leaders in the early spread of telephone service

About 1893, the country leading the world in telephones per 100 persons (teledensity) was Sweden.  Telephone service in Sweden developed through a variety of institutional forms: the International Bell Telephone Company (a U.S. multinational), town and village co-operatives, the General Telephone Company of Stockholm (a Swedish private company), and the Swedish Telegraph Department (part of the Swedish government).  Since Stockholm consists of islands, telephone service offered relatively large advantages.   Competition between Bell Telephone and General Telephone, and later between General Telephone and the Swedish Telegraph Dept., was intense.

The U.S. rose to world leadership in teledensity with the rise of many independent telephone companies after the Bell patents expired in 1893 and 1894.   In 1893, the U.S. was considerably behind Sweden, New Zealand, Switzerland, and Norway in teledensity.  By 1914, the U.S. was the world leader in teledensity and had more than twice the teledensity of Sweden, New Zealand, Switzerland, and Norway.   The relative good performance of the U.S. occurred despite competing telephone networks not interconnecting.[1]

While every country is unique and special, competition between telephone service providers, including between private companies and state departments, seems to have been generally important in spurring provision and adoption of telephone service.  State-owned telephone service monopolies were associated were relatively lower teledensity.[2]  At least in the U.S., a private monopoly (Bell patents) was also associated with relatively lower teledensity.   Across the world, telephone industry structures early in the twentieth century were diverse and dynamic.  Business failures, business consolidations, new entry and nationalizations were common.   Such changes indicate competition at a broader institutional level.

International comparisons of telephone industry developments and arguments about the merits of different forms of ownership and industry structure were common early in the twentieth century.  The International Bureau of the Telegraph Union produced yearly statistical comparisons of countries’ telephone services.[3]   After the U.S. had assumed world leadership in teledensity, AT&T and its supporters highlighted international comparisons of teledensity in arguing for the superiority of private provision of telephone service.  That argument did not prevail internationally.  The more meaningful contest seems to have been between bureaucratic organization and decentralized innovation.  For wireline telephone service,  bureaucratic organization prevailed.   The general trend worldwide through to the final decade of the twentieth century was toward state monopoly provision of telephone service.

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Data: international and intercity comparisons of teledensity, 1893-1914 (Excel version)

Notes:

[1] “[A]round 1904-1914, more than 55% of the US population lived in cities or towns where there were two unconnected telephone exchanges.”  Mueller, Milton (1993), “Universal service in telephone history: A reconstruction,” Telecommunications Policy 17(5) p. 359.  Competing networks also did not interconnect in Sweden.

[2] See Wallsten, Scott (2001), “Ringing In The 20th Century: The Effects Of State Monopolies, Private Ownership, And Operating Licenses On Telecommunications In Europe, 1892-1914,” (October 2001). World Bank Policy Research Working Paper No. 2690; SIEPR Policy Paper No. 00-0037. Available at SSRN: http://ssrn.com/abstract=281092

[3] These statistics appear annually in Journal Télégraphique.  The International Bureau of Telegraph Administrations, a Bern-based technical arm of the International Telegraph Union, published the Journal Télégraphique.  It did not explicitly rank countries by teledensity.

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