Telegraph and Other Message Communications

SIC 4822
TELEGRAPH AND OTHER MESSAGE COMMUNICATIONS

This industry covers establishments primarily providing telegraph and other nonvocal message communications services including cablegram, electronic mail, and facsimile services. Also within this industry are establishments providing one or more of the following services: mailgram, photograph transmission, telegram, telex, and various telegraph services. Online and Internet services, many of which provide electronic mail services, are classified under SIC 7375: Information Retrieval Services.

NAICS Code(s)

513310 (Wired Telecommunications Carriers)

Industry Snapshot

The telegraph and other message services industry was an industry in decline at the end of the 1990s. Although the telegraph was the oldest form of telecommunications, it has been steadily replaced by newer forms of data transmission such as e-mail over the Internet. However, Western Union, long the U.S. leader in this industry, was still a vibrant company and still offered telegraph and telex service, but has turned to various forms of money transfer as its bread-and-butter. Newer methods of nonvocal message transfer, such as broadcast facsimile and fax-on-demand services, were still viable businesses, but served rather specialized markets.

Background and Development

The word "telegraph" has been in use since 1792 when Frenchman Claude Chappe of France used it to describe a visual signaling system he invented. However, it was Samuel F. B. Morse—sending a message using his new system of dots and dashes between Baltimore and Washington, D.C., on May 24, 1844—who set a communications revolution in motion. On October 24, 1861, America's two coasts were linked by a single telegraph wire. This event put the legendary Pony Express out of business. In 1866 the Western Union Telegraph Company introduced stock tickers, enabling stockbrokers to receive minute by minute information from the New York Stock Exchange.

Even after the invention of the telephone by Alexander Graham Bell in 1876, the telegraph continued to be a vital communications medium. In 1930, the telegraph began to increase in popularity following a 40-year decline, a result of the use of teletypewriters, which did not require a skilled operator to use Morse Code and had the added benefit of providing a printed record of a communication. In 1933 Western Union introduced the singing telegram. In the 1960s the telegraph lines and poles that blanketed the nation were replaced by a microwave radio system.

Until the 1970s, telegrams and telexes were the most frequently used ways of transmitting written messages within the same day. The development of communications satellites and related technological improvements further enhanced the flexibility of the telegraph. But with the increasing use of personal computers and modems, and the advent of the "Information Superhighway" for person-to-person communications (either from one computer to another or through electronic bulletin boards and online service providers), the telegraph no longer had the same prominence it enjoyed for most of the twentieth century.

Western Union, the largest telegram and mailgram service in America, saw a dramatic drop in its service levels over the years, from an all-time high of 200 million telegrams at its height in 1929 to less than one million at the start of the 1990s. In 1980, there were eight telegraph carriers, according to the U.S. Federal Communications Commission's Statistics of Communications Common Carriers. By 1994, there were two. Operating revenues showed a similar downward trend, decreasing from $1 billion in 1980 to $579 million in 1994. U.S. revenue from international telegraph service declined from $63 million in 1980 to $4 million in 1997. International telex service revenues declined from $325 million to $110 million over the same period.

Although still available at the end of the 1990s, the telegram and the telex were relics of a bygone age. Specialized forms of message delivery services, however, continued to fill certain market needs. Western Union listed at least 20 different services on its Web site. Many of these were ways to pay bills, transfer money, or collect money owed, but others were various forms of message delivery, including the famous singing telegram. Among its services for businesses and organizations were the Hotline, a method organizations could use to enable their members and supporters to send a message to government officials or other decision-makers.

Another form of message delivery service that had a ready market at the end of the century was facsimile. Many small businesses such as packaging stores, print shops, and even convenience stores sold facsimile services for the many consumers who did not own a fax machine. On a bigger scale, a number of businesses provided a range of facsimile services for business. Broadcast fax enabled an organization to send a message to a list of fax telephone numbers very similar to a mass mailing. Fax-on-demand services provided businesses an automated system to supply documents of many kinds to interested parties by fax. The company providing the service would store the client's documents electronically, and anyone who wanted a document, such as a sales brochure or product information sheet, could simply call a toll-free number, identify the document wanted, and receive it by fax in just a few minutes.

Current Conditions

Although telegraph services were in all but dead, e-mail services were booming in the early 2000s. Of households with Internet service, e-mail was ranked as the most popular activity with 52 percent of wired households. Another service, instant messaging, was also growing in popularity. Instant messaging allowed various Internet users to send and receive messages in real time.

Although many hailed the boom of e-mail as a legitimate opportunity for marketing purposes, it was not without its problems. With the boom of e-mail and marketing over the Internet came spam. Spammers are marketers and others who send out millions of automatically generated, unsolicited e-mails, or spam, to users. By some estimates, spam volume grew some 150 percent in 2002. Internet providers saw clogged servers, and users saw their e-mail in-boxes quickly filling up with unwanted messages. The proliferation of spam has led Internet providers and other companies to come up with antispam programs to protect legitimate e-mail marketers, as well as annoyed users. Twenty-nine states have passed spam laws making it illegal to send unsolicited commercial e-mail. In 2002, another seven antispam bills were proposed in Congress.

Industry Leaders

Western Union, perhaps the oldest company in the telecommunications industry, now is a subsidiary of First Data Corporation, the leading bank card transaction processing company in the United States. Although it still offers telegraph and other message services, Western Union's 26,000 agents, many of which are located in supermarkets, primarily transfer money, sell money orders, and collect debt payments. The company provides many such financial services for consumers who do not use banks. A new service developed with Electronic Data Services Corp. enables money transfer via ATM machines. The sender uses a debit card to initiate the transfer but the recipient does not have to own a card. Instead, the recipient uses codes received from the sender to access the money from another ATM.

Xpedite, a business unit of Ptek Holdings, Inc., is a leader in document distribution services. It offers broadcast facsimile and fax-on-demand services, as well as e-mail, telex, cablegram, and mailgram services both domestically and internationally. Xpedite processed about two billion messages in 2001.