Telegraph and Other Message Communications

Industry Snapshot

The telegraph and other message services industry was in decline by the end of the 1990s and continued to decline throughout the 2000s. Although the telegraph was the oldest form of telecommunications, it has been steadily replaced by newer forms of data transmission such as e-mail. Newer methods of nonvocal message transfer, such as broadcast facsimile and fax-on-demand services, were still viable businesses, but served rather specialized markets.

Western Union, perhaps the oldest company in the telecommunications industry, became a subsidiary of First Data Corporation, the leading bank card transaction processing company in the United States. In 2006, Western Union announced that it would discontinue its telegram services, citing diminished use of the service, although other companies still offered the mode of communication. As of 2008, the company generated nearly $5.3 billion in revenue with 5,900 employees. Its agents, many of whom were located in supermarkets, primarily transferred money, sold money orders, and collected debt payments.

Background and Development

The word "telegraph" has been in use since 1792 when 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 system of dots and dashes between Baltimore, Maryland, 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. However, with the increasing use of personal computers and modems, and the advent of the "Information Superhighway" for person-to-person communications 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 the United States, experienced 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, but by 1994, there were only 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 the facsimile, or "fax." Many small businesses, such as packaging stores, print shops, and 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 with 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, and receive it by fax in just a few minutes.

Although many hailed e-mail as a legitimate opportunity for marketing purposes, it was not without its problems. With the boom of e-mail and Internet marketing 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 about 150 percent in 2002. Internet providers saw clogged servers, and users saw their e-mail in-boxes quickly fill up with unwanted messages. The proliferation of spam led Internet providers and other companies to create anti-spam programs to protect legitimate e-mail marketers, as well as annoyed users. One such product, announced in 2005, was Blue Squirrel's Spam Sleuth Lite that tackled spam plus bugs and viruses. Another one, Cipher Trust IronMail, claimed to protect educational institutions against e-mail-borne threats. Twenty-nine states passed spam laws making it illegal to send unsolicited commercial e-mail. In 2002 another seven anti-spam bills were proposed in Congress, resulting in at least one act coming to fruition in 2004--the Federal Trade Commission's CAN-SPAM Act, which regulates commercial and transactional e-mail messages.

A 2005 report entitled "E-Mail Marketing: How to Improve ROI," explained that the approach worked amazingly well for marketers who used it effectively. The report said that 45 percent of consumers in a survey believed that it was a "great way" for companies to stay in touch with their customers. Consequentially, it was reported that 12 percent of advertisers planned to start e-mail campaigns in 2005.

Current Conditions

Although telegraph services generally ceased operations in the United States by the mid-2000s, e-mail services boomed. E-mail was ranked as the most popular activity with 75 percent of households with Internet service in the late 2000s. Another service, instant messaging, also was growing in popularity. Instant messaging allowed various Internet users to send and receive messages in real time, the most recent and popular of which, Twitter, delivers broadcast messages with a limit of 140 characters instantly.

A 2007 report from eMarketer, a company that provides research and analysis on online marketing and technologies, estimated that e-mail advertising spending by marketers would grow from $338 million in 2006 to $616 million in 2011, an increase of 82 percent over six years. Another study reported by WebProNews concluded that the number of households with Internet access had reached 82 percent by 2009.