Telegraph and Other Message Communications

SIC 4822

Industry report:

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.

Industry Snapshot

The telegraph and other message services industry was relatively obsolete by the early 2010s. Although the telegraph was the oldest form of telecommunications, it was steadily replaced by new forms of data transmission, such as e-mail, texting, cell phones, and even video chat. Faxing remained another form of viable communication but was primarily used in the business environment, and even then, many documents were scanned and sent via e-mail as PDF files or uploaded to private servers.

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 2010, the company generated nearly $5.2 billion in revenue with 7,000 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, the two coasts of the United States 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 prominence it had enjoyed for most of the twentieth century.

Western Union, the largest telegram and mailgram service in the United States, reported 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 1 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 larger scale, a number of businesses provided a range of facsimile services for businesses. 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.

Current Conditions

By the early 2010s, nearly 75 percent of Americans had access to the Internet and 68 percent had high-speed broadband access. In addition, wireless communication technology was booming with over 5 billion cell phone users globally during 2010, and the numbers of users were growing rapidly. As a result, online texting, instant messaging, video and audio chatting, and e-mails made communication around the world nearly instantaneous and inexpensive. Scanned files, made legally binding using an encrypted digital signature, could be converted into a Portable Document Format (PDF) and e-mailed and read by any reader with access to the free Adobe Reader program.

Nonetheless, numerous international companies offered telegram services in the early 2010s, although only one U.S.-based company remained, American Telegram, headquartered in Las Vegas, Nevada. In 2010 the firm posted revenues of $300,000. American Telegram offered a wide array of services. Customers paid a delivery charge for a hand-delivered telegram, plus a per-word rate. For example, in December 2011, a same-day, hand-delivered domestic telegram was billed at $34.95 plus $0.79 per word. Delivery was made by one of American Telegram's 10,000 delivery agents across the United States and Canada. Customers could also send and receive messages via a Telex operator for $13.00 plus $0.89 per word. International telegrams and cablegrams to countries were also available and billed at $28.95 plus $0.89 per word. Messages could also be routed through fax, e-mail, and the postal service. American Telegram also offered additional services, such as celebrity and VIP telegrams, bulk services, singing telegrams, and candy and flower telegrams.

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