Belgacom Business Information, Profile, and History

History of Belgacom

Belgacom, as Belgium's Régie des Télégraphes et Téléphones (RTT) has been officially known since 1991, exists primarily to run telecommunications services for Belgium, but is also determinedly equipping itself to compete in the increasingly dynamic international telecommunications marketplace.

In its new incarnation as Belgacom, the company belongs to a special class of Belgian state-owned utility companies that are intended both to safeguard the public interest--in this case, by maintaining the communications infrastructure and providing a public telephone service--and to act as a commercial concern. Belgacom is one of Belgium's most profitable companies, returning BEF 8.8 billion in 1991, and plays an important part in the Belgian economy, being one of the country's largest employers and investors.

Although Belgacom and RTT date back only to 1930, its roots go back much further in time. Belgium's first telegraph line, running along the railway line from Brussels to Antwerp, was opened by a private licensee in 1846. In 1850 telegraph service began to be provided by the state. Over the next two years, the telegraph network was expanded to include the country's main towns, and links with adjoining countries began to be established.

The first Belgian telephone services began to operate privately in 1879. The Brussels directorate of telegraphs successfully established links with the towns of Malines and with Ostend, 20 kilometers and 124 kilometers away respectively. Within Brussels, telephone links were established using overhead wires. The railways also began to use telephone links in 1879, with one of their projects considered the most ambitious application of telephone technology in any country at that time. Coal companies also set up private telephone networks. In 1880 private operators applied for licenses to open telephone bureaux in Liège (to serve Liège itself as well as the areas of Brosseux, Jemeppe, and Seraing), and also in Verviers. The same year, an internal telephone system was installed in the Palais de Justice in Brussels.

The government had granted the private companies only short-term licenses, and nationalized almost all the systems in 1883. This step was considered necessary because, although the private companies were serving the large towns reasonably well, other areas were less well provided for and there were difficulties in arranging for the various local networks to be connected. Critics of the state administration argued that it slowed the development of the service: the number of telephone subscribers increased from a total of 8,500 in 1894 to only 43,540 in 1910, when some felt that with better marketing Brussels alone could easily support a comparable number of subscribers. By 1930 it had been decided that telecommunications would be better run by a separate organization, which could put it on a more commercial footing.

Although most European countries had turned the operation of telephone services into a state monopoly, usually run by a postal, telegraph, and telephone administration, Belgium separated the telegraph and telephone administration from the post, forming RTT in 1930. The newly formed company inherited approximately 225,000 subscribers, of whom 51 percent were connected to automatic exchanges. RTT immediately drew up a plan for the progressive automation of the rest of its networks. Other objectives included the establishment of a non-stop, night-time service, the replacement of overhead wires with underground cables, and the extension of overseas services. By the outbreak of World War II, RTT had succeeded in increasing its subscriber base by almost a third, to 314,000. Of these, 68 percent were served by automatic exchanges, while almost 90 percent enjoyed round-the-clock service.

In 1902 Belgium had become the first country to install a public radiotelegraphy service allowing ship-to-shore communication, and during the 1930s maritime radiotelephony services to ships became common. Short-wave radio communication was widely adopted. RTT's expansion and automation programs were put on hold during the war, throughout which the company lost a substantial number of its buildings and a great deal of equipment. By 1944 the number of telephone subscribers had dropped back to 238,000. Despite stringent post-war budgetary restrictions, RTT initiated an extensive reconstruction program, beginning more than 100 building projects between 1945 and 1950. This was a period of burgeoning demand for telecommunications services. By 1955, the year that marked the 25th anniversary of RTT's founding, there were 615,000 telephone subscribers, over three-quarters of them served by automatic exchanges. At any point in the route, 88 percent of urban calls were connected without operator intervention, compared to just 33 percent before the war.

The introduction of telex in 1937 had adversely affected the popularity of Belgium's telegraph services, since businesses could install their own telex machines instead of sending and receiving telegraphic messages via a telegraph office. However, telex was not for the majority of businesses: as late as 1955 there were only 669 subscribers. Therefore, traffic over the telegraph system, after an initial dip, had continued to increase, reaching a peak of more than 10 million messages in 1947. By 1955 the domestic telegraph system was fully automated. In the mid-1950s telex users could communicate with 20 different countries. In telegraphy, too, international links were extensively available. The simpler-to-use teletype machines had progressively replaced the original Morse code devices, and multiplexers, devices enabling multiple messages to be transmitted over the same radio circuit, had made their appearance.

In 1956 Belgium's international telephone system first became automated with the introduction of automatic links between Brussels and both Paris and Lille in France. In 1964 RTT introduced the Semaphone, a pioneering paging system that could be accessed via the public network and store multiple coded messages. Another technological breakthrough during this period was the introduction of computerized exchanges. Trials were performed at Wilrijk and Hasselt during the late 1960s and early 1970s. The first operational computerized exchange, at Berchem-Sainte-Agathe, was commissioned in 1972. These exchanges became the norm, and a computerized exchange, called the 'Europe', was opened in Brussels in 1977.

In 1970, the automation of the telephone network was completed. Thereafter the network and capacity of the exchanges continued to grow. By the mid-1980s, almost all telephone cables ran underground. RTT began to invest in equipment that would enable it to take advantage of satellite communications, and Belgium's first earth station for routing satellite traffic was opened by King Baudouin in Lessive in 1972. Other stations were to be opened subsequently in Brussels and Liedekerke.

Overall, RTT's second quarter century, from 1955 to 1980, was a period of innovation and phenomenal growth. The telephone tariff structure was radically overhauled in the early 1970s, with a cheaper rate introduced for evenings, weekends, and holidays and charges based on the duration of the call instead of a flat rate. A system of 9-digit telephone numbers was adopted in 1974 in order to increase the capacity of the exchanges. In 1977 RTT introduced its first car phone. Most importantly, during this period the number of telephone subscribers almost quadrupled, to 2.3 million. The number of telex users increased even more dramatically, to 20,000. International access via telex became virtually universal, with 130 countries included in the network.

During the 1980s RTT put considerable effort into updating its networks and services. Fibre optic cables were installed along major routes, and by the end of the decade these carried all long-distance calls. Digital electronic switches gradually took over from electromechanical and analogue electronic switches; by 1990 almost 40 percent of switches were digital. Belgium could claim to be ahead of almost everyone in Europe except France in digitization. Belgium was among the earliest countries in Europe to introduce Integrated Services Digital Network (ISDN), a technological innovation that allows data and voice traffic to be carried in digital form over the telephone network, in contrast to older systems whereby the traffic is transmitted in analogue form for at least part of its journey. RTT's ISDN service, 'Aline,' opened for business in June 1989, and full ISDN coverage of Belgium was predicted by 1995. Specifically for data transmission, which had started in 1972, there was a successful X.25 network, for which considerable expansion was planned.

In order to provide one-stop shopping for customers wanting to lease an international network, RTT established links with other telecommunications providers. Instead of having to negotiate for lines in each country, the customer could lease them from one supplier that arranges the other lines as necessary. AT&T, British Telecom, France Télécom, and several others were in operation by 1991. RTT also established a partnership with AT&T for the provision of ISDN services to the United States.

In the late 1980s Belgium was criticized for failing to keep up with the trend toward liberalization that was sweeping the European telecommunications industry, although certain areas, such as mobile telecommunications and the supply of terminal equipment, had already been opened up to some extent. In 1990, however, Belgium announced a drastic organizational shake-up of RTT as part of an across-the-board deregulation of such public industries as the postal service and railways. Legislation was drafted to create a category of public companies that were genuinely commercial yet assigned top priority to the public interest, with a status midway between a private company and a government department. Greater competition would be allowed within the telecommunications industry, the sale of terminal equipment would be completely deregulated, and the regulatory and operating aspects of the industry would be split. RTT was to be renamed BELGACOM, and there would be a new regulatory authority, the Belgian Institute of Postal Services and Telecommunications (IBPT).

RTT's chief executive officer, Lodewijk Eggermont, told Networking Management magazine that the new status would give 'more autonomy and more flexibility' which he expected would provide more than ample compensation for loss of its monopolistic power. Belgacom would have the freedom to restructure its employees' pay to compete for the best people with private companies, and it could be more responsive to changes in the market, less bureaucratic, and more customer-friendly.

RTT was anything but static during the period leading up to its reorganization. In 1990 it revised its tariff structure to bring it more into line with its European neighbors. It also took the first steps toward competing in the international market when it opened its first foreign agency in Westport, New York, in April of 1990. It initially targeted multinationals and Belgian companies with United States offices, establishing agreements with the United States telecommunications companies AT&T and MCI to provide a joint service for phone, data, and image transmission. Other international links established at this time included an agreement with PTT Telecom of the Netherlands to cooperate more closely on infrastructure and service. Interpac Belgium was set up as a joint subsidiary of RTT (which owns 95 percent of the shares) and the American firm Infonet Services Corporation, to provide international communications via Infonet's data network. This was a convenient alliance since Infonet has its European headquarters in Belgium. Expercom was created as a joint venture between RTT, Telinfo, and France Cables et Radio, part of France Télécom. Expercom, expected to be the first of many such joint ventures, was a company specializing in consulting, installation, and network operation for corporate customers. A further joint venture, this time with Alcatel Bell, was BRAINS (Belgian Rapid Access to Information Network Services). BRAINS, set up in early 1991, was designed to provide value added networks (VANs) suitable for carrying traffic such as Electronic Data Interchange, a system which can, for example, allow a manufacturer to order parts electronically. BRAINS was launched initially for the domestic market, with plans to expand the service internationally.

Technological strides in this period included the commissioning of an earth station to provide VSAT (Very Small Aperture Terminal) satellite services, which can provide message transmission from a central point where conventional cabling is difficult to establish. This station, LDK4, was built at Liedekerke where there was an existing satellite communication station. Gateways between Belgium's 'Aline' ISDN network and the ISDN services of France and the United Kingdom were set up as the first steps toward internationalization of ISDN.

New mobile communications systems, including a third-generation paging system operating throughout the Benelux countries, were commissioned. A new digital mobile telephone system with international capabilities, the Groupe Spécial Mobile, was being introduced as the previous system, introduced in 1987, was reaching its saturation point.

Despite all the hi-tech success, there were still problems with the basic telephone service at home. There had been allegations (for example, in EuroBusiness of May 1990) that Brussels' attractiveness as 'capital of Europe' was being undermined by the long wait for telephone hook-ups. This delay could, EuroBusiness claimed, be up to eight months in some areas, in contrast with London where service could be connected in 48 hours. RTT could, however, claim that it was already improving matters. Telephone connections rose from 434,063 in 1989 to 452,163 in 1990. An 'emergency plan' reduced the waiting list by more than 15,000 to just over 38,000. And, the company pointed out, its strengths in international communications helped Brussels to attract companies like Hewlett-Packard and British Petroleum to set up their international headquarters there.

In September of 1991 Bessel Kok, the founder of the SWIFT interbank network, was named the first managing director of Belgacom for an initial term of six years. Perhaps responding to the criticisms of the phone service, he told the press, 'We must orient ourselves to our clients, both residential and business, and provide the services that will meet their current and future needs.' This was sound business strategy. With the advent of the single European Market in 1993, corporations from the United States and Pacific Rim were hurrying to set up European bridgeheads. Brussels boasted several advantages over other European capitals, including its geographically central position, its transport systems, and headquarters for both NATO and the EEC. For any organization looking to establish a European headquarters, the availability of telecommunications and information technology infrastructures were a high priority. If Belgacom could persuade these organizations that the infrastructures were in place, the opportunities for profit were virtually unlimited.