Mercury Communications

Background: before 1981

The history of telecommunications in the United Kingdom starts in 1879, with the establishment of its first telephone exchange in London by The Telephone Company (Bells Patents) Ltd. On 10 March 1881, National Telephone Company (NTC) was formed, which later brought together smaller local telephone companies. In 1898, to break the near-monopoly held by NTC, the Postmaster General's office, which was in charge of licensing new telephone companies, issued thirteen new licences. But by 1911, five of the remaining six competitors had been taken over by either the General Post Office (GPO) or NTC. Under the Telephone Transfer Act 1911, NTC was taken over by the GPO in 1912, and created a state-run monopoly that would run nearly all telecommunication assets in the UK for the next seventy years.

During the 1920s, there was increasing competition from companies using radio communications such as Marconi's Wireless Telegraph Company. In 1928, it was decided that all telecommunication assets outside the UK, and within the British Empire, particularly the telegraph companies, should be merged into one operating company. The merged entity was initially known as the Imperial and International Communications company, and from 1934 as Cable & Wireless.

Following the Labour Party's victory in the 1945 general election, the government announced its intention to nationalise Cable and Wireless, which was carried out in 1947. The company remained government-owned, continuing to own assets and operating telecommunication services outside the UK. All assets in the UK were integrated with those of the General Post Office, which operated the UK's domestic telecommunications monopoly.

In October 1969, the Post Office (a public corporation) replaced the General Post Office (a government department). In October 1981, the Post Office was split into two separate public corporations, the Post Office and British Telecommunications. In 1981, the Thatcher government started the process of privatising nearly all state-run monopolies, including British Telecommunications, British Airways, British Steel Corporation and British Aerospace. The act also started the privatisation of Cable & Wireless, whose primary business was then in Hong Kong.

Mercury: 1981–97

In 1981, Mercury Communications Ltd – a consortium of Cable & Wireless, Barclays, and BP – was founded as an experiment in telecommunications competition, primarily to compete with British Telecom. Its first chairperson was Sir Michael Edwardes, known for his success in turning around British Leyland. Mercury Communications was first licensed in 1982, and became a full Public Telecommunications Operator in 1984. The same year, Cable & Wireless bought out the stakes of its partners.

In 1989, Mercury formed a consortium with Motorola and Shaye Communications to run Callpoint, a Telepoint-based nationwide mobile phone service. It could not successfully compete with cellular telephone technology and closed in June 1991.

In July 1991, Mercury's sister concern, Mercury Personal Communications Network (PCN) Ltd, was awarded one of the licences to develop and build a personal communications network (PCN) in the United Kingdom. The other two went to Microtel Communications (later Orange), and Unitel. PCNs were envisaged to be superior to the then-existent cellular phone technology, giving customers the flexibility to make or take calls in the home or car, in an aeroplane, or while on holiday.

In November 1992, Cable & Wireless sold a 20% stake for about £480 million to the Canadian company BCE, the parent company of Bell Canada International, which brought much-needed telecommunications expertise to Mercury. BCE also owned two cable companies in the UK.

Payphones and mobiles

From 1986 Mercury operated public payphones in the UK, in competition with BT. These proved not to be profitable and this interest was sold in 1995. They were notable for their varied designs which imitated architectural styles.

Mercury also operated the first GSM 1800 mobile phone service, launched in 1993 as Mercury One2one. The service was first rolled out in the London area bounded by the M25, and offered free mobile to landline calls at off-peak times, weekends and Bank Holidays. Calls could be made free to landlines in the area the mobile was in, and to adjacent landline exchange codes. Even after this plan ceased being sold, SIM cards that were subscribed to the plan continued to provide these free calls, and often changed hands for large sums of money. Coverage was extended throughout the decade, with most of the UK having service by 1997. One2One was sold to Deutsche Telekom in 1999 for £8.4bn, and was rebranded as T-Mobile in 2002.

Fixed-line phone services

Mercury began by offering fixed-line facilities direct to business and residential customers. Callers could use the 'Mercury 2300' service via their existing BT phone line by dialling a '131' prefix followed by a ten-digit customer code, then the number they wished to dial. Some phones were manufactured with a 'Mercury button' which allowed the prefix and customer code to be stored and then dialled with a single button press.

Later, a more modern indirect service was introduced which required only the dialling of an access code (132) and the destination number. Mercury also provided backbone services to the emerging British cable operators which were beginning to offer their own fixed-line telephone services.