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Telecommunications

by A. C. Wilson

By 1876 New Zealanders were able to send telegrams to London. From 1931 they could phone – if they could afford to pay the toll bill. In 2009 people communicated instantly by text, and there were more cellphones than people.


Early telegraphy and telegrams

Māori communicated over distance in early New Zealand by means of gongs, horns, smoke and even ‘human semaphore’ – gestures and stances. After European settlement, electro-mechanical telegraph devices invented in Britain and the United States were used.

Brief messages were translated into Morse code and tapped into the telegraph network, arriving at the telegraph office closest to their destination. The code was then returned to written form and carried by a telegraph messenger to its recipient.

The national network

New Zealand’s first telegraph line – between Lyttelton and Christchurch – was set up by the Canterbury provincial government in 1862. By 1865 the southern telegraph line extended from Invercargill, via Dunedin and Christchurch, to the Hurunui river in North Canterbury.

In 1866 the link across Cook Strait was laid. Development of the North Island network was delayed by opposition from hostile Māori. The Wellington–Auckland line was not fully operational until 1872. With the help of sympathetic Māori and the use of military redoubts, a route through Napier, Taupō and Tauranga was used.

Cabling disaster

 

It was a near disaster when the telegraph cable being laid across Cook Strait in 1866 fouled. A huge knot of rope tangled in the cable-laying drum. Wheels broke, and pieces flew into the air and thundered down on the deck.

 

International connections

In February 1876 the Eastern Extension Company laid cable between La Perouse, New South Wales and Wakapuaka near Nelson. The New South Wales and New Zealand governments subsidised the cost. Connections overland via Adelaide and Darwin, and undersea via Java and Suez, allowed telegraphic contact with London the same year.

Cost to the consumer

At first telegrams to London cost 15 shillings per word (around $100 in 2009 terms), and those to Australia cost 1s. 6d. Most telegraph use was by government officials and businesses.

From the 1870s telegram rates came down as technology and service improved. The ‘shilling telegram’ (for 10 words, irrespective of distance within New Zealand) arrived in 1870, and dropped to sixpence by 1896. Slow or urgent telegrams at half or double rates respectively also became available.

Rate of use

In 1865 some nine telegraph stations (mainly in the South Island) sent almost 100,000 messages. During the prosperous Liberal government years, traffic had grown from 1.96 million messages (excluding non-paid ones and cables) from 145 stations in 1890, to 8.5 million from 300 stations in 1910.

Overseas cables further swelled the colony’s telegraph traffic, and messages to and from overseas grew eightfold to 120,000 between 1880 and 1910.


Telephones, 1877–1914

In 1877 news of the development of telephony – the electrical transmission of sound – reached New Zealand. In 1878 the government set up wires between Dunedin and Milton to test the new invention. The first public demonstration of the new wonder (linking Blenheim and Nelson) took place later the same year.

As a social tool, the telephone had more appeal than the telegraph. It provided immediate voice contact and had no code to master. Enthusiasm for the telephone led to the setting up of rural party-lines and even private telephone cooperatives by individuals – the lower Wairarapa was notable for this.

Setting up the telephone network

In New Zealand the state monopolised the development of telephone exchanges and the network from the very beginning. By contrast, in Australia (briefly), the United Kingdom (up to 1912) and in the United States (up to the present), business interests took the initiative.

Broadcasting by telephone

In the early days of telephony there was a craze for sending music, songs and even nursery rhymes over it. The novelty of telephony as primitive broadcasting soon faded in the face of its obvious value for commerce and government.

The government demanded at least 30 subscribers for an exchange to be viable; it found them in Christchurch (including the local asylum) where the first exchange opened on 1 October 1881. Auckland followed the same month. The other large population centres also gained exchanges over the next 10 to 15 years.

Subscriber numbers rose from around 50 in 1880 to 25,000 by 1910, and the number of exchanges rose to 14.

Cost to the consumer

The first subscribers paid a hefty annual fee (£17 10s.) to rent (not own) their phone. Rental cost had more than halved by 1900, as more people subscribed. Premier Dick Seddon’s rejection of the ‘American toll system’ (charging for each local call) kept prices down.

Costs for the combined telephone/telegraph system were also kept down by not sending trained telegraphists to out-of-the-way places. Small telephone offices were opened instead (first in the Otago backblocks) to allow isolated settlers, or the office telephonist, to phone in messages to the nearest telegraph office for onward transmission.


Business and cable networks

Businessmen – in particular those with interests in newspapers and agriculture in Canterbury, and gold-mining in Otago – were foremost in lobbying for telegraph and then telephone connections between ports, neighbouring settlements, and the hinterlands beyond.

Traffic between key commercial points in the telegraph system was much higher than between the general population. In 1871, for example, Christchurch, with 16.9% of the provincial population, sent 48% of Canterbury’s telegraph traffic for that year; Lyttelton, with 5.5% of the population, sent 20.9% – a pattern that continued for more than 60 years.

Developing the network

Overseas cable links had primarily commercial benefits. They facilitated trade with Britain, New Zealand’s biggest market. Farmers and exporters got much quicker information on London’s latest sales prices for produce, especially the huge frozen meat trade after 1882.

Within New Zealand, growing telephone use sped up business transactions. However, its regular use for overseas business dealings would only become possible in the 1960s, with lower costs and bigger cables. Internal (as opposed to overseas) telegrams had further commercial benefits. They sped up communication and so helped build infrastructure – railways, bridges, dams and motorways – on which efficient commerce and government depended.

The role of government

Businesses looked to the government to develop the telegraph network. Sometimes non-commercial factors spurred government action. A contingent of British military engineers built the first line south of Auckland, to Drury in 1863, as part of a push into Māori lands in the Waikato.

Another government responsibility – science – benefited from the telegraph. In 1874–75 it was used to coordinate the observation of the transit of Venus by visiting American scientists. From 1876 the New South Wales and New Zealand governments used the new trans-Tasman cable to exchange meteorological data.

Although provincial government was initially involved, central government quickly asserted a dominant role, to coordinate colony-wide expansion. A Telegraph Department was set up in 1864, and later also took responsibility for telephones. In 1865 the first of several Electric Telegraph acts was passed. These regulated the appointment of staff and the acquisition of land for telegraph construction.

Telecommunicating rugby

 

In 1905 telegrams and telephones combined to advertise the success of the All Blacks on tour in Britain. New Zealand’s representative in London, William Pember Reeves, would telegraph results to Prime Minister Richard Seddon, who would telephone the Evening Post. The match against Wales – the focus of intense public interest – saw a more direct method of communication. The telegraph office opened early and a system of flags was devised to declare the result: New Zealand ensign if the All Blacks won, the Union Jack if Wales won, and a white flag with red centre if it was a draw.

 

P & T

The telegraph service was strengthened when it joined the Postal Department to become the Post and Telegraph Department (P & T) in 1881 (‘the Post Office’ after 1959). The combined department was prestigious. Up to the 1920s at least, senior politicians served as postmasters-general. The department also had a strong staff union (from 1890), and in-house technical training systems and workshops were well regarded by private industry.

Amalgamation provided a stronger fiscal base for bulk overseas equipment purchases, to meet massive demand from the 1890s. Purchases were based on equipment efficiency and continuity of supply rather than colonial loyalties.

Initially telegraph equipment came from British manufacturers because of their head start in making such items. For telephony, American, and later Swedish and English, companies supplied equipment. New Zealand even obtained radio-telegraphy equipment in 1911–13 from Telefunken in Germany, despite worries about future hostilities.


Post and Telegraph, 1914–1945

Telecommunications in the First World War

The outbreak of the First World War meant that for the first time military priorities, like the censorship of telegrams and cables, had to overrule civilian ones for the government.

Military personnel could send and receive telegrams at cheaper rates, and the telegraph service was used to spread war news more quickly. Summaries were posted in outlying Post and Telegraph (P & T) offices. Some rural postmasters used the telephone for this purpose, for subscribers easily contactable via party lines, as at Kāwhia from September 1914.

P & T abroad and in New Zealand

Some 62 wireless telegraphists served in Mesopotamia (Iraq) during the war. By 1918, 850 female ‘temporaries’ were employed, many as telegraphists, to replace men on war service. The war also delayed the installation of rotary automatic telephony equipment until 1919, when the Masterton exchange trialled it. Ten years later main centres had all gone automatic.

Growing phone use

Between 1910 and 1950 the number of telephones grew more than tenfold – from around 33,000 to more than 350,000. Much of the growth took place in the interwar years.

Increasing suburbanisation was met and fostered by the spread of exchanges into suburbs. Enhanced carrier technology allowed more calls to be carried on each line by the use of wireless frequency modulation techniques. Private (from 1925) and rural (1929) automatic exchanges – PABXs and RAXs – increased government, commercial and rural use of phones.

In 1922/23, telecommunications revenues outstripped postal revenue for the first time.

The Murray multiplex

By 1925 telegrams sent between main centres were using the ‘Murray multiplex’, a higher-capacity, machine-printing system. It was invented by an expatriate New Zealander, Donald Murray, who had installed a prototype between London and Edinburgh some 20 years earlier.

Radio telecommunications from the 1920s

The 1920s also saw the tremendous expansion of radio for telegraphy, made possible by advances in short-wave radio. From 1921 to 1986 the P & T was the licensing authority for the use of radio frequencies for any purpose. From 1924 to 1930 it substantially upgraded its own maritime and general communications radio stations.

From 1936 ‘aeradio’ helped the navigation of fledgling passenger air services, and in 1937 the army even used radio-telephones to coordinate a mock battle. New Zealand subscribers could call the UK from 1931, but a three-minute call set them back nearly seven pounds – at least double the weekly wage for most.

Second World War

The advent of another world war saw strict censorship and, later, even greater employment of women in communications. There was a huge influx of women under the 1942 industrial conscription, or manpower regulations, with some 4000 employed by the Post and Telegraph Department by 1943. Abroad, 2nd Division signallers supported New Zealand forces in Crete, the Middle East and Italy. In the Gilbert Islands, eight of the Signal Corps radio operators, deployed as coast-watchers in July 1941, were among 22 New Zealand and British servicemen killed by the Japanese in October 1942.


Phones, faxes and satellites

New services

The post-war years witnessed a massive growth in telephone subscriber numbers, which more than tripled between 1950 and 1970 (from 271,935 to 835,325). They reached the half-million mark by 1959, and a million in 1976.

The late 1950s also saw new services, including the 111 emergency service number in 1958, the Yellow Pages in 1959 (to supplement the telephone directory, which first appeared in 1909), and self-dialling for toll calls in 1976. Computerisation further extended services. From 1980 SPC (Stored Programme Controlled) exchanges allowed three-way conference calls, putting calls on hold, and the diversion of calls.

Telegrams’ demise

From 1982 new higher-capacity optical-fibre wiring, in concert with SPC exchanges, let the network carry and switch ‘packets’ of data. It provided an early version of electronic mail and resulted in a rapid downturn in the use of telegrams. From 1986 pagers were also in regular business use.

Facsimile (fax) machines

The facsimile machine was first patented in 1843. Fax machines were used for specialist purposes such as transmission of newspaper photographs from the 1930s, but use was not widespread until the 1980s. The prior existence of the telegraph and teleprinter systems meant there was little demand for faxing, and the first machines available were slow and expensive.

When the development of digital imaging made it possible to send images quickly, and the cost of equipment dropped, use of fax machines expanded. Fax use declined in the 1990s, replaced by email, as use of desktop computers and printers became standard.

International cable and satellite links

From the 1950s and 1960s, overseas calling was easier. International submarine cables using improved technology were laid, notably the COMPAC (Commonwealth Pacific) system linking commonwealth countries.

These jointly owned cables and subsequent satellite access limited national control. They involved often complex negotiations with other countries and the International Telecommunications Union on how to share cable space, or (for satellites) the radio spectrum.

Satellite reception

 

In 1971 New Zealand’s first earth-based satellite station was opened at Warkworth. For the first time television newscasts could feature extensive overseas footage, and in turn, New Zealand sent footage – including of the 1974 Christchurch Commonwealth Games – overseas.

 

COMPAC was part-funded by New Zealand to meet surging demands for overseas telephone calls. Opened in 1962, it linked New Zealand with Australia and Fiji. It was extended to Canada in 1963, and South-East Asia (as SEACOM) in 1967.

First satellite links

The same decade saw the arrival of the first worldwide satellite links. These were in large part American-funded and overseen by the Washington-based International Telecommunications Satellite (INTELSAT) Organization. New Zealand joined INTELSAT in 1965, the same year satellite calls to the UK began.


Telecom

Corporatisation and breakup of the Post Office

In the 1980s pressure to change the management and regulation of New Zealand’s telecommunications system was increasing. The Post Office did achieve near-total subscriber coverage for automatic exchanges, and provided a solid digital platform. But business customers in particular wanted more sophisticated telephone services which were available internationally, and households were often frustrated by the time it took to get a telephone. The industry itself was driven by huge international corporations like GEC, Ericsson, Phillips, Siemens and NEC.

The economic theory prevailing at the time argued that a government department was not the best institution to foster efficiency or innovation. These ideas shaped the fourth Labour government’s 1987 decision to replace the New Zealand Post Office with three separate state-owned enterprises; New Zealand Post, Telecom New Zealand and Postbank were to be run as profit-driven businesses.

Hot under the collar

 

Delays in the installation of new telephones affected more than residential customers. In 1984 Treasury, at the forefront of the push for re-organisation of the Post Office, waited two months for existing telephone jacks to be shifted. Senior officials exchanged angry letters. Treasury argued that it was inefficiency, and the Post Office insisted it was pressure of work.

 

Telecom

Telecom introduced new services in the 1990s, which were already available overseas: telephone calling cards, 0800/0900 numbers, voicemail, and telebanking. Toll prices came down by 60% between 1987 and 1992. After 1987 anyone in New Zealand could wire up, repair or sell telecommunications equipment, though Telecom New Zealand maintained firm control over access to the network.

Privatising Telecom

In 1990 the government sold Telecom for $4.25 billion to a consortium consisting of two US companies (Ameritech and Bell Atlantic) and two New Zealand partners (Fay Richwhite Holdings and Freightways Holdings).

Public apprehension about the implications of private ownership were addressed by sale conditions that included retention of free local calling, nationwide rentals and price increases tied in to the Cost Price Index. Despite these constraints, in the five years to March 1992 Telecom’s annual profits grew from $69 million to $403 million. Contributing to this was a drastic reduction in staff. Numbers dropped from a peak of 25,000 in 1987 to under 8,000 by 1997.

Competition in telecommunications

By the early 2000s Telecom faced two very strong competitors, TelstraClear and Vodafone. Telecom’s control of the telecommunications network was being widely criticised by lobbies like the Telecommunications Users’ Association of New Zealand and Internet New Zealand.

They pointed to the high prices, the Telecom–Vodafone duopoly in the retail mobile phone market, and limited mobile internet coverage. They cited International Telecommunications Union statistics showing low per-capita telecommunications investment in New Zealand (41st out of 42 developed nations). The country also had a low OECD ranking in broadband uptake (22nd out of 30 in 2005). They noted low download speeds, and high prices for (not very) high-speed internet.

Responding to these criticisms, government passed legislation in 2006 requiring local loop unbundling (LLU). LLU meant that the local telecommunications network – the telephone lines and exchanges, sometimes known as the local loop – were opened to rival companies. They could operate their own equipment within Telecom exchanges or in special ‘cabinets’ nearby, and set their own internet speeds. As part of this re-regulation of New Zealand telecommunications, Telecom’s network services, retail, and wholesale operations became three separate entities.


Mobile phones

Digital mobile phones

In the 1990s and 2000s digital telecommunication devices became widely available. Mobile telephones, the smallest and cheapest of the new devices, were rapidly taken up and became standard.

Mobile phones were first available in the 1980s. Expensive and relatively large, the phones were nicknamed ‘the brick’, and used by a small minority. With the introduction of smaller, reasonably priced, digital mobile phones in the 1990s, use became commonplace. The price and size of mobile phones continued to drop and use increased.

Texting

The introduction of the short message service (SMS), or texting, in 1998 prompted an explosion in the rate of use. By 2001, 58.3% of households had a mobile phone, up from 21.3% in 1998. Cellphone numbers more than doubled, from some 200,000 to 500,000. By 2006 Vodafone, a British cellphone giant, had 2 million mobile customers in New Zealand, and Telecom had 1.8 million.

Although the introduction of texting had a similar effect in other countries, New Zealanders are particularly prolific texters. In 2008 over half a billion texts per month were sent. For some New Zealanders, their mobile phone is primarily a texting device.

Cone of silence

 

With growing use of mobile phones the public payphone became increasingly rare, but the cone of silence used on 1960s American comedy series Get Smart made a comeback. Used at Auckland’s Big Day Out concert in 2009 the new ‘hush cones’ were shaped like a curved pod. Within them, mobile phone users talked in relative peace despite surrounding noise.

 

Mobile phone use

In 2006, 80% of New Zealanders used a mobile phone. In 2009, there were more mobile connections than there were people in New Zealand. Although some people remain content with a landline phone, increasingly communication is digital.

From the early 2000s mobile-phone capabilities broadened considerably. Many New Zealanders used their phone to play games, receive television, exchange emails, and take and send photographs and videos. GPS navigation and MP3 audio player applications were commonplace. Texting and talking remained the primary use for mobile phones.


Internet

Internet use in New Zealand

From the late 1990s internet use in New Zealand expanded rapidly. Smaller, nimbler internet service providers like Ihug, Actrix, Econet and others proved popular. By 2006, 56% of New Zealand households had internet access. But individual subscribers’ non-work access to high-speed broadband internet remained comparatively low – 14% of the population, 22nd amongst OECD countries.

In 2009 the government announced a $1.5 billion fund to accelerate New Zealand’s broadband uptake over the next ten years.

With access to the internet came email. By 2001, 87% of businesses were using email, use within government was standard, and amongst individuals email was increasingly replacing the postal service.

Internet opportunities

New Zealand is isolated and the internet provided opportunities for businesses to advertise via websites and search for information about other markets. Researchers of all types benefited from quick access to texts, archives and professional contact.

VOiP (Voice over Internet Protocols) allowed much cheaper international phone calls through sites like Skype. Improving internet software and hardware allowed ready downloading of video and music.

Goods and services were sold over the internet. The online-auction site Trade Me was a particularly successful internet business. Started in 1999, Trade Me was sold in 2006 to Fairfax Media for $750 million. By then it was generating over 60% of all web traffic originating in New Zealand.

Social networking

By 2009 the internet was becoming increasingly interactive. Social networking sites have been widely used in New Zealand: in the 2008 election political parties exploited the increased scope for networking and fundraising on the net. Online banking was commonplace and business services like accounting were often completely internet-based.

Internet perils

Traditional media, particularly newspapers, lost advertising revenue and readers to the internet in New Zealand from the early 2000s. An exception was the Southland Times, which provided intense local coverage and increased sales. Along with alternative sources of news and entertainment, many people found music and videos on the net. Illegal downloading became a widespread problem.

New Zealand’s laws have been amended but have not always kept pace with more serious problems on the internet like invasion of privacy, crimes against minors, the circulation of pornography or the use of viruses and ‘spyware’ against corporations or individuals. But people have been prosecuted for internet crimes.

InternetNZ

The Internet Society of New Zealand (InternetNZ) was set up as a lobby group. It aimed to prevent the web’s capture by corporate interests and to provide representation on international internet-monitoring bodies. It also oversaw the registering of all New Zealand websites via the Domain Name Commission.


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How to cite this page: A. C. Wilson, 'Telecommunications', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/mi/telecommunications/print (accessed 24 March 2019)

Story by A. C. Wilson, published 11 Mar 2010