Swisscom

Swisscom AG

Type	Aktiengesellschaft
Traded as	SIX: SCMN
Industry	Telecommunications
Founded	1 January 1998 (1998-01-01) (Bern, Switzerland)
Headquarters	Worblaufen, Switzerland
Key people	Urs Schaeppi (CEO), Hansueli Loosli (Chairman)
Products	Fixedline & Mobile Telephony Fixedline & Mobile Internet Digital Television IT Services & Networking Solutions
Revenue	CHF 11.678 billion (2015)[1]
Operating income	CHF 2.012 billion (2015)[1]
Profit	CHF 1.362 billion (2015)[1]
Total assets	CHF 20.932 billion (end 2014)[2]
Total equity	CHF 5.242 billion (end 2015)
Owner	Swiss Government
Number of employees	21.637 (FTE, end 2015)[1]
Website	www.swisscom.ch

Swisscom AG is a major telecommunications provider in Switzerland.^[3] Its headquarters are located at Worblaufen near Bern.^[4] The Swiss Confederation owns 51.0 percent of Swisscom AG.^[5] As of the end of 2015, Swisscom had around 21,000 employees and generated revenues of CHF 11,678 billions.^[6]

The Swiss telegraph network was first set up in 1852, followed by telephones in 1877. The two networks were combined with the postal service in 1920 to form the PTT (Postal Telegraph and Telephone). It struggled to develop a homegrown digital network, with the first digital exchange launched in 1986, but pioneered the NATEL A mobile service in 1978 and the GSM-based NATEL D offering a digital service in 1993. The Swiss telecommunications market was deregulated in 1997. Telecom PTT was spun off and rebranded Swisscom ahead of a partial privatisation in 1998 which has left the Swiss government with a 51% stake.

25% of Swisscom Mobile was sold to Vodafone in 2001. Since then Swisscom has bought a majority stake in Italy's second-biggest telecoms company Fastweb and invested in areas such as hospitality support, cloud services, mobile solutions and billing.

History

Pioneers (1852-1911)

Switzerland's entry into the telecommunications era came in 1851, with the passage of legislation giving the Swiss government control over development of a telegraph network throughout the country. The government's initial plans called for the creation of three primary telegraph lines, as well as a number of secondary networks. In order to build equipment for the system, the government established the Atelier Fédéral de Construction des Télégraphs (Federal Workshop for the Construction of Telegraphs).

In July 1852, the first leg of the country's telegraph system—between St. Gallen and Zurich—was operational. By the end of that year, most of the country's main cities had been connected to the telegraph system. In 1855, the network was extended with the first underwater cable, connecting Winkel-Stansstad and Bauen-Flüelen. Night service was also launched that year, starting in Basel, St. Gallen, and Bellinzona.

Telegraph traffic took off in the late 1860s after the government reduced the cost of a 20-word message in 1867. While telegraph traffic continued to rise in the following decade, that technology was soon to be replaced by the telephone.

Switzerland's entry into the telephone age came in 1877, when the first experimental phone lines appeared, starting with a line linking the post office building with the Federal Palace and then with a link, using the existing telegraph line, between Bern and Thun. The following year, the government passed legislation establishing a monopoly on the country's telephone network. Nonetheless, private operators were allowed to bid for licenses in order to develop their local concessions. By 1880, Switzerland's first private network had been created in Zurich. This was a central system with the capacity for 200 lines. The first directory was also published that year and listed 140 subscribers.

Basel, Bern, and Geneva all debuted their own local networks between 1881 and 1882. One year later, the first inter-city telephone line was established, linking Zurich's private exchange with Winterthur's public system. Yet the Zurich company ran into difficulties by the mid-1880s. With its development falling behind the telephone concessions elsewhere in the country, the federal government bought out the private operator, paying just over CHF 300,000 in 1886.

The national telephone network continued to expand. Telephone numbers were introduced in 1890, replacing the initial system whereby callers had been able to ask for their party by name. The number of Switzerland's telephone subscribers steadily grew, particularly after the inauguration of a new telephone central capable of handling nearly 4,000 lines.

By 1896, Switzerland's telephone network had been extended to include all of Switzerland's cantons. By 1900, the country had also established its first international connection, between Basel and Stuttgart, Germany. Switzerland began testing its first public phone booths in 1904. Initially restricted to local calls, the public telephones allowed national calling for the first time in 1907.^[7]

Telephony takes off (1912-1965)

The first automatic telephone exchanges were installed by private networks in 1912. By 1917, a semi-automatic exchange had been installed, in Zurich-Hottingen. The following year, in order to extend the country's phone system into rural parts of Switzerland, the government began promoting the establishment of party-line systems.

In 1920, the Swiss government created the Swiss PTT, combining the country's postal services and telegraph and telephone systems into a single, government-controlled entity. Development of the country's telephone system now came entirely under the purview of the government. In 1921, the PTT launched its own directory inquiries service. The following year, the PTT debuted the first fully automatic public telephone exchange, in Zurich-Hottingen.

The PTT began telex services in 1934, and by 1936 had linked up the cities of Zurich, Basel, and Bern, which were then linked via Zurich to the international market. In the meantime, the PTT also became responsible for developing the company's radio broadcasting, and, later, television broadcasting services.

Switzerland's telephone system took off in the years following World War II. By 1948, the country boasted 500,000 telephone subscribers. Over the following decade, that number doubled. In 1957, the PTT added computer capacity in order to handle billing for its fast-growing network. Through this period, the state-owned organisation had continued to invest in automating its telephone network, and in 1959 Switzerland became the first country to feature a fully automated telephone exchange system.^[7]

Space-age communications (1966-1981)

Telstar – the first telecommunications satellite – was launched into space in 1962. At Expo 1964 in Lausanne, the first exchange to permit international direct dialing was unveiled. In 1974, the Leuk satellite earth station went into operation in the canton of Wallis.

Moving towards mobile in the 1980s

Automation enabled the PTT to introduce pulse-metering for local calls in 1963, priced at 10 centimes per pulse. In 1966, the PTT introduced automated international dialing services, initially from Montreux. International direct dialing was rolled out to the rest of the country over the following decade, achieving full coverage in 1982.

As the PTT's subscriber base topped two million at the beginning of the 1970s, the country introduced a new, seven-digit phone numbering system. By then, the PTT was also becoming interested in a number of new technologies. In 1970, the PTT led a workgroup, including a number of prominent Swiss telecommunications players, in an effort to create an integrated digital telecommunications network (IFS). Originally intended to be rolled out by the middle that decade, the first IFS exchange did not become operational until 1986.

Other technologies proved more accessible to the PTT. In 1976, the company debuted facsimile transmission services from its customer service centers. Two years later, the PTT established its first mobile telephone network, called NATEL (for Nationales Autotelefonnetz). Although rudimentary—with calls limited to just three minutes, coverage restricted to five, unlinked local networks, and often difficult-to-establish connections—the NATEL network marked one of the earliest and most successful attempts at making telephony mobile.

In 1980, the PTT enabled facsimile transmission for the home and office market. By then, its subscriber base had risen to nearly three million fixed-line users. In 1983, the PTT launched its next-generation mobile network, NATEL B, which, among other enhancements, reduced the size of mobile telephone equipment to a 25-pound unit that fit in its own carrying case. In 1985, the first fibre-optic cable was laid between Berne and Neuchâtel.

Other new technologies appeared in the mid-1980s, including the Telepac data transmission network, rolled out in 1983, and the first videoconferencing services, launched in 1985. In 1987, the PTT upgraded the NATEL network again. The NATEL C network provided more extensive coverage, digitally transmitted sound, and smaller telephone sizes. The new network permitted mobile telephony to take off in Switzerland, and by 1992 the country had some 200,000 subscribers on the NATEL network.

In the 1990s, the PTT faced the loss of its telecommunications monopoly. As a run-up to the coming deregulation of the telecommunications market, the PTT put into place a new corporate strategy, separating its postal and telecommunications operations into two focused units. The telecommunications business became known as Swiss Telecom PTT. New telecommunications legislation was passed in 1992 that stripped away the government's monopoly status, starting with the equipment sector and digital data communications services, although maintaining the company's de facto hold on the local telephone market for most of the remainder of the decade.

As part of its repositioning, Telecom PTT invested more heavily in mobile telephony business, launching the new GSM-based NATEL D network in 1992. That network, which also provided customers with compatibility throughout most of Europe, marked the start of a new era for the telephone market as callers adopted the new technology. By then end of the 1990s, nearly two million customers had connected to the NATEL D network.^[7]

Public company in the 21st Century

One of the smallest of the European telecommunications companies, Telecom PTT began to seek international growth, forming the short-lived Unisource partnership with the Netherlands' KPN and Sweden's Telia. Unisource attempted to enter a number of markets around the world, including Malaysia and India, but finally collapsed after years of losses.

A more successful expansion effort came with Telecom PTT's entry into the Internet, as the company set up service provider Blue Window (later Bluewin), which became the country's leading Internet service provider (ISP). The company had also introduced digital ISDN subscriber services, building up its subscriber base from 250,000 in 1996 to more than two million by 2003.

In 1997, the Swiss government passed new legislation fully deregulating the Swiss telecommunications market. As part of that move, Telecom PTT was spun off as a special public limited company. Telecom PTT then changed its name to Swisscom on 1 October 1997 and prepared a full public offering for 1998. However, even though it was listed on the Swiss Stock Exchange, Swisscom remained majority controlled by the Swiss government. Also in 1998, Swisscom faced competition at home for the first time, as a new player, Diax (which changed its name to Sunrise) entered the mobile telephone market. Competition for the Swiss mobile market heated up in 2000 with the arrival of France Telecom-dominated Orange. Nonetheless, Swisscom held onto it leading position among mobile users.

By then, Swisscom had also made its own international moves. In 1999, the company acquired Germany's publicly listed Debitel, the third-largest mobile services provider in that country, which also had operations in France, the Netherlands, Slovenia, and Denmark. Debitel quickly became the leading network-independent mobile services provider in Europe, with a base of more than ten million subscribers. Swisscom rapidly built up its holding in Debitel, which stood at 93 percent in 2003.

Swisscom had restructured its own operations in advance of planned public offerings of both Bluewin and Swisscom Mobile. The company now split up into six primary business units, then sold a 25 percent stake in Swisscom Mobile to England's Vodafone in 2001. The linkup with Vodafone, a major investor in so-called 3G (third-generation) mobile telephone technology, coincided with Swisscom's winning of a UMTS (Universal Mobile Telecommunications Systems) license in 2000. While others, including Vodafone, paid billions for their UMTS licenses, Swisscom paid just CHF 50 million, which softened the blow on the company when the bottom dropped out of the UMTS market soon after.

Swisscom began rolling out new DSL (digital subscriber line) broadband technology in the early 2000s, rapidly building up a base of some 200,000 subscribers by the beginning of 2003. With respect to its heavily indebted and unprofitable European competitors, the company now found itself in the enviable position of holding a war chest of between CHF 5 billion and CHF 10 billion for possible acquisitions.

These funds enabled the company to target the growing wireless "hotspot" market—that is, areas providing wireless network access. The company, which formed its WLAN operations under a new subsidiary, Swisscom Eurospot, began further expansion in May 2003 when it acquired the Netherland's Aervik, which operated some ten hotspots and had access to another 45 sites. By the end of that month, Swisscom took a giant step forward on the European WiFi scene by acquiring England's Megabeam and Germany's WLAN AG. Those purchases gave the company 206 hotspots in Germany and Switzerland as well as the third-largest hotspot network in the United Kingdom.^[7]

Modern times

The former state-owned PTT (Post, Telegraph, Telephone, founded 1852) was privatised in stages from 1988 onwards and became a public limited company with special legal status in October 1998.^[8] The Swiss Confederation currently holds 51.0% of the share capital.^[8] The Telecommunications Enterprise Act limits outside participation to 49.9% of the share capital.^[9]

In its 5 April 2006 message, the Federal Council proposed to Parliament that Swisscom should be completely privatised and that the Swiss Confederation should sell its shares in stages. On 10 May 2006, the National Council declined to support the proposal. On 20 May 2006 the Advisory Committee of the Council of States advised the Council of States to endorse the proposal – but only so that it could be referred back to the Federal Council for revision.

Swisscom announced its new visual identity on 14 December 2007.^[10] The previous sub-brands of Swisscom Fixnet, Swisscom Mobile and Swisscom Solutions ceased to exist on 1 January 2008.^[11]

On 23 July 2013 the CEO of Swisscom, Carsten Schloter was found dead from an apparent suicide and Urs Schaeppi was appointed interim CEO.^[12] Since November 2013, Schaeppi has been the CEO of Swisscom.^[13]

Organisation

Switzerland

Swisscom (Switzerland) Ltd underwent a reorganisation on 1 January 2008. The subsidiary companies Fixnet, Mobile and Solutions were dissolved and were eventually replaced by Residential Customers, Small and Medium-Sized Enterprises, Enterprise Customers, Wholesale as well as the IT, Network & Innovation segments.^[14] The IT platforms together with the fixed-network and mobile communications infrastructures of the former Group companies were merged into the “IT, Network & Innovation” Division.

Currently, Swisscom operations are performed via three operating divisions,^[15] Swisscom Switzerland, Fastweb, and Other operating segments. Swisscom Switzerland is divided into the following segments: Residential Customers, Small and Medium-Sized Enterprises, Enterprise Customers, Wholesale and IT, Network & Innovation.^[15]

Swisscom Network & IT builds, operates and maintains Swisscom's nationwide fixed-line and mobile communications infrastructure in Switzerland.^[15] The division is also responsible for the corresponding IT platforms and is in charge of migrating the networks to an integrated IT and IP-based platform (All-IP).^[15]

In the first half of 2007, Swisscom acquired a majority holding in the Italian company FASTWEB. During the offer period, which ran from 10 April to 15 May 2007, Swisscom acquired 80.7% of FASTWEB's share capital, which, when added to Swisscom's existing stake, meant that Swisscom owned 82.4% of FASTWEB shares by the cut-off date of 22 May. The total transaction amounted to EUR 4.2 billion or CHF 6.9 billion.^[16] FASTWEB currently operates the second largest network in Italy.^[15]

Investments

The participation portfolio covers the five business fields of "broadcasting" through Swisscom Broadcast, "network construction and maintenance" through Cablex, "Building management and business travel (incl. vehicle fleet management)" through Swisscom Real Estate Ltd, "Billing and collection" through Billag, Alphapay and Medipa Abrechnungskasse, and "Mobile Solutions" through Minick Holding and Sicap.^[17]

International Carrier Services

On 26 June 2009, MTN Group and Belgacom, merged their International Carrier Services MTN ICS and Belgacom ICS (BICS). BICS will function as official international gateway for all international carrier services of Belgacom, Swisscom, and MTN Group.^[18] These companies respectively hold 57.6%, 22.4% and 20.0% of the shares of the company.^[18]

Internet of Things (IoT)

The Company started testing a network for the Internet of Things, or Low-Power Wide Area Network (LPWAN), in the Geneva and Zurich regions in April 2015.^[19] The pilot project serves as an addition to the existing M2M mobile network solutions, and it has been estimated that by the year 2023 over 3 billion connections will be running via the IoT.^[20]

Business areas and services

coComment

In February 2006, Swisscom launched the Web 2.0 website coComment,^[21] which allows users to track any discussion online.^[22]

Hospitality Services

Swisscom Hospitality Services (SHS) is a division of Swisscom AG that supports the hotel industry with network and communication solutions.^[15]

SHS services Hyatt, Rezidor, IHG, Marriott, Hilton Worldwide, Accor, Mandarin Oriental,^[23] and other large hotel groups across North America, Europe, the Middle East and Asia-Pacific.^[24]

Founded in 2002 as Swisscom Eurospot, the company originally specialised in providing High-Speed Internet Access (HSIA) services to hotel guests in European 4- and 5-star hotels.^[25] With the rising complexity of information and communication technology and increasing cost pressures affecting the hotel business, SHS expanded their range of applications including Voice over IP, Hotel TV, High-speed Internet and tablet-based room controls that are offered through a converged hotel network infrastructure.^[25]

In 2012, the company introduced a Managed Network Services offering specifically for its hotel customers.^[26]

In June 2015, Swisscom Hospitality Services became part of a new company, Hoist Group, following its acquisition by the Sweden-based HoistLocatel.^[27] Hoist Group develops and supplies systems, products and services to independent hotels and hotel chains, hospitals and public venues in Europe and the Middle East.^[28]

Cloud and data centers

In 2013, Swisscom announced its plan to build a cloud service based in Switzerland which would adhere to the strict privacy laws of Switzerland. The data would be stored within Switzerland's borders but would allow users global access. This would protect individuals and businesses from foreign authorities and less stringent foreign data privacy laws.^[29] Swisscom's main focus is on Swiss-based clients, especially banking clients, but it also targets foreign-based clients who are interested in seeking data privacy from abroad.

Individuals in Switzerland can utilize "Docsafe", a cloud storage solution promising optimum security for documents.^[30] The documents can be uploaded and accessed via the web or an app and are free-of-charge with unlimited storage space. Swisscom's cloud service is comparable to the cloud service of Dropbox but without a desktop client.

For developers Swisscom offers container-based Platform-as-a-Service (Cloud Foundry) called Swisscom Application Cloud public.

New business fields

Swisscom considers infrastructure as the basis of its products and services.^[31] Due to increasingly competitive global conditions, the company's current strategy involves adapting to these new conditions by developing business models and by further developing its Natel infinity pricing plans, in order to ensure a sustained source of revenue.^[31] Therefore, the company's national and international offerings are to be based on a high-speed cloud infrastructure.^[31] Vertical solutions offer growth opportunities for Swisscom in the banking, healthcare and energy sectors.^[31] Recent examples in these fields include the testing of driver-less cars,^[32] exploring the opportunities in the healthcare market, striving to make intelligent power networks, and forming a partnership with Coop in the area of e-commerce.^[33]

Corporate Responsibility

Complying with the recommendations of the Swiss Code of Best Practice for Corporate Governance 2014 issued by economiesuisse and meeting the requirements of the Ordinance Against Excessive Compensation in Listed Stock Companies, Swisscom is practices effective and transparent corporate governance.^[34] At present, Swisscom's corporate responsibility strategy involves fostering long-standing partnerships in the areas of climate and environmental protection, sustainable living and working, social responsibility and media expertise.^[35] Swisscom was ranked 20th in the recent list of the Global 100 Most Sustainable Corporations in the World.^[36]

Competition

Other big telecom companies competing in the mobile business are Salt and Sunrise Communications AG. For the 6th consecutive year, "Connect" magazine named Swisscom the winner of its yearly network test by comparing telephone and data services of the three largest providers in 2015.^[37]

Connect network test

In the category "phone network", Sunrise came out top with Swisscom in second place due to their slower connection time for telephone calls.^[37]

In the category "data network", the success rate for the connection to the internet for all three networks are close to 100%. Swisscom provides the fastest download and upload data rate, even in less urban areas.

As such, Connect magazine awarded Swisscom the prize of "Best Network". However, the gap between Swisscom and the two other companies has shrunk significantly since 2012. The test also showed big improvements in services for all companies involved.^[38]

References

External links

• Official website
• www.bics.com
• Swisscom in German, French and Italian in the online Historical Dictionary of Switzerland.