Deutsche Bundespost Telekom

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Deutsche Bundespost Telekom

Godesberger Allee 117,
5300, Bonn 2
Federal Republic of Germany
(228) 1-81-0
Fax: (228) 18188

State-Owned Company
Incorporated: 1989
Employees: 260,000
Sales: DM40.59 billion (US$26.79 billion)

Deutsche Bundespost Telekom (DBP TELEKOM), the German state near-monopoly responsible for telecommunications, was formed in 1989 when Germany’s post and telecommunications company, Deutsche Bundespost, was divided into three separate companies, each with its own board of management and separate accounts. Chancellor Kohl’s Christian Democrat-dominated government had begun to explore the possibility of privatization in the late 1980s, but had encountered strong opposition and had had to settle for a reform law that split the company into three separate companies: DBP Postdienst (postal services), DBP Postbank (bank services), and DBP TELEKOM (telecommunications).

Some observers noted that the reform, aimed at making the companies more independent and efficient, would make any future privatization easier. By late 1991 the enormous financial costs of updating the former East German telephone system and absorbing it into the Bundespost caused many opposition politicians to drop their objections. Privatization legislation of all or part of the business began to look likely.

Although the 1989 legislation had opened the door to some competition and limited DBP TELEKOM’s monopoly to some key areas, DBP TELEKOM remained the dominant force in German telecommunications. Even with privatization, it would take some years to diminish the influence of Deutsche Bundespost’s companies.

The former Bundespost’s single postal and telecommunications monopoly, increasingly anachronistic in today’s competition-oriented European Community, is somewhat surprising because Germany’s postal system has historically been run on a more profit-oriented, and less of a public service, model than that found in other state systems. This emphasis on profits can be traced back to the Bundespost’s 15th century origins in the international private enterprises of the Thurn und Taxis family and the revenue-producing post offices of the German princely states.

The Thurn und Taxis postal system lasted for 400 years, almost until the proclamation of the German Empire in January 1871. The family not only started one of the world’s first postal systems, but also provided a basis for German unification in 1871. Heinrich von Stephan, the first Postmaster of the German Empire, emphasized this fact at a tribute delivered in Frankfurt in 1895: “The House of Taxis should be praised because for a long time it formed a unity in the midst of a mosaic-like state complex; it understood how to maintain old Germany in the course of frequently trying situations and even when there was great chaos in state and legal relationships.”

Roger de Tassis—the original, Italian form of the name Taxis—began a service delivering baronial correspondence in 1440 in the central part of the Holy Roman Empire—present-day Bavaria, Austria, and Northern Italy. History has it that Maximilian I, the Holy Roman Emperor, commissioned Janetto and Francesco de Tassis to operate an imperial dispatch service in 1490. Francesco changed his name to the more German-sounding Franz Taxis and used his excellent relations with Emperor Charles V to secure postal privileges to Aragon and Naples in 1516.

This monopoly was restricted to official letters and documents, but the Taxis family began to ignore this restriction and carry letters on behalf of the private merchants of Germany. Soon the restriction was modified to allow the general public to use the Taxis postal system, but at higher rates than those charged to royalty. The Taxis family insisted on a high level of profitability. Its networks extended throughout the German states, the Netherlands, Austria, and France. Relay stations were set up for the fast changing of horses and the reduction of carrying times.

The Thurn und Taxis system slowly declined with the decay of the authority of the Holy Roman Emperor and the rise of Prussia and the other independent German states in the 18th century. The Treaty of Luneville in 1801 gave France postal rights in the Netherlands and on the left bank of the Rhine, but the Thurn und Taxis family secured an agreement with France, giving the family the right to handle all German mail destined for France or Spain. Prussia chose to ignore this agreement and operated its own postal system.

Wurtemburg, Bavaria, Baden, Brunswick, Hanover, Saxony, Oldenburg, and Mecklenburg also developed their own systems but still depended on the Thurn und Taxis system for international services. Thurn und Taxis had handled the postal affairs for allied armies involved in the crusade against Napoleon’s Grande Armée in 1815, and continued to rely upon the networks established during that period.

Although the Thurn und Taxis system originated as an imperial monopoly, it remained efficient and profitable, even in its last years. In May 1851, Thurn und Taxis had little choice but to enter the German-Austrian postal unions founded a year earlier. By 1866, Prussian territorial annexations following the Austro-Prussian War of 1866 had, in effect, put almost all of the German lands served by the system under Prussian control. The last “postal” Prince of the House of Thurn und Taxis, Maximilian Karl, negotiated the sale of the family business assets to Prussia and the last of its 500 post offices disappeared.

The penny post stamp originated in England in 1839. The idea behind it was to streamline post office administration by charging a single unified rate for the entire country, rather than a series of rates based on distances. However, the first German postal authority to use the penny post, Bavaria, did not follow suit until 1849. It was followed by Saxony, Prussia, and finally Thurn und Taxis on January 1, 1852. The concept worried German officials because it was feared that the penny post would not be profitable.

The German states had followed Thurn und Taxis in viewing the post office as a profit-making endeavor. For Prussia and other states, high postal rates were an important source of government revenue. Disagreements about lower rate scheduling became the principal non-political barrier to German postal unification after Austria began the process with a series of proposals to Bavaria, Baden, Saxony, and Thurn und Taxis. The process of postal unification began in April 1847, when the Prussian Postal Chief Schaper and the Austrian Hofkammer-President—president of the Imperial Chamber of the Austrian Empire—Baron von Kuebeck jointly called for a postal union and announced a conference of all German postal systems. The conference was held at Dresden in October 1847 but the delegates failed to agree.

On April 6, 1850 Austria, Prussia, and Bavaria formed the German-Austrian postal union. With few exceptions, all German states had joined by the time of the first postal union conference in Berlin on October 15, 1851. Five more conferences gradually reduced the differences in stamp pricing and revenue distribution between the states.

In 1866 a unified postal system, the North German Postal Confederation, was formed after Prussian victories in the war against Austria. Essentially, Prussia’s large and efficient system absorbed those of the smaller states and formed the basis of the Deutsche Reichspost that came into being shortly after the proclamation of the unified German Empire in January 1871. The new national post office quickly absorbed the post offices of Baden, Hesse-Darmstadt, and newly-conquered Alsace-Lorraine. Bavaria and Wurtemburg, by special arrangement, retained their own separate post offices and stamps within the empire, right up to the formation of the Weimar Republic in 1919.

The first postmaster of the German Empire, Heinrich von Stephan, modernized and unified the new national system. He also introduced the newly-invented telephone to Germany and put it under Bundespost regulation and control. By 1880 Germany had 16,000 subscribers. Von Stephan was also a founder of the Universal Postal Union in 1874.

After World War I, the Bundespost had to adjust to the difficult economic circumstances engendered by the Treaty of Versailles. The famous “wheelbarrow” inflation of that period, in which raging daily price increases supposedly required a wheelbarrow full of German marks to pay for a loaf of bread, also affected postage rates badly. In 1913 one U.S. dollar was equal to about four marks. By November 1923, it took 4.2 trillion marks to buy one U.S. dollar. High denomination stamps of the period are now valued by collectors as “the inflation issue.” During the inflation period of 1922#x2013;1924, about 125 different values of stamps had to be brought into use, with the highest being an amazing 50 billion marks. Prior to 1919, the German Empire had had no stamp of a value higher than 5 marks.

The Weimar government began the first of a series of attempts that have continued to this day, to find a structure that would allow the Bundespost a measure of independence as a profit-making organization. In 1924, laws were passed allowing the Bundespost a considerable degree of financial autonomy from government control. The Bundespost was specifically asked to conduct its business in a semicommercial manner, but the success of this reform was restricted, as always, by interference from politicians and trade unions.

After Adolf Hitler came to power in January 1933, the Post Office became, like other German government bodies, an instrument of the Nazi totalitarian state. Officials were forced to cooperate with the demands of Heinrich Himmler’s Gestapo and the minister of propaganda, Joseph Goebbels. Letters and telephone calls were routinely intercepted and used to identify Jews and dissidents. On the positive side, the Bundespost helped pioneer air mail services during the 1920s and 1930s. Limited airmail services were available from 1909 and the first air mail stamps were sold from 1919.

Up to the famous Hindenburg disaster in 1937, the Bundespost cooperated with the Zeppelin company in experiments to develop a transatlantic air service to both North and South America. Special stamps were issued by German and foreign post offices, but international services were limited to a relative few per year and were irregular.

At the same time Lufthansa, the German propeller aircraft airline, and the Bundespost began to develop a regular airmail service to South America. Mail from Germany and seven other European countries was flown from Berlin via Stuttgart, Marseilles, Barcelona, Seville, and the Canary Islands to Gambia on the West Coast of Africa. A seaplane than carried the post to a catapult ship out at sea, where it was refuelled and sent on across the South Atlantic to Natal, Brazil. Total transit time was reduced from an original three weeks to four days. By 1939, a weekly service was carrying 90,000 items of mail per flight before the outbreak of World War II brought it to an end.

Although Bundespost services continued to function right up to Allied occupation in all areas of Germany, the service was in chaos by the time of Germany’s surrender on May 7, 1945. Of the 3,420 buildings the Bundespost had owned before the war, 1,483 had been completely destroyed or damaged. Many of its former personnel were dead, wounded, or had been conscripted into the German armed services. Those who had survived were likely to be detained by the Allies as prisoners of war. Local services had been maintained by using women, old men, and young boys as carriers. Telephone lines were cut. Rail and road networks and mail vehicles had been destroyed by bombing between 1940 and 1945, and during the fighting within Germany before its surrender.

As U.S., British, and Soviet forces assumed control, they also took over postal and telephone services. Wherever possible, they used existing facilities and personnel. They used their own stamps printed in their home countries. By February 1946, special stamps marked “Deutsche Post” were issued, valid for use in these three now officially demarcated zones of occupation. Within the French occupation zone, letters were simply handstamped until 1947, when the French administration began to issue its own postage stamps.

Between 1945 and 1947, political rifts and eventually the Cold War broke out between the Western allies and the Soviet Union. In 1947 the British and American occupation zones were merged for economic purposes, and administration began to be handed back to the Germans. The Soviets’ refusal to participate in the currency reforms of June 1948 and the Berlin blockade meant that a unified postal structure for all occupation zones was doomed. Postal services in the eastern part of Germany were turned over to the new East German state established by the Soviets in 1949, and not integrated into the German communications system until reunification in 1990.

An elected Parliamentary council from all three western zones met at Bonn on September 1, 1948 to draw up the West German constitution or “Basic Law.” In April 1949, United States, British, and French governments published a new occupation statute guaranteeing full powers of self-government to the new West German state. The Bundespost was reborn as a state body under the control of a cabinet ministry and assumed control over posts, telephones, and telegraphs in the new Federal Republic of Germany. The new constitution specifically forbade the privatization of posts and telecommunications.

During the 1950s the Bundespost had to rebuild its communications network. Much of prewar Germany’s communications had centered on east-west communication networks between Berlin and western industrial cities. The new West Germany was a long, narrow country in which many lines of communication now ran north-south. West Berlin had become an isolated city in an alien country. After the war, the division into different occupation zones had also fragmented communications and delayed the formation of an integrated network.

Hundreds of post office buildings had to be built or rebuilt. The reconstruction of the telephone service was accomplished by the end of 1951, but installation of new private telephones was slow. By 1952, there were still only 5 telephones per 100 inhabitants in Germany, compared to 28 and 11 per 100 inhabitants in the United States and Britain respectively. All German subscribers could be listed in just three volumes. By the 1960s, however, German telephone subscribership was on a par with other industrial countries. In 1947 a teletype network was put into operation and began to replace telegraphs. By the mid-1950s, Germany already had more teletype subscribers than any country in Europe.

As postwar Germany’s prosperity rose, the demand for other post office services grew. A Post Office Savings Bank had been started before World War II on January 1, 1939, but public confidence was badly shaken because the system formerly had been located in Vienna, and Austria was separated from Germany after the war. Records were scattered and lost, and many were shocked when savings were lost through currency reform. But soon deposits soared as the economy boomed, and Germans regained their reputation as savers.

By the 1960s, Germany’s communications network had been fully restored. Air mail services had been resumed by 1961. In 1965 the Bundespost announced that all letters would be sent by air without extra charge if they could reach their destinations more quickly than by land. The Bundespost invested in satellite communications, and new transatlantic self-dialing facilities from Bonn, Frankfurt, and Munich became available in 1970. Bundespost described itself as “Europe’s largest service company”.

Nevertheless, many business and consumer groups continued to criticize the post office monopoly for inefficiency. A 1970 law formally stated that the monopoly had been effectively superseded by a reservation that prevented the establishment of a rival undertaking, but little changed.

In 1973 a further reform, the Postal Organization Act, limited government intervention in the Bundespost “only to what is politically necessary and to facilitate post office management.” Under the new structure, the Bundespost would be headed by an executive committee assisted by a supervisory council. The committee would, however, remain responsible to the government.

German business continued to complain that the Bundespost’s telecommunications system was relatively unsophisticated and expensive. With telecommunications products expected to constitute more than 7% of the European Community’s gross national product by the year 2000, these critics alleged that German manufacturers would be disadvantaged by a backward home market. Claiming that the 1970 and 1973 reforms had been failures, they urged the break-up and privatization of the Bundespost.

However, several powerful interest groups opposed change: the Social Democratic Party, a left-wing postal union, the Deutsche Postgewerkschaft, the Bavarian State Government, and large contract suppliers to the Bundespost, including the German electronic giant Siemens. All feared the loss of jobs and disappearance of preferential treatment under a more competitive system. As civil servants, the Bundespost’s employees have considerable job security.

Pressures from both the European Community (EC) and the United States, however, finally forced Bonn to establish the Witte Commission in 1985 to make recommendations about the future of the Bundespost. When the report finally appeared in September 1987, four of the twelve people on the commission condemned it for not going far enough, while two others claimed it went too far. The proposals, slightly altered, became the basis of the latest legal changes to the Bundespost and became law in July 1989. The Witte Commission recommended the opening of the telecommunications equipment and services market to outside bidders. This change was likely, in any event, to be required by EC competition law. The Bundespost was, however, allowed to continue operating in all its present fields. The basic telephone monopoly, which earns 90% of the Bundespost’s telecommunications income, would be retained, but some competition would be allowed in radio paging, mobile telephones, modems, videotext, and some satellite systems.

The commission also recommended that the Bundespost be divided into three businesses: Telekom, Postdienst, and Post-bank, with a minimal level of political interference above the level of their respective management boards. But when it passed the reform legislation the Bundestag added a common directorate between the three businesses and limited a proposal for incentive-based pay.

Critics, including several businesses and economists, were not completely happy with the new law, but there was a belief that the organization’s entrepreneurial tasks had been freed from direct political control of the Ministry of Posts and Telecommunications. The Ministry still has ultimate supervisory and regulatory authority. It is supposed to identify the public interest and prepare ordinances based on this interest.

The reformers, however, did not foresee the collapse of East Germany’s hardline Communist regime in late 1989 and Germany’s eventual reunification in October 1990. German reunification brought with it the unexpectedly large problem of integrating East Germany’s Deutsche Post, its own telecommunications monopoly, into the Bundespost. The Bundespost and the government soon realized that the required infrastructure investment would be greater than had previously been supposed. Only 10% of East Germany’s households had a telephone, compared to 98% of West Germans. Much of the existing East German telephone equipment predated World War II.

There could be no rapid improvement in East German living conditions and economic performance without a thorough modernization of telecommunications, without which the business of a market economy simply could not be transacted. A seven-year investment plan of DM55 billion was announced, with 500,000 new telephones introduced in 1991.

Privatization to provide finance and increase efficiency was increasingly seen as a solution. Chancellor Kohl publicly said that he favored privatization, but constitutional change required the support of the opposition party, the Social Democrats (SPD), to achieve the required two-thirds majority in the Bundestag. Largely because of union fears about job security, the SPD had vigorously opposed privatization. But in a surprise move in September 1991, the SPD said it would put forward its own amendment in support of privatization. It now looks likely that TELEKOM, at least, will be privatized before the next German general elections in 1994.

Unlike the old British Post Office, which it formerly resembled, Deutsche Bundespost managed to survive into the 1990s as a huge state communications semi-monopoly.

Deutsche Bundespost Telekom, like the hived-off and partly privatized British Telecom, is profitable. As long as this profit criterion—a tradition in Germany that dates back to the time of the Thurn und Taxis family—was met, the company was, until recently, unlikely to be sold off. The rapid advance of modern communications, EC competition, and the needs of a unified Germany are leading to the return of communications to private hands. But these are more likely to be those of a modern structure like British Telecom than like that of the old Thurn und Taxis family.

Principal Subsidiaries

Deutsche Postreklame GmbH; Deutsche Telepost Consulting GmbH (30%); Telepost Kabel Servicegesellschaft mbH (54%); Deutsche Fernkabelgesell-schaft mbH; EUCOM (50%); INFONET Services Corporation (15%); DANET (30%); KABELCOM (24%).