British Telecommunications, trading as British Telecom, severed its links with the Post Office under the British Telecommunications Act, 1981 and became a totally separate public corporation on 1 October. They were now two separate organisations with their own chairmen and boards of directors.

It was also at this time that the first steps were taken to introduce competition into the United Kingdom telecommunications industry. In particular, British Telecom lost its monopoly of the supply of customer premises equipment (CPE) except, as an interim measure, providing the first telephone at an address. In practice, it had become increasingly difficult in the years leading up to the Act to exercise this monopoly as more and more unauthorised equipment was added to the network.

The Act introduced an independent approval regime for CPE. Before 1981, the Post Office and then British Telecom had alone decided what could and could not be connected to its network. The 1981 Act established an independent procedure to set standards and approve equipment for connection to the network. Standards were now set by the British Standards Institution (BSI), while the British Approvals Board for Telecommunications (BABT) issued approvals based on independent evaluations. This was the first step in separating regulatory and operational activities which was essential if private suppliers were to be able to compete with BT on equal terms.

The 1981 Act permitted further liberalisation by allowing network competition. The Secretary of State for Trade and Industry was empowered to grant licences to operators other than BT to provide network and value added services. This was a recommendation of the Beesley Report, published in April this year, which suggested full freedom for private suppliers to use the national network to provide Value Added Network Services (VANS) at a flat rate.

British Telecom offered telephones for sale for the first time as an alternative to rental. Eleven phoneshops were opened in major department stores.

New style telephone plugs and sockets were introduced on 19 November, enabling convenient movement and replacement of telephones and customer equipment.

The first 'System X' digital exchange to which subscribers were directly connected was opened at Woodbridge in Suffolk.

The development of 'System X' exchanges was the linchpin of the policy to modernise the existing network by replacing analogue plant with digital switching centres interconnected with digital transmission links. It enabled an increased variety of facilities and services to be made available to the telecommunications user, resulting in ISDN (Integrated Services Digital Network) and ISDN 2 .

Thereafter, the network was rapidly modernised and more and more exchanges converted to digital systems. In 1970, 8.5 million exchange lines were Strowger, representing 98 per cent of the total. As late as 1980, when the number of Strowger lines reached a peak of 13 million, 75 per cent of the network was Strowger. Throughout the 1980s and 1990s modernisation of the network was rapid, so that in July 1990 the long distance or trunk network became totally digital. The last Strowger exchanges (Crawford, Crawfordjohn and Elvanfoot, all in Scotland) were withdrawn on 23 June 1995.

During the same period the TXE and TXK families of electronic and electromechanical exchanges were gradually withdrawn. The last TXE2 exchanges (Ballycastle, Northern Ireland, Llandovery, Wales and Ramsbury, England) were also closed on 23 June 1995. The last TXK crossbar exchange, at Droitwich, was withdrawn in 1994.

The UK network became totally digital on 11 March 1998 with the closure of the last electronic TXE4 exchanges at Leigh-on-Sea and Selby and their conversion to System Y (AXE 10) and System X respectively.

The first cashless, card-operated payphone - the Cardphone - was introduced as a new service and to combat damage caused by vandals attempting to break into payphone coinboxes. The 10, 20, 40, 100 or 200 unit Phonecard was inserted in the payphone and the call made in the usual way, with the charge for the call erased from the phonecard until the units were exhausted.

Radiopaging was extended to give a virtually nationwide service.

Britain's first automatic carphone service, System 4, was launched in London on 14 July, whereby customers were able to make direct calls without having to go through an operator

A microfiche system was introduced in inland directory enquiry centres to speed up the response time to subscribers' enquiries.

Prestel was extended to Holland, Italy, Sweden, Switzerland and West Germany.

Prestel launched an electronic "mailbox" service in London. It was extended nationwide in 1984.

BT launched the "It's for You" campaign, featuring such characters as Neptune and the Hunchback of Notre Dame, followed by a series of animal themed advertisements. The campaign ran until 1985.

British Telecom introduced the Answering and Recording Machine No 101, following field trials of the Answering and Recording machine No 1 by the Post Office from 1979. This was the first British Telecom supplied answerphone, although models had been available from other suppliers for some years. By law these had to be approved at that time by the Post Office / British Telecom as meeting their standards. Some were approved, though in the years leading up to the Telecommunications Act 1981 (which led to greater choice for customers in obtaining equipment) many answerphones and other items of equipment on the market were not approved.

Cable & Wireless Ltd. was privatised in November, the Government selling 50 per cent of its shares in the company


The Government licensed Mercury Communications Ltd. as the main competitor to BT as a telecommunications network provider. Mercury, originally owned by a consortium of Cable & Wireless, British Petroleum and Barclays Merchant Bank, was later a wholly owned subsidiary of Cable & Wireless, and in 1999 was part of Cable & Wireless Communications, formed from a merger with Nynex of the United States, Bellcable Media and Videotron.

Customers were able to buy terminal equipment from suppliers other than British Telecom from June this year. Equipment had to meet standards set by BABT

On 19 July, the Government formally announced its intention to sell up to 51 per cent of British Telecom to the public - the first example of the privatisation of a public utility. A Telecommunications Bill was introduced the same year. The future for British Telecom was described thus by Kenneth Baker, Minister for Industry and Information Technology: "The Bill creates freedom from Treasury and ministerial control. It also gives freedom to BT to grow, to operate overseas, and to make acquisitions ... the market is growing so quickly that BT can expand only by becoming a free, independent company."

The world's longest optical fibre telephone cable was brought into service between London and Birmingham.

British Telecom introduced the Telecom Gold electronic mail service.

IDD (International Direct Dialling) was made available throughout the United Kingdom.

Telemessages (overnight delivery services) superseded the inland telegram service on 30 September.

Bureaufax was established, a facsimile service for sending documents between offices in the UK and more than 60 other countries.

The first national directory of facsimile users' numbers was published by British Telecom.

The first 'Transaction Telephones' were installed in traders' premises - a system which helps fraudprevention by enabling plastic credit cards to be checked via the data network.

The CS Iris served as a despatch vessel to carry stores, mail and military personnel in the South Atlantic during the Falklands conflict.

The Telecom Technology Showcase was opened - an exhibition centre showing the development of communications from the earliest days to the present era by means of displays of telecommunications equipment. From 1991 the Showcase has been known as 'The Story of Telecommunications', part of the BT Museum.


Purpose-built Telcare (Telecom Customer Attitude Research) centres opened, providing continuous and up-to-date measurements of customers' opinions, enabling British Telecom to respond quickly to customers' needs.

Kenneth Baker, Minister for Information Technology, announced in the House of Commons on 17 November that British Telecom and Mercury Communications would enjoy a 'duopoly' on basic telecommunications services for the following seven years (except for the City of Kingston-upon-Hull which would continue to operate its own service), after which the position would be reviewed. This was to give Mercury security in the early stages of its development to establish itself as an effective competitor to British Telecom, and to give British Telecom time to adjust to competition in the private sector.

Earlier in the year, in February, the Government accepted a recommendation of a report by Professor Littlechild that British Telecom's tariff increases for the five years after liberalisation should be pegged below the inflation rate.

A new Code of Practice for Telecommunications Services was published by British Telecom to reflect the rights of customers following changes by the Telecommunications Act, 1981. Before the Act, British Telecom had no liability for its services. The Code was produced in consultation with the Post Office Users' National Council and the Office of Fair Trading.

The transatlantic submarine cable, TAT 7, laid the previous year, was officially inaugurated on 16 September.

Mercury launched telecommunications services in the City of London.

British Telecom's first satellite coast station came into service with the opening of a new dish aerial at Goonhilly. Telephone and telex calls could be made or received direct for the first time to almost anywhere in the world, via Britain.

KiloStream and MegaStream digital private circuit services were launched.

British Telecom offered car telephone radio sets for the first time.

Telecom Tan, an advanced operator controlled messaging service, was launched.

Telecom Red, a range of security systems using telephone lines to link customers' premises to emergency services, was introduced.

The microprocessor-controlled press-button Blue Payphone 2 was introduced as part of £160 million modernisation programme of the payphone system. The new payphone replaced the pay-on-answer payphones.

The first electronic, microprocessor-controlled payphone, the 'Blue Payphone' had been introduced in 1979.

British Telecom's first cordless phone - the Hawk - came onto the market. It used a radio to link the mobile extension set, which could be up to 600 feet away, with the customer's telephone line.

Display Page, British Telecom's radiopager with a digital message display, was launched. A ten-digit liquid crystal display on the new pager could be used to identify the caller (by giving a phone number), or to convey a message.

Itemised billing was introduced on a trial basis on trunk and international calls in part of Bristol and Bath.

Confertel, a new flexible and inexpensive means of holding meetings by telephone, was introduced.

The Phototelegraph Service, a form of facsimile service operated by the Post Office and British Telecom for more than 50 years  was closed on 31 March. It was replaced by the more modern Bureaufax Service.