POSTI- JA TELELAITOS History

Address:

Mannerheimintie 11
00100 Helsinki
Finland

Telephone: (0) 1951
Fax: (0) 195 4040

State-Owned Company
Employees: 40,400
Sales: Fmk 9.6 billion (US$2.4 billion)

Company History:

Posti- ja Telelaitos (Post-Telecom Finland), a state-owned enterprise, is granted by law complete control of postal communications in Finland. Although it does not have the same rights in the area of telecommunications, the company owns Finland's entire long-distance network and nearly one-fourth of the local telephone exchanges.

The Finnish Post began in 1638, when, at the suggestion of the governor general in Finland--then a part of the Kingdom of Sweden--the government of Sweden arranged the country's first postal lines and approved postage rates. The postal route began in Stockholm and extended from the ;aNland Islands to Turku, where it was divided to the middle, east, and north of Finland to Ingermanland and the Baltic provinces. The object of this arrangement was to reflect the elevated status of Sweden in the north of Europe as well as to meet the goals of the centralized government.

Mail was to be carried safely and on time from the capital to the outskirts of the kingdom, especially to the politically and militarily sensitive eastern borders and to the Baltic region. Finland was at first allotted five postal substations, all located in towns. There were no more than four or five postal lines in Finland, a small number considering the size of the country. Mail delivery, in fact, was irregular, especially in autumn and winter.

Mail carriers were landowning peasants who received compensation in the form of reduced taxes. This configuration was unique: in most European countries the crown servants were responsible for delivering mail. The Swedish system, however, proved to be a practical one, and it lasted for a considerable time.

As long as Finland was a part of the Kingdom of Sweden--until 1809--the Post was managed in Stockholm. In 1697 the government assumed control of the Post, and in the beginning of the eighteenth century various methods of operation were established. The postmaster general in Stockholm was the highest authority; other cities had local postmasters. Postal peasants delivered mail in a relay chain, and rates were determined according to the distance carried and weight of the letter.

For Finland it was important that new postal lines were opened at the same time roads were being constructed. Even so, by the end of the eighteenth century no more than seven percent of the total income of the Swedish post came from Finland. When Finland became autonomous--a period that lasted from 1809 to 1917--the Post was managed by the economic department of the Finnish government (the Senat). Compared to the era under Swedish jurisdiction, no practical changes were made for many years. Finally, in 1845, the delivery of mail by peasants was abolished, and full-time mail carriers were hired. Ten years later, stamps were introduced.

The modernization of the Finnish economy and society in the second half of the nineteenth century was clearly evident in the operation of the Post, which became a state monopoly in 1874. The decision to monopolize stemmed from international patterns and new means of communications. Steamers on the sea coasts and on inland lakes began to deliver mail, and numerous private railway lines were planned as well. Since there was a risk that several different postal systems would appear, it was considered wise to solidify state control of the Post.

Two factors influenced the subsequent evolution of the Finnish Post: the modernization of the economy and society, which created a demand for new and faster services, and new technical innovations, which allowed the Post to satisfy these demands. The delivery of mail by steamers to countries abroad, for example, began at the end of the 1830s. In addition, icebreaking passenger steamers made it possible to carry mail daily and year round between Finland and other countries beginning in the 1880s. Postal delivery by rail began in 1862. Thereafter the mail was carried night and day, and mounted postal delivery began to be dissolved.

Advancements in the area of telecommunications also had an impact on the Post. The first telegraph line was opened between Helsinki and St. Petersburg in 1855, and in 1869 the Danish-Russian Telegraph Company laid an undersea cable between Sweden and Finland; Finland was thus joined with the international telegraph network. With the introduction of the telephone in 1877, the need to write letters was diminished, even though the national long-distance network was developing rather slowly.

The number of postal lines and offices grew in the 1870s. Before World War I there was one post office in Finland to every 1,400 persons, a ratio similar to that in Sweden and Denmark. The most concrete change in the late 1800s was the improvement of postal facilities in the countryside. By the end of the century there were post offices with local delivery lines in nearly every rural area. The number of units delivered by the Post multiplied rapidly due to an increase in private correspondence and the delivery of newspapers, a phenomenon that was connected to the country's rising literacy rates. The Post--which by the end of the 1800s had greatly diminished its delivery time and was employing women as postmasters--was earning a reputation as a promoter of Finnish culture and a symbol for the autonomous state.

A new phase in the history of the Finnish Post began in the 1890s, when Russia achieved a strong political foothold on Finland. As part of a policy of Russification, the Finnish Post was separated from the authority of the Finnish Senat and taken over by the Russian Home Office in 1890. The most visible signs of Russia's influence were the new Russian-style stamps and efforts to censor postal deliveries. This phase, however, did not last long enough to significantly alter Finland's operation of the Post.

The total independence of Finland in 1917 also did not profoundly change the operation of the Post. In 1918 Finland joined the International Postal Union. Due to technical improvements, mail delivery was made even more efficient. Postal service abroad by air began in 1923, and within Finland in 1930. Postal delivery by bus, an important means of communication in the sparsely populated countryside, began in 1921 in Lapland. Though at first hindered by the snow that closed the roads in the winter, bus service was revived in the 1930s, when motorized snow plows came into use. From 1917 to 1945 the amount of mail delivered tripled. The bulk of the mail was newspapers; in sparsely inhabited areas, newspapers were subscribed to on an annual basis, instead of being sold as single copies.

The services of the Post became more democratic as mail was delivered daily at about the same time in different parts of the country. In addition, the quality of postal services became equal in various parts of the country. Even though rates, when compared with the income of the people, diminished, the Post's growing efficiency rendered it a profitable business for the Finnish government.

During the period between World War I and World War II, telephones became very common. Until the end of the 1920s the telegraph and telephone had clearly different functions. The telegraph was used for long-distance messages and the telephone for local ones. While the technical problems of the telephone were being solved, however, the question arose as to who was entitled to maintain the country's long-distance telephone services. In the south and middle of Finland there were many private telephone companies that also had trunk lines, or telephone exchanges. In Lapland and other remote areas, telephone services were hardly profitable enough to attract private companies, and the state had to construct the trunks. Another problem was the existence of too many small, private telephone companies, whose services were insufficient. Within these circumstances the Post gradually got a stronger foothold in the national telephone network. By the end of World War II, long-distance telephone service was maintained under the authority of the Post.

In 1927 it became possible to make a telephone call from Helsinki to Lapland and a year later to the coast of the Arctic Ocean. Telephone service has played a very important role in encouraging private savings in Finland; people were able to manage affairs from a long distance without spending money on travel.

Also during the 1920s the activity of the Postal Savings Bank heightened. Founded in Finland in 1886 but remaining inactive until World War I, it began to mediate the government's financial transactions. The bank's private savings accounts increased, and national and international postal checking accounts were introduced. The volume of the bank grew, but compared with other banks, remained small.

The period after World War II may be divided into two parts in terms of the Post's activities. Until 1970 traditional postal business increased, but thereafter, especially in the 1980s, it diminished. In the 1950s and 1960s post offices were introduced in small villages and new suburbs of cities. This happened, however, at a time when growing amounts of people moved from rural villages to towns. In fact, the expansion of the Post through the establishment of new offices at this stage was ineffectual; the number of customers in those areas was decreasing.

The beginning of the 1980s ushered in a new period of postal services that were affected by alterations in the lifestyles of Finland's citizens. Numerous post offices were closed; in 1970 the number of post offices was 5,000, in 1980 the figure was 3,000, and it fell further to 2,300 in 1990. For many years the Post was no longer considered an economic asset to the government, becoming instead a burden. Personnel costs in particular were increasing. To improve the situation, unprofitable offices in remote areas were closed, and their services were compensated for by buses. This was seen as a controversial move in the outskirts of the country, where the post office was the sole provider of the citizens' public services.

At the same time that many offices were closing, Post officials made attempts to develop new capacities in which the offices could serve their customers, including granting loans, transmitting medications from the local pharmacy to the patient, acting as a small public library in sparsely populated areas, marketing various types of insurance, and selling postcards and stationery.

Further Post innovations were implemented in the 1970s and 1980s. Postal codes were introduced in 1970, and in 1984 domestic mail was divided into first and second class. First-class mail was guaranteed delivery anywhere in the country in 24 hours. In addition, the handling of the mail was decentralized from Helsinki to different locations in the country. The transport of newspapers via airmail, a method used in the 1960s, became too expensive, and airplanes were replaced by nighttime trucks. The postal bus service became so unprofitable that it was greatly reduced, and in the beginning of the 1990s there were no more than 190 remaining routes.

Post-Telecom's share in the telecommunications market increased in the 1980s, as new services and lowered tariffs were offered. In the beginning of the 1990s nearly one-half of Post-Telecom's turnover came from telecommunications.

In 1990 the Post--previously operating as an office of the Finnish government--became a state-owned enterprise. Another significant change was the reorganization of Telecom's regional operations; the immediate consequence was lowered tariffs. At the beginning of the 1990s the real price of trunk calls was only one-fifth of those at the end of the 1970s. Compared with most European countries, trunk call tariffs are generally very low in Finland.

Post-Telecom Finland will not be privatized, but will nevertheless see increased competition. Private delivery of mail will be allowed, and the state monopoly will be dissolved. Since the mid-1980s Post-Telecom Finland has been a profitable business, but in a competitive environment, it will face a continuing need for development.

POSTI- JA TELELAITOS History

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