Saturday, February 02, 2008

Telex lives on


A faint ping

Jan 31st 2008
From The Economist print edition

An ancestor of e-mail lives on

LIKE slide-rules, steam engines and carbon paper, the telex machine, once ubiquitous and indispensable, has vanished from sight. But not, quite, from existence. As younger readers may need reminding, or informing, the telex was what would nowadays be called a hard-wired, low-bandwidth, point-to-point messaging system.

At speeds of around one-millionth of that of a modern broadband connection, it sent data chugging along dedicated networks to clunky terminals.

In its time, telex was a huge improvement on the international telegram system, which could charge the modern equivalent of several dollars per word. It was often better than making international phone calls, which were cumbersome, crackly and costly. It was on telex systems that today's electronic data interchange developed. Telex starred in the huge logistics effort for the airlift that supplied West Berlin during the Soviet blockade of 1948.

It would be easy to imagine that newer technology puts paid to such systems. But their death throes are oddly slow. Three countries, Japan, Kuwait and Italy, still maintain the old-fashioned international telegrams. And the internet has not yet killed off the telex. It has certainly sent traffic tumbling (see chart). In March Britain's BT will be the latest big company to cease offering telex services. “All good things come to an end,” says a spokesman. Britain will then join around 30 countries including Austria, Germany and Russia that no longer provide telex through their national telecoms operators.

But that clears the way for nimble, low-cost competitors. These have turned round the technology. As well as maintaining the old-fashioned service involving terminals and dedicated lines, they provide telex services both over phone lines and over the internet—in effect, making it a secure and ultra-reliable variant of e-mail. One, SwissTelex, is a spin-off from the Swiss national telecoms operator that offers international telex services and has taken over BT's network. Another is EasyLink, based in America, which provides a service for Dutch, Belgian and Japanese subscribers.

Many of the remaining customers are banks. Telexes, unlike ordinary e-mails, are legally valid documents (being to all intents and purposes impossible to fake). “The telex network is closed—you can't get in unless you are part of the club,” says Peter MacLaverty of SwissTelex.

Small financial institutions not hooked up to the main international money-transfer system, SWIFT, find telexes a cost-effective alternative. And with no server to go down, the telex system is robust. Big banks like that: for them back-up systems are vital, and the cost of keeping a telex is trivial.

Euroclear, the world's largest settlement system for international financial markets, maintains 184 telex accounts for 50 out of its 1,375 clients. It sends up to 800 telexes a day, mostly as confirmation for transactions. The system is overseen by Danny Bogaerts, a communications manager who was told when he joined the company in 1975 not to learn about telexes because they were soon going to be obsolete. “You can laugh about it,” he admits. “It is old-fashioned—but it works.” The second big customer group is at sea. Ocean-going ships are still legally required to have a telex on board—chiefly for SOS messages.

Even its fans do not pretend that telex is a technology with a bright future. Euroclear, for example, will start decommissioning its telex system in 2010 when it introduces new software. “I'm surprised it has lasted as long as it has,” says Mr MacLaverty. “What we aim to do is to be the last man standing,” says Eva Allen of EasyLink. “Who will send the last telex? Possibly me.”

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