Backroom Boys

by Francis Spufford

  But the mobile phone had an advantage over other new pieces of telecommunications kit like the fax machine which saved it from being a pure luxury gadget. Fax machines were no use unless other people had fax machines you could send faxes to; the eventual success of the fax was a network effect, a product of there being a critical mass of connections, so fax use started very slowly. But a mobile let you dial every telephone number in the UK from Day One, even if there were hardly any other mobiles around, and it let you be reached from every phone number too. So, quietly, the other early adopters of mobiles were small tradesmen: plumbers and electricians and builders and plasterers and hauliers, who didn’t have back-office staff and could do a simple cost-benefit analysis on the price of a subscription. A mobile phone cost £25 a month, plus 25p a minute when you were talking, but if it meant you picked up a couple of extra jobs a week, because customers could find you, you’d be well ahead. Garry Garrard remembers market-researching one bloke, and him saying, ‘What’s the benefit? The benefit is, my wife doesn’t have to sit by the phone. I’ve sent her out to work …’ Already, use of mobiles was beginning to push along the S-curve to the next phase of the market. Already, the first tinge was showing up of one of the mobile phone’s great cultural effects: its power to erase any absolute distinction between when people are working and when they are not. If people can always find you, in a sense you’re always working.

  As a part of the competition regime the Tories had set up, Vodafone and Cellnet were forbidden to sell their service direct to customers. People had to sign up through ‘service providers’ instead. The idea had been to stimulate lots of innovative activity in the middle of the market, and indeed, by the end of 1985 there were thirty-nine service providers active in the UK, including the networks’ own two proxy providers, all frantically reselling cellular subscriptions. But the commission rates paid by Vodafone and Cellnet turned out to be too low: Cellnet’s providers only received 2.5 per cent of the call revenues they billed, to begin with. This meant that running a service provider was a business you couldn’t easily make a profit at. The name of the game became aggregration: you found the subscribers, you built your list, and then you sold it on at so much per customer. It was a salesman’s dream: instant commission, because both networks paid an initial signing bonus, and then the chance of a fat pay-off later. Up in Newbury, the planners were laying out the greaseproof paper overlays on the Ordnance Survey maps, building out the cells to cover the rest of the UK, but down where the subscriber base was growing, there was a wide-boy frenzy going on, completely non-technical, just the street capitalists of Thatcher’s Britain applying their energy to this new thing you could flog. ‘If they hadn’t been selling phones, they’d’ve been on the barrow down Petticoat Lane,’ Garry Garrard said.

  The word was that the service providers’ salesmen would call in at the office, fill up the boots of their Mondeos with the new hand-portables, and not come back till they were empty. Marc Albert had left school early and washed cars for his first job; he was twenty-four when he founded Executive Car Telephones in 1985. ECT had about 11,000 subscribers by May 1988, when Albert sold them on – at £1,000 per subscriber, making him an instant twenty-seven-year-old multi-millionaire. ‘I saw him at this big international conference we used to have every year in February,’ Garry Garrard told me. ‘He looked like a skinhead, basically. Very smart guy.’ Albert was the poster boy. Nobody else’s score was quite that big, but everywhere the salesmen were scrambling, a classic greed-induced higgledy-piggledy land-grab was going on, leaving a madly complicated mess of intermediaries in its wake which would have to be rationalised before steady profits could be made. Nobody could say it produced a sensible structure for the industry, but in one respect it was deeply efficient. Down at the bottom of the pyramid, it provided the incentives that kept the salesmen constantly scouring around for the next individual who might possibly be persuaded that he or she really needed a talking brick in their lives. It produced a blind, unplanned, self-interested search strategy, capitalism’s classic method for exploring a new space in the market where profit may be found.

  Nineteen thousand people used the Vodafone network by the end of 1985, and over the next few years, there were always more subscribers than the company predicted there would be. No matter how optimistic Gerry Whent was, the reality was a bit better every time. Vodafone rolled out cells faster than expected too; both networks had 145–150 cells covering 65 per cent of the UK population by April 1986, and though the licence conditions said they had until 1989 to satisfy the requirement of 90 per cent population coverage, both in fact managed it by mid-1987, two and a half years early. Vodafone and Cellnet competed all right, but their relationship had its co-operative side too. At a time when hardly anyone knew yet why they should desire a mobile phone, every bit of advertising by either helped familiarise the British with mobiles, helped sell the idea of mobile communications, to the benefit of both. And having tacitly agreed to compete on coverage and on quality of service, they didn’t much bother to try undercutting each other on price, which would have damaged both their revenues. Vodafone and Cellnet had certainly taken some contrasting technical decisions. Vodafone’s possession of PACE and its heavier investment in high-capacity switching meant that the service you got might sound different, depending on which network you were ultimately the customer of; but despite the heaving multitude of service providers, every mobile subscription from every provider essentially cost £25 a month, plus 25p per minute outside London, 33p a minute inside. As a result, the UK became a unique market for mobiles, the only place in the world where intense advertising created high usage, yet the agreement between the two networks kept the prices up. Draw a graph of market penetration versus cost for all the European countries, and the UK is a dot out on its own, in a completely different piece of commercial space. There were far more users in the UK than anywhere else where it cost as much: for instance, Italy; the cost was far higher in the UK than anywhere else where so many people used it: for instance, Denmark. Possibly this was not much of an advantage for consumers in the UK, but it provided a powerbase for the future growth of the companies, and particularly for Vodafone, which was structured from the start to be nimble, with decentralised divisions making decentralised decisions, all focused more single-mindedly on maximising profitability than an offshoot of BT could ever be. Vodafone gushed cash – it made 27 per cent operating profit in 1988 on revenues of around £140 million, rising to about 45 per cent profit on £540 million in 1991.

  Seeing that Vodafone was contributing a larger and larger share of Racal’s income, to the point where Racal’s other activities were becoming invisible in the stock price, the Racal board resolved to start unbundling Vodafone as a separate company. In 1988, they floated a first 20 per cent tranche of Vodafone shares in London and New York. The City loved them. This wasn’t despised, uncertain manufacturing, with its lumbering armies of employees and its wobbly low returns on capital, which no one in Britain seemed to know how to get right. This was commerce, which the City understood, and commerce, what’s more, elevated to some radiant altitude where the thin air itself metamorphosed into banknotes. If you were one of the barrow-boys who’d gravitated to the Square Mile in the 1980s instead of flogging mobile phones up West, you could look out of your window on the trading floor of a skyscraper on London Wall and practically see the vapour trails of money forming out there, in the canyons of empty space between the buildings, every time someone like you used his handportable, his thrillingly tiny handportable, now only half the size of a brick. No investment could be more zeitgeist-y – or more attuned to the trader’s alchemical hope that money might materialise from nothing, in blue-brown scads and sheaves. Forty-five per cent operating profit! The number seemed to glow. You didn’t get that kind of return from loan-sharking. Who wouldn’t want a slice? Everyone did, from the lowly brokers to the old style smoothly-smoothly merchant bankers to the Wall Street firms muscling in now that the Big Bang had
opened up the City to American competition. Everyone wanted Vodafone’s business. Acquisitions advice, certainly sir. Syndicated loans, step this way. Book-building on the secondary offering – me! me! me! Between the gushing profits and the cheap capital the City kept offering, Vodafone had something that few British companies had possessed in a hundred years – access to enough money to try for the world, to make a truly global play. No one I met in radio engineering talks the way other British engineers do, with a rueful sense of operating small, of having to make do with inadequate means, and this is part of the reason why. Vodafone had the cash. It could pay the price of its ambitions. From now on, Vodafone would be a bidder in almost every competition for a mobile licence, everywhere.

  *

  And the air began to fill with voices. The nation’s conversation with itself was taking to the sky. You could hear it happening, in the late 1980s, if you just went out and bought yourself a cheap scanner, because the signal wasn’t encrypted on the analogue networks Vodafone and Cellnet had built. Speech travelled the same way it did in the broadcasts put out by radio stations, as a pattern directly imposed onto the radio waves – in fact, as a sequence of smaller and larger bumps in the wave’s height, which a diaphragm in a receiver could turn back into intelligible human words. No processing was involved. The voice travelled naked, just as it had when the early twentieth-century pioneers originally worked out how a little bit of electric power, a mike at one end and a diaphragm at the other would let humanity ride for free on the swells of the invisible ocean. Which meant that anyone could listen to it, if they were tuned to the right frequency. You set your scanner to the 900-MHz band where Vodafone and Cellnet operated, and then you started delicately searching for the narrow channels, 25 kHz apart, where a pair of voices were talking to each other on adjacent filaments of frequency. (There had to be two frequencies for every conversation so the two participants didn’t have to take turns, and could believe that their voices were sharing a single chamber in cyberspace.) Then out they came, teased free from the static to either side of them: counting both networks, anything up to 1,100 different conversations, in 1989, and of course, if you moved to another cell and listened there, you’d find anything up to 1,100 more, the same frequencies reallocated to different users. There they all were, princesses and plumbers, lorry drivers in love and lonely politicians, the neurotic and the saintly and the menacing, the bored, the boring, the imploring. Every time someone crossed the boundary of a cell, their call vanished, as far as the listener was concerned, to reappear, unfindable, on a randomly different frequency in the next cell over. But that was OK; that was part of the strange, free, disembodied entertainment of it all, if you were addicted to what your scanner brought you. It was as if you had been made miraculously able to hear the thoughts of your fellow citizens, like the angels in Wim Wenders’ Wings of Desire, and now you picked out one thread from the hubbub and quickly attuned yourself to the particular concerns of that voice, its special idioms, its rhythm of experience; and now you let it fall, and searched again through the crowd, and took up another. The randomness was part of the point.

  Some of the people who eavesdropped on mobile-phone calls in the late 1980s were simple audio voyeurs, hoping to lap up the private bits of other people’s private lives and the moments of crisis in them. ‘In time all streets are visited,’ wrote Philip Larkin, of ambulances. With a scanner, you could pick out the 999 calls on mobiles (a popular use for them from the very beginning) and hear the visitations, by heart attack, by mugging, by hit and run. And some listening were tipsters for the tabloid press, counting on mobile ownership, back then, being skewed towards the rich and the important, which gave a higher chance that a random search would happen on something newsworthy. But some were just enthralled by the new soundscape; and here and there, someone listening to the collective murmur at 900 MHz thought they’d glimpsed some bigger pattern in all the voices – some general rhythm emerging from the endless colloquy, a kind of halting stop-go instrumental beat made collectively by all the human forays across the boundary line between signal and noise. In Bethnal Green, the experimental musician Robin Rimbaud, recording as ‘Scanner’, cruised for that kind of sense in the air, and when he found it, snatched it and fed it back into his mixes. It seemed to belong there. Dance culture was just getting underway – Ian Bell was having it large at illegal parties around the M25, often organised by surreptitious calls from mobile to mobile – and with the hard acceleration of the beats, came the counterbalancing invention of the chill-out room, where sound came in washes and slow swathes and smoothed fragments of found rhythm. Of course, the collective murmur of mobiles had a place there. It was the true ambient sound of the times, as loved-up as us, as confused as us, as ugly as us.

  What have you had on today? What have you been wearing? A pair of black jodhpur things at the moment, and a pink polo neck. Really? Looking good? Yes. Are you? Yes. Dead good? I think it’s good. You do? Yes. And what on your feet? A pair of flat black pumps. Very chic … Kkhhrrr … You’re doing it again. Doing what? Talking shit. No, I ain’t talking shit. Yeah, you are. Why am I? What you think and what I know’s two different things. You do’t have these things to think about because you don’t give me the fucking chance to give you anything to think about.’ Cause you’re fucking on my case – ‘You ain’t going anywhere, you ain’t doing this, you ain’t doing that.’ It’s always been the same. I can’t stop you from going out. Ah-huh? I can’t stop you going out. Well, you do. I can’t though, can I? How can’tcher? Ain’tcher done so far? … Kkhhrrr … We’ve got to make the most of this. We’ve got to do something better than this. Mmm. Don’t you think? Mmm. It’s just so frustrating! Mmm. Oh well, one day. Slow explosion … Kkhhrrr … If you want to be like me, you have got to suffer. Oh, Squidgey! Yeah, you have to, and then you get – What you want. No, get what you deserve perhaps … Kkhhrrr … You suffer all these indignities and tortures and calumnies! Oh, darling, don’t be so silly. I’d suffer anything for you. That’s love. It’s the strength of love. Night-night.

  Yet the murmur still only included a fraction of the population at the end of the 1980s. By later standards the hubbub was a very small and exclusive hubbub. In 1990, just under 2 per cent of British adults had a mobile phone: about a million people. For everybody else, they were still outside of everyday experience, still the stuff of yuppie jokes. And for the first time, the rate of growth in subscribers was slowing. In 1990, under the influence of recession, it dipped; in 1991, it slumped, to a mere 8 per cent as against the growth of 70–100 per cent the industry had got used to. Some observers thought mobile use was levelling out for good. Perhaps that was the permanent size of the market: a million or so people whose wealth justified a mobile as a toy or whose work justified it as a tool. For the rest, there would always be phone boxes.

  The government was not convinced. It had already decided to disrupt Vodafone and Cellnet’s cosy duopoly by injecting more competition. In December 1989, the Department of Trade and Industry issued licences to build new networks. The winners that time were the consortia that would eventually become One2One and Orange. They were expected to have their services up and running by 1993 or 1994. The tactic worked, but not for the reason the DTI expected. The DTI had miscalculated. They’d worked on the theory that the new operators, given the trickier band of spectrum at 1,800 MHz to work with, would come up with something commercially or technologically distinct that would let them reach the parts that Vodafone and Cellnet could not. They imagined some kind of service which traded off low cost for limited functionality – maybe a service that only worked in two or three major cities, or one that made ingenious use of pagers. Instead, the new operators and the old operators converged on the same thing. The prospect of the new players going after the unconnected 98 per cent of the population galvanised the old operators into making a serious try for them too. As a compensation for the increased competition, they were allowed to swallow all the little intermediate service p
roviders and deal direct with customers. Meanwhile, the marketing advantage the old operators got from offering coverage everywhere persuaded the new players they needed to offer the same. Vodafone and Cellnet started competing with One2One and Orange on price, while One2One and Orange started competing with Vodafone and Cellnet on coverage, until all of them were trying to offer full functionality at low prices. And that’s how the whole market for mobiles moved to the next stop on the S-curve, turning a cellphone from ‘business tool’ to ‘household luxury’. Once the shift had begun, there was no choice for anyone but to go along. You couldn’t go on offering a high-priced service at the top of the market, because the market for mobile calls isn’t segmented. You can get people to pay 60p a minute to call phone-sex lines, true; but if your business is enabling people to talk to each other, you have to face the fact that there is no such thing as a premium phone call, or for that matter, a cheap ’n cheerful phone call. There are just phone calls. So you had to move, the shrewd and opportunistic people running Vodafone saw. You had to stake the capital you’d accumulated from the previous game and learn to win the next game.

  For Vodafone, the turn of the 1990s was frantic. Preparing to face the new wave of competition happened alongside – and overlapped with, and intermingled with, and sometimes just plain entangled with – the preparations for the switchover to the next, digital generation of the network. In fact, going digital turned out to be the other thing that liberated Vodafone to try for the world. GSM, the specification for the digital system, proved to be as important to Vodafone as having competitive reflexes and eager bankers. It had not always looked like a blessing. TACS, the analogue system Vodafone started with, worked to a spec imported from America, but GSM was European. The name stood for Groupe Spéciale Mobile, a working party of the unpromisingly bureaucratic, very old-line Conférence Européenne des Administrations des Postes et Télécommunications. This unwieldy organisation of twenty-five different countries’ nationalised phone companies had initiated discussions back in 1982, before there were any mobile services on the continent at all, except for a few prototype operations in Scandinavia. Similar Europe-wide initiatives resulted in a European standard for teletext, which didn’t work, and a European standard for high-definition TV, which also didn’t work. By the second half of the 1980s, the Groupe had sprouted a myriad of sub-groups, expert groups and policy circles, in which engineers from all over Europe – including Vodafone and Cellnet, of course – got together to stipulate in minute detail what should be put in place when voices stopped travelling over the cellular networks as smaller and larger bumps in the amplitude of radio waves and became streams of 1s and 0s coded into the bumps. One group worked on encrypting the data streams, so that eavesdroppers with scanners would no longer be able to sample the ambient or embarrass princesses. Another group formulated an elaborate protocol that let a GSM phone search the air for a GSM network wherever it was, irrespective of international frontiers. Another again developed a cunning plan for sending short pieces of text to and fro. Every bright idea made the spec more complicated and wished another swathe of demanding software into existence. It was theoretical-design heaven, with different groups of engineers all elaborating away in different directions at the coolest stuff on their wish lists, without any reference whatsoever to what the market demanded that week, that month, that year. Those in charge had to co-ordinate a teetering coalition of organisations. Success depended on procuring what all giant public collaborations promise, but most fail to deliver: an advantage for all that could not be obtained by the individual effort of any.