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SP and Sprint

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This page was last updated on November 12, 2015.

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Southern Pacific Communications Company (SPCC)

The Southern Pacific Transportation Company (usually known as the Southern Pacific Railroad) operated its telephone system as an independent company, using copper wire as its method of transmission for the railroad's internal communications. By the late 1950s, the Southern Pacific and other railroads started to use radio microwave systems, which eliminated the need to maintain thousands of miles of pole-mounted aerial wire, and enabled dispatchers to communicate directly with the railroad's train engineers.

Southern Pacific Communications Company (SPCC) was formed in January 1970 to offer public and corporate access to its already internal "switched private network," used for the railroad's own interoffice communications. The service was also known as a Private Branched Exchange (PBX), compared to an FCC-regulated Public Exchange such as AT&T's nationwide long distance service. The coast-to-coast network was completed and began operations in December 1973. By July 1974, through acquistions and lease agreements, SPCC was the first company to offer nationwide voice transmissions by microwave. By the end of 1976, SPCC owned the major portions of its nationwide network.

The completion of its nationwide microwave network was the result of Southern Pacific's expanded use of its microwave communications system along the railroad's rights of way used for internal communications. In 1973, they began selling surplus time on that system to corporations for use as their own coast-to-coast private networks, thereby circumventing AT&T's then-monopoly on public telephone service. This was in response to an FCC ruling in 1971 that AT&T must allow open access to its local telephone exchanges, an attempt by AT&T to limit the growth of several new companies hoping to take advantage of new communications technologies. Naturally, AT&T was against this open access to its local exchanges and asked the FCC in May 1975 to overturn its decision, which it did soon after. In 1977, a new company by the name of Microwave Communications, Inc. (MCI) sued the federal FCC to overturn the decision.

Much like SPCC had done in 1973, MCI created its own "Execunet" service in 1974 that took advantage of the 1971 FCC ruling that allowed private line networks access to AT&T's local telephone exchanges. In a letter written in May 1975 to the FCC chairman, AT&T asked the FCC to prevent access to its network by MCI and many other growing companies, including SP's SPCC network. A decision by the courts in April 1978 forced AT&T to accept access by private networks, and became known as "Execunet II."

In January 1978, SP announced that its Southern Pacific Communications subsidiary would offer shared time on its "private-line" network. At about the same time, internal company documents began describing its private network as SPRINT. SP reportedly wanted to spin off its communications subsidiary to a third-party, then lease back time for the railroad's internal communication needs.

Sprint

There are two versions of the story for where the Sprint name came from. One has it meaning Southern Pacific Railroad Internal Network Telecommunications (SPRINT), and has been reported as being the result of an internal name contest. The other, much less believable version says that the name meant Switched PRIvate Network Telecommunications. Regardless of where the name came from, Southern Pacific created Sprint in 1978 to take advantage of the open-access to AT&T's local telephone exchanges.

A third version comes from former Southern Pacific communications control wire chief Brijet Neff, with SPRINT being an acronym for Southern Pacific Railroad Internal Networking Telephony.

After the Execunet II decision was affirmed by the Supreme Court on November 27, 1978, SP began expanding its microwave system to include fiber optic cables laid along its railroad right of way. This combination of microwave communications and fiber optic cables was the basis for the creation of Sprint. The customer base had grown from 1,000 customers in early 1978, to 30,000 customers by the end of 1979. A news item in the New York Times, April 9, 1979, reported that SPCC offered three services: Sprint for voice transmission; Speedfax for facsimile transmission; and DataDile for data transmission. Within a short period, the three networks became known simply as Sprint. By mid 1979, the Sprint network had grown to serve 72 cities, making it the nation's largest specialized communications common carrier.

By 1981, Southern Pacific Communications Company, and its informally named Sprint network, had 200,000 customers and was handling 60,000 long-distance calls per day, at rates that were 20 to 50 percent lower than those being charged by AT&T. Following the January 1982 breakup of AT&T, and within the same year, SP's "Sprint" network grew to 900,000 customers in 45 states.

Southern Pacific sold Sprint to GTE Corporation in 1983, at about the same time as the planned merger of AT&SF and SP. GTE, parent company of General Telephone, as the United States' largest non-Bell telecommunications company, hoped to add the railroad's system to its own network to form the backbone for a new long-distance unit that would successfully compete with AT&T. Federal antitrust action forced AT&T to divest itself of its 22 local Bell companies by 1984. At the same time, AT&T's long-distance monopoly ended, clearing the way for competition from GTE and others.

GTE knew that a long-distance network would be relatively simple to create and extremely profitable once in operation. It had the engineering and switching capability but lacked the long-distance corridors in which it could install wiring. While Sprint came with a wired network, it offered hundreds of miles of open easements between major cities, along the railroad's right of way. GTE completed its acquisition of Sprint (officially known as Southern Pacific Communications Company) later in 1983, rechristening the operation GTE Sprint Communications.

In 1986, GTE sold Sprint to U. S. Telecom, subsidiary of United Telephone, a large telephone company that had a large presence in Florida. U. S. Telecom then changed its name to U. S. Sprint, and later started a wireless division, made other acquisitions, then spun off the original United Telephone wired local phone operations as Embarq. Many may remember U. S. Sprint for its "pin-drop" commercials, advertizing the quality of its mostly fiber optic system. The "U. S." was later dropped from the name, and the company returned to its original Sprint name.

SP Telecommunications Company and Qwest

Although SP had sold Sprint to GTE in 1983, there was still plenty of potential for the use of its right of way as a home for more communications infrastructure. After Philip Anshutz (then owner of Rio Grande Industries) bought Southern Pacific Transportation Company in October 1988, in March 1989 he also started Southern Pacific Telecommunications (SP Telecom) as a subsidiary company of Southern Pacific Transportation Company to take advantage of the railroad's extensive right-of-ways for use by underground telecommunications fiber optic lines.

The original Sprint was started by the Southern Pacifc in 1978 to sell capacity on the railroad's microwave telecommunications network for long distance communications. Their FCC licenses did not permit non-railroad resale, so they had to build their own parallel network. This was before fiber optics, when microwave was the technology of choice. Later some fiber was added along the right of way. Almost all fiber installed by Sprint other than the initial San Francisco to San Jose installation was done after SP's sale of Sprint to GTE, which is why Sprint's fiber east from Northern California follows the UP's former Western Pacific tracks through Feather River Canyon, rather than SP's line over Donner Pass.

After Anschutz's Southern Pacific started SP Telecom in March 1989, Anschutz paid $55 million in September 1991 to separate SP Telecom away from its Southern Pacific parent, to his own Anschutz Corporation, retaining full rights of access to the railroad's right of way for the purposes of installing telecommunications infrastructure. A list of telecommunications service providers in the November 1990 issue of Network World magazine, shows that SP Telecom had little presence in large metropolitan areas, where other companies, including Qwest, were already well placed. Qwest was shown as doing business in the large metropolitian areas of Indiana, Pennsylvania, Texas and Wiscosin. At the time of the September 1991 separation of SP Telecom from SP, the same magazine's list shows SP Telecom with a business presence in California, Florida, Indiana, Maryland, Pennsylvania and Texas. In almost every state where SP Telecom was doing business as a telecommunications provider, Qwest was a competing provider of telecommunications services.

Qwest got its start in 1987 as Qwest Microwave VII, Inc., and in December 1991 became Qwest Microwave Corporation. To expand its business, it served as the general contracting liason between Southern Pacific and MCI when MCI leased access to SP's right of way between Houston and Los Angeles for the burial of some of the earliest fiber optic-in-conduit installations. In 1988, Qwest acted as the contractor for the installation of fiber optic conduit between Los Angeles and San Francisco. In an appeals court case decided in 1998, testimony showed that Qwest was purchased by MCI in 1992, and in December 1994, MCI sold Qwest to SP Telecom. Through a series of mergers and acquisitions among microwave service providers that took place between late 1991 and April 1995, Qwest became Qwest Communications Corporation.

On December 28, 1994, regulatory agencies approved the merger of SP Telecom and Dallas-based Qwest. At the time Qwest was mostly a microwave telecommuncations company, but was also one of the fledgling companies that was taking advantage of the new fiber optics technology for communications. The merged company changed its name to Qwest Communications Company. In July 2000, Qwest made a successful hostile takeover of U. S. West Communications, the former Mountain Bell.

In a June 1995 press release about the construction of a fiber optic network alongside Southern Pacific tracks between Dallas and Los Angeles, Qwest described itself as follows:

A privately held subsidiary of the Anschutz Company, Qwest is the only company of its kind, providing comprehensive turn-key services in the three primary business areas of the telecommunications industry -- construction, carrier and commercial services.

Qwest designs and constructs fiber optic networks; manages its own nationwide long distance network; offers long distance services to commercial users, primarily small to medium-sized businesses; and is a premier "carrier's carrier," providing network transmission facilities to other long distance companies.

SP Construction Services

Southern Pacific laid fiber optic cable for Sprint and other companies with SP Telecom's own construction train beginning in 1988 and continued until 1991, when the Construction Services department of the railroad was spun off as a subsidiary of Anschutz Corporation. After the split in 1991, SP Telecom was free to provide fiber optic construction services to other railroads and other telecommunications companies. Free access to the SP right of way for the fiber optic cable was reported to be one of the main reasons Anschutz bought the SP.

The SPCS/Qwest train was used to lay multiple communications conduits along the right of way of Southern Pacific, and later, other railroads. The conduits were laid in what is known as a duct bank, owned by the telecommunications company, such as Sprint, MCI, WorldCom and Frontier Comunications. In 1996 and 1997, the construction train was working in northern New Mexico to lay fiber optic ducting for both Sprint and MCI. A side benefit was that SP Telecom received access to the duct bank at no charge, giving Anschutz's Southern Pacific Railroad its own fiber optic network. Om Malik wrote in his book Broadbanditis, published in 2003, that "by the time construction was finished in 1999, the network would span 18,500 miles and would connect 150 cities" in the U.S., Canada, and Mexico.

In 1994, SP Telecom purchased two grey former C&NW GP9's from OmniTRAX, and had OmniTRAX remanufacture the units at their shop in Loveland, Colorado. They were originally for the SP Construction Services (SPCS; AAR reporting mark SPCX) and were assigned to the fiber optic construction train. Qwest Communications took over the operations of SPCS in 1995, as Qwest Construction Services, and after adding more locomotives and more cable burial equipment, operated fiber optic construction trains nationwide.

The construction trains and fiber optic cable laying equipment of SP Construction Services, and later Qwest Construction Services, were later used along NS and CSX to lay fiber optic duct banks, along railroad rights of way. The agreement between Qwest and CSX was in May 1995. The cable plow cars were said to have been on the frames of retired General Electric six-axle locomotives. The train consisted of a plow, that buried up to 12 flexible conduits five feet underground at a walking speed, and large spools of the conduits on flat cars. The fiber optic cable itself was pulled by companies leasing the underground wire ducts from the railroads.

By mid 2000, the fifteen locomotives (SPCX 500-507 and SPCX 700-706) were out of service and stored. Within a few months, the units were sold on the used locomotive market, first to Ohio Central, then later to other companies. (photo in January 1998) (photo in 2002)

Epilogue

Although Sprint started out as a wired and microwave telecomunications company, it is now a wireless telephone company. Sprint spun off its fiber optic and local landline business to a company called Embarq, which is now known as CenturyLink. (CenturyLink at Wikipedia)

Southern Pacific Telecommunications became Qwest, which took over U. S. West as a regional wired landline telephone company, and a wireless cellular telephone company that leases capacity to other companies, including Sprint. Qwest (now CenturyLink) owns a national fiber optic network.

An article in the Wall Street Journal reported that Anshutz bought SP for $1 billion, sold it to UP for $3.9 billion, and still retained Qwest at a value of $10.7 billion. Qwest was later purchased by CenturyLink. (Qwest and Mountain Bell at Wikipedia)

Succession Summary

SPCC → Sprint → GTE → U. S. Telecom → U. S. Sprint (wireless) → Sprint → GTE → Verizon

SPCC → Sprint → GTE → U. S. Telecom → U. S. Sprint (wired) → Embarq → CenturyLink

SP Telecom (fiber optics) → QWest → CenturyLink

Sources

New York Times

Broadbanditis by Om Malik (John Wilet & Sons, 2003)

The Southern Pacific, 1901-1985 by Don L. Hofsommer (Texas A&M University press, 1986)

Telebomb, the Truth Behind The $500 Million Bust by John Handley (American Management Association, 2005)

Qwest Communications International - Changes Name To Qwest Communications Corp., 1995-1996

Qwest Communications at Answers.com

Trainorders.com, May 31, 2008 (includes photo)

Qwest Transmission, Inc. at Leagle.com and also at Findlaw.com

Qwest Communications at FundingUniverse.com

Anschutz Company and Subsidiaries v Commissioner of Internal Revenue (United States Tax Court, Docket 6169-03, filed March 13, 2006)

The Anschutz Company at Referenceforbusiness.com

Various internet searches for Sprint, MCI and Qwest

More Information

Sprint, on Wikipedia

MCI on Wikipedia (Microwave Communications, Inc.)

GTE/Verizon on Wikipedia

Execunet II Decision, April 1978 (this was the basis for SP's creation of Sprint)

Breakup of AT&T on Wikipedia

Sprint on NPR -- National Public Radio's "All Things Considered" has a one-minute history of SPRINT.

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