red with gas and water. The value of these utilities was inherent in themselves and largely independent of whether one's friend or neighbour also had access to them. In contrast, the value of telephony services largely depended on whether one's friend and family had a telephone subscription: the value indeed increased as more subscribers joined the network. From a natural monopoly point of view, an operator with the largest number of subscribers was likely to attract more subscribers since most of one's network were also likely to be subscribers. On the other hand, similar to all large fixed-cost utility businesses, telephony service provi- sion duplication was inefficient. No house is served by two set of water or gas pipes or electricity wires. These factors meant that telephony companies in each local, and soon national, market became natural monopolies. While in the United States, BTC remained a private company, in almost all other countries telephony operation was conducted through government-owned companies. These companies remained monopolies until the late 20th century when they were largely sold-off following a global trend in deregulation and privatisation. These operator companies owned the infrastructure, generally the twisted pair copper wires connecting a subscriber's premises to an exchange, the exchanges and switches and cables connecting the exchanges together. They also were the retailer of the telephony service: managing the subscriber and ensuring a mandated GoS was maintained. Furthermore, they controlled and provided most of the content provided over telephony networks: contents such Voice Communications Vertically integrated operator (AT&T, British Telecom, etc.) Content and services layer Connectivity retail layer Infrastructure layer Subscriber/End-user Figure 3.18 Vertically integrated operators of the first century of telephony services Telephone Platform Manufacturers Subscribers More subscribers join the network More manufacturers start to build devices Cost of devices decreases Pool 