Editing Packet Switch Stream (section)

== Investment challenges ==

=== Early years ===
PSS suffered from inconsistent investment during its early years. Sometimes not enough and sometimes too much but mostly for the wrong reasons. BT's attitude to packet switching was ambivalent at best. France's [[Transpac (network)|Transpac]] had a separate commercial company with dedicated management and saw X.25 packet switching as a core offering. BT's then senior management regarded packet switching as a passing phase until the telecommunications nirvana of ISDN's 64&nbsp;kbit/s for everyone arrived.<ref name=":8">{{Cite book |url=https://books.google.com/books?id=y-tFrTTweRIC&pg=PA337 |title=The "Hidden" Prehistory of European Research Networking |publisher=Trafford Publishing |isbn=978-1-4669-3935-6 |pages=28 |language=en}}</ref>

=== Tymnet acquisition and exchange for other assets ===
BT bought the [[Tymnet]] network from [[McDonnell Douglas]]. BT subsequently exchanged major US elements of the Tymnet business with [[MCI Communications|MCI]] for other assets when the proposed merger of their two businesses was thwarted by MCI's purchase by WorldCom.

In the words of BT's own history:<blockquote>
British Telecom purchased the Tymnet network systems business and its associated applications activities from the McDonnell Douglas Corporation on 19 November (1989) for $355 million. Its activities included TYMNET, the public network business, plus its associates private and hybrid (mixed public and private) network activities, the OnTyme electronic mail service, the Card Service processing business, and EDI*Net, the US market leader in [[electronic data interchange]].

BT Tymnet anticipated developing an end to end managed network service for multi-national customers, and developing dedicated or hybrid networks that embraced major trading areas. Customers would be able to enjoy one-stop-shopping for global data networks, and a portfolio of products designed for a global market place.

These services were subsequently offered by BT Global Network Services, and subsequently by Concert as part of Concert Global Network Services after the Concert joint venture company was launched on 15 June 1994.
</blockquote>

=== Later years ===
Even in later years, BT's senior management stated that the Internet was "not fit for purpose".

Investments in [[value added network services]] (VANS) and BT's own access level packet switching hardware delayed operating profit. This in turn dented PSS's low credibility with BT's management still further. Despite healthy demand for basic X.25 services and the obvious trend for more demanding bandwidth intensive applications that required investment in more powerful switches a decision to develop BT's own hardware and network applications was made instead.

In the midst of this IBM (the then market leader in computing) and BT attempted to launch a joint venture, called Jove, for managed SNA services in the UK. And for a time significant extra expenditure was allowed for BT's data services, PSS being the major part, as one concern of regulators was this joint venture might damage work on Open Systems Interconnection. This only made cost control worse and achieving operating profit delayed further. Eventually the UK government decided the SNA joint venture was anti-competitive and vetoed it. But not before PSS management was allowed to commit to large investments that caused serious problems later.

One of the few successful value added applications was the transaction phone used to check credit cards by retailer to validate transactions and prevent fraud. It was believed that putting a packet switch in every local telephone exchange would allow this and other low bandwidth applications to drive revenue. The lesson of Tymnet's similar transaction phone that just used a dial up link to a standard PAD based service was not followed. Each low end packet switch installed added costs for floor space, power, etc. without any significant value added revenue benefit resulting. Nor were they adequate for X.25 host traffic.

Ideas such as providing a menu based interface, called Epad, more user-friendly than X.28 was proven obsolete by the advent of Windows-based clients on PCs.

As the added value services, named PSS Plus collectively, added significant costs and headcount while contributed virtually no revenue a change in PSS's management eventually resulted. While a decision was eventually made to put some of the basic network services people in senior positions and try to launch what had been developed this proved to be a major mistake. An exodus of people who were developing the value added network services helped reduce some costs. However significant on-going expenditure had been committed already to manufacture packet switch hardware and by using the very expensive Tandem computers in existing VANS. Operating profit was still not achieved and a further change in management with McKinsey consulting being called in.

McKinsey's recommendation that increasing revenue while cutting costs was required to turn around the business was duly followed by the new management and an operating profit achieved in about 1988. This rested on running PSS efficiently and cutting the VANS as much as possible. PSS was then merged with other failing business like [[Prestel]] as it became part of a larger Managed Network Services division that was used to fix or close BT's problem businesses.