José Sitzenstatter’s concession

José Sitzenstatter claimed that he helped to design the world's first telephone exchange in 1878. He moved to Stockholm in the mid-1880s to reinforce the Bell company's Stockholms Bell Telefonaktiebolag subsidiary, which considered that it was seriously threatened by a local newcomer, Stockholms Allmänna Telefonaktiebolag (SAT). Bell's Swedish subsidiary asked its US parent company for assistance, and the answer was Sitzenstatter.

In the course of his period of service in Stockholm, Sitzenstatter, who was of Hungarian extraction, was regarded as a linguistic genius. Swedish became the seventh language he mastered, but his assistance was of no avail. In 1888, SAT acquired the majority of the shares in Stockholm Bell, thus terminating the American company's role in Stockholm.

Peder Hammarskjöld, the manager of Ericsson's London sales office in the early 1900s, was unaware of Sitzenstatter's existence until a man, who was clearly not a Swede, stepped into his office in 1903 and started to engage him in small-talk in almost perfect Swedish. Initially, Hammarskjöld was puzzled, but when Sitzenstatter presented himself and explained the reason for his visit, he started to pay more attention.

As a result of his contacts with important personages in Mexico, Sitzenstatter had received a license for a telephone service in Mexico City and the surrounding area. Mexicana, the Bell subsidiary in Mexico was charging such high rates to subscribers that expansion of the telephone system was being held up. It was considered that greater competition was needed in the capital city. Sitzenstatter said that he regarded Ericsson as a highly competent company, and offered to transfer his license in the Mexico City area to Ericsson, in order to challenge the Bell monopoly.

Ericsson's senior management had doubts about whether they should accept the offer - hitherto the company had specialized in the manufacture of telephone equipment and had left the operation of telephone networks to others. SAT was the operator in Stockholm, for example. However, H.T. Cedergren, SAT's founder and president had joined the Ericsson Board in 1903, and he was in a good position to assess Sitzenstatter's offer. He knew Sitzenstatter and respected his expertise in the telephone sector.

In 1904, Ericsson's management, headed by Axel Broström, the president, and with Cedergren's approval, decided to apply for the Mexican concession. The Mexican authorities granted a license in the following year, and Ericsson's Articles of Association were amended to permit the company to become an operator. A consortium was formed for the Mexican venture, in which Ericsson had a 60 percent holding and SAT 20 percent. The remaining 20 percent was held by a leading Swedish banker, Marcus Wallenberg Sr, since Stockholms Enskilda Bank already had business interests in Mexico.

Sitzenstatter was employed by the consortium to assist its personnel in Mexico in the initial phases. In preparation for his new assignment, Sitzenstatter inspected the SAT's telephone installations in Warsaw and Moscow, under the guidance of Hemming Johansson. These installations had been supplied by Ericsson and they employed the same technology which was to be used in Mexico City.

When Karl Wilhelm Gerdhem, the consortium's manager left Mexico in 1907, following completion of the first telephone exchange, Sitzenstatter took over the reins. But when the consortium was listed on the stock exchange in Sweden in 1909, Erik Östlund, a 34 year old engineer, became the first president of Mexikanska Telefonaktiebolaget Ericsson.

Following the receipt of shares in the new company under the terms of his agreement with the consortium, Sitzenstatter ceased to be employed by Ericsson. But the part he played was more significant than anyone realized at the time. As a result of Ericsson's entry into the Mexican market at such an early stage, the company had an advantage over its competitors in the Latin American market - which was to become increasingly important for Ericsson. In addition to this Mexico was the one market where Ericsson could supply its own concession company with telephone material prior to the merger with SAT in 1918.

Sitzenstatter continued to work in Mexico, and in 1911 he received a new concession for the city of Vera Cruz. His continued participation in the telephone industry is demonstrated by a postcard with a picture of Sitzenstatter in Ericsson's archives, dated 1926 and accompanied by the following text: "José Sitzenstatter - in the telephone harness since 1877. Don't it seem time I make room for somebody of a later generation?"

Hemming Johansson's comment on Sitzenstatter was that he was "a lively and entertaining fellow, who could keep people amused and appreciated good food, drink and the charms of female company. But he also turned out be somewhat unreliable and not altogether serious-minded about financial matters." In other words, this Hungarian-American cosmopolitan's behavior did not always correspond with the precision and discipline expected of a Swedish engineer.

Author: Mats Wickman

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