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It All Started with TOILET PAPER

by Bob Estreich

Fredrik Idestam's name is known to very few telephone collectors, but indirectly he had a major impact on the world's telephones.

In 1865 Idestam opened a wood pulp factory in his home town in Finland. He appears to have "borrowed" the technology from a German firm and adapted and improved it for Finnish conditions. The factory produced a range of paper products including toilet paper. His main customer was Russia, with whom Finland had close political ties. The business thrived, so he left it in the hands of his son-in-law in 1895 and traveled to the United States looking for new business opportunities.

In 1898 he returned with the European rights to the newly-invented vulcanizing process for rubber. He started a new business, the Finnish Rubber Works. They made rubber boots and galoshes and later, car tyres. Again, with Idestam's business abilities, it thrived. Idestam built a network of international salesmen and gained a place in many countries that was to help the company in the future. They were now generating their own hydroelectric power for the firm and the town, a measure of their success and growth. Idestam was able to retire to a local retirement home, leaving the companies in the hands of good managers. He retained a fifty percent shareholding, so it would have been a comfortable retirement.

In 1912 the company branched out again and opened the Finnish Cable Works, producing rubber-insulated cables for the new electrical and telephone systems that were springing up worldwide. Although the Russian Revolution was a setback to sales in Russia, it encouraged the company to look further afield for markets. The end of the First World War saw them well-placed to service the growth in power and telephone cables. In spite of this, rubber boots and paper products were still the major part of the firms' output until the 1950s.

Finland had allied itself with Germany during the Second World War, so it was forced to pay reparations to Russia after 1945. This placed a huge burden on the companies, which had to export large amounts of cable as part of the reparations payments. In spite of this, their relations with Russia remained cordial and Russia became a major customer once again.

By 1967 the various companies were finally amalgamated into one corporation. Under new manager Kari Kairamo they moved into consumer electronics in the late 1970s and early 1980s. Their outlook changed from Russia to the west. They gained a huge amount of technical expertise by buying other companies.

Unfortunately so did many of their competitors such as Dutch giant Philips, and Siemens in Germany. The company found itself in serious financial problems and it only worked its way through this period with Government help. The help was appropriate, since it had now become Finland's largest company. Fortunately their previously unregarded "cancer ward", their name for the costly research and development group, was getting things together. They were able to move into new areas that were to save the company. They had been working on radio transmission since 1962, and its application to consumer areas. Their expertise was especially strong in military portable radios.

At a time when most telecommunications systems were government-owned there was little room for new companies, so new areas of technology were needed to develop into. One of these areas was mobile phones. They launched their first mobile phone in 1984 and never looked back. The research people from the "cancer ward" had developed a full mobile phone infrastructure transmitters, control units, software etc so they were able to move into the market strongly and successfully. They were able to introduce the vital Pulse Code Modulation technology before any other European country.

Although their earliest NMT mobile system was widely used only in northern Europe, it laid the groundwork for all the later cellular phone technologies. Many of their patents are still in use worldwide in the mobile phone industry. They have maintained their lead in mobile phone technology into the 21st century. Their shares trade worldwide, and they account for more than fifty percent of Finland's total share trades. They make around one third of the world's mobile phones in 120 countries. Their mobiles are only outsold in the United States by Motorola. Quite a step up from toilet paper.

Fredrik Idestam died in 1916. He left his shares in his company to a trust fund to provide amenities for the members of his town's nursing home. That makes them the richest retirees in Finland, for they own half the shares in the company named after the river that flows through Idestam's home town - the Nokia.

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