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French seek to repeat videotex success in U.S.


A little over a decade ago, French people complained half the population was waiting for a telephone, the other half for a dial tone. Today, France claims the most digitized telephone network in the world, and over 95% of French homes have a phone.

Just as impressive has bee the success of the French videotex system, originally called Teletel but more popularly known as Minitel after the subscriber terminal of the same name. In a lavish ceremony in Paris recently, the French PTT, France Telecom, proudly commemorated the delivery of the 5 millionth Minitel terminal, and predicted growth to 8 million terminals within three years.

France Telecom estimates over 15% of homes already have a Minitel terminal and over 30% of working people have access to one. In contrast, the British and West German PTTs have attracted fewer than 200,000 subscribers to their videotex services.

Mindful of the united Europe of post-1992, France Telecom is busy expanding Minitel's presence on the continent by interconnecting wiht the smaller national videotex networks of neighboring countries and Scandinavia. And in what may be its greatest challenge, France Telecom now seeks to repeat its success in the U.S.--historically a graveyard for consumer and business videotex.

Secrets To Success

When other videotex ventures have failed, why has the French system been so successful? Was it the radical plan to replace paper telephone directories with electronic service and to distribute terminals free of charge for subscribers to access the service? This plan did overcome the chicken-and-egg problem, where users wait until there are enough services before subscribing, and service providers hesitate to sign up before there are enough users. Also, the Electronic Directory Service forced millions of users to become familiar with the Minitel terminal, paying the way for other videotex services.

However, there are other, less obvious, reasons for Minitel's success, according to Susan Michaelides, director of business development with Intelmatique, France Telecom's international videotex company. One is the open system design of the Minitel service. Service providers maintain their own databases on their own computers and are able to control marketing factors such as image and pricing. With closed systems, such as British Telecom's Prestel, the PTT maintains all the databases on its own large computers.

In France, users access Minitel via the telephone network, while service providers generally use the Transpac packet-switched network to connect their host computers to the service. This arrangement provides the convenience and economy of uniform, low-cost access anywhere in France, regardless of the host computer's location.

Also, France Telecom has introduced an innovative method of charging for the use of videotex services. With this so-called kiosk charging, there are no subscriptions or passwords, as there are with most on-line services, and no direct billing by service providers. Instead, users pay for videotex calls on their regular telephone bills and France Telecom hands over a portion of the collected sums to remunerate the service providers. Because these payments are based on traffic statistics, the more popular a service, the greater a service provider's income.

Large profits for service providers have generated a flood of new businesses that sell services over the network, creating tens of thousands of jobs and adding to France Telecom's revenues. In 1988, France Telecom reported a gross income of $438 million from its videotex service.

By 1993, France Telecom projects a domestic population of 8 million Minitels, including 3 million terminals in the workplace, or three times the present figure. It also expects the number of service providers to grow from the current 13,000 to more than 20,000.

With europe heading toward unity after 1992, Intelmatique is busy leveraging Minitel's success by interconnecting with other European videotex services. February saw the interconnection of Minitel and the Italian PTTs videotex service, adding to existing ties with Belgium and Finland. This year Spain, West Germany, Luxembourg and Portugal will also join the club, Intelmatique is also working with Telecom Eireann to develop a national videotex service for Ireland based on Minitel technology.

RHBCs Test Waters

France Telecom is also focusing on the U.S. market and has established a videotex subsidiary, Minitel U.S.A., based in New York City. According to its president, Hilary Thomas, the firm has three aims. First, its seeks to promote usage of French videotex services in the U.S. One way is through another New York-based subsidiary, Minitelnet, which provides a North American gateway to the 13,000 services on the French videotex system.

The second aim is to stimulate the growth of videotex through consultancy and collaboration with partners. Minitel U.S.A. makes the expertise and experience of France Telecom available to network operators wishing to construct videotex networks. US West is drawing on this resource for its CommunityLink service in Omaha, which is based on the French Minitel sytem.

US West began the service las November by renting the French Minitel terminal for $7.95 per month and providing 218 information service, including classified ads, community schedules and local news and sports information. US West also gave out software packages to PC users. After three months, CommunityLink had 1300 subscribers and over 400 services supplied by 80 information providers.

Southwestern Bell also supported Minitel for its one-year trial of a gateway service, called SourceLine, which could be accessed by PC or Minitel terminals renting for $9.95 per month. The company is currently evaluating the results of the trial before deciding on whether to follow US West's lead.

The third role for Minitel U.S.A. is to invest in joint ventures with North American partners to develop successful videotexf businesses. One example of this strategy is Minitel Services Co., a joint venture with Infonet, the worldwide communications network provider. Minitel Services Co. is cultivating videotex in North America by making start-up easy for both users and new information providers. Users can access Minitel services without preregistering, just by dialing the network and entering a credit card number.

All the information provider requires is an IBM PC AT or compatible to develop a service and market to users worldwide. Minitel Services Co. handles all billing and administration, provides market research and promotes all services on Minitel.

Videotex services in the U.S. got a boost when Judge Harold Greene opened the way for the regional Bell Holding Companies (RBHCs) to offer information services. While the order stopped short of allowing the RBHCs to provide information content, it supported the idea of providing information through gateways accessed through their networks.

However, while Nynex, Bell Atlantic and BellSouth have already joined the ranks of gateway suppliers, questions remain about the viability of videotex in the U.S. There is a reluctance to invest in distributing a massmarket Minitel-like terminal. There's no "magnet" service, such as the French electronic directory service, to stimulate videotex usage. U.S. videotex companies must contend with a variety of terminals and a lack of clearly defined videotex standards as well.

But Minitel's Hilary Thomas is optimistic: "The success of videotex in France is not only a success for France Telecom but for the entire videotex industry."
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Title Annotation:includes related article on Minitel aiding cable TV
Author:Edwards, Morris
Publication:Communications News
Date:Jun 1, 1990
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