Minitel -- the resistible rise of French Videotex

Ewan Sutherland

An Artificial Market

The Cour des Comptes, the French national auditors, reported in 1989 that Minitel had cost considerable sums of government money and had failed to make the savings promised. Consequently, it was losing money for France Télécom. (See Table) Moreover, such demand as it had created was 'artificial' because the costs of the investment were not being recouped by the charges made for the service. [Cour des Comptes, 1989]

Table Cumulative Savings and Costs to 31 December 1987

Savings on printed directory 147
Savings on directory enquiries 272
Miscellaneous receipts 122
Tariffs from traffic 1,779
Rental of Minitels 618
Total savings 2,939
Terminals 6,144
Distribution of terminals 150
Other equipment 1,673
Maintenance 339
Total costs 8,307
Deficit FFr 5,367 M

Note: Calculated in 1987 Francs.

The basis of the cost justification was to have been the reduced costs for printing directories together with reduced running costs for the directory enquiry service. It would also generate new revenues from the network traffic by the use of the Minitels. Together, these were to cover the cost of investment. After the removal of the element of compulsion in distribution of Minitels, this prospect declined considerably.

Minitels have a life expectancy of seven to eight years, within which period the Cour des Comptes considered it was impossible to recover the costs using the existing tariff. This life expectancy also implies that a programme of replacement will soon be required.

France Télécom countered that additional, though unspecified, telephone traffic had been generated by the use of the online directory. Minitel was still growing, making estimates of profitability difficult and suggesting the Cour des Comptes underestimated income. Revenues from Transpac had been omitted from the calculations. France Télécom stressed that Minitel was an accepted international success.

Instead of developing Minitel, the Cour des Comptes suggested, that the money would have been better spent on the reduction of business telephone tariffs. This comment reflects the comparatively high telephone and data communications tariffs set by France Télécom.

France Télécom has undoubtedly been far more successful than any other PTT in developing videotex (See Table). Even allowing for a level of nonuse allegedly as high as 40 to 60% it still exceeds comparable countries by a large margin. The Cour des Comptes failed to consider the profits generated by Transpac, neither did it try to quantify the return from the manufacture of Minitel systems. Therefore, in one sense Minitel can be judged a success, even if the shortterm financial basis is less clear.

Table National Markets for Videotex in 1988

CountryTerminalsServicesPopulationTerminals per 1000 population
France 4,227,0769,57857,100,100 74.03
Germany 122,069 3,37961,180,000 2.00
Sweden 16,700 n.a. 8,458,900 1.97
Australia 32,000 200 16,263,300 1.97
Netherlands24,945 223 14,805,000 1.68
Austria 9,084 643 7,573,000 1.20
Finland 4,414 262 4,955,000 0.89
Norway 2,092 150 4,221,538 0.50
Ireland 1,700 10 3,540,000 0.48
Italy 27,499 280 57,527,437 0.48
Belgium 4,303 100 9,876,000 0.44
Canada 4,000 50 25,795,800 0.16
Brazil 15,188 47 144,427,5860.11
Spain 988 n.a. 39,217,804 0.03

[Source: UIT, 1990]

The Quickening Pace of Technology

Trials of the French ISDN service, Numéris, were conducted first in St Brieuc in 1987, then in Rennes and Paris in 1988. The trial was further expanded to Lille, Lyon and Marseille in 1989. In 1990, France Télécom was able to offer ISDN on a national basis, the first country to do so. Experience from Minitel and similar ventures had made clear the importance of providing a national service as soon as possible. [Dunogué, 1990]

The key question with ISDN concerns the services which consumers would buy; 'putting the S into ISDN'. At present, the evidence is that photovideotex is being used, for example, by estate agents to sell property. Some businesses are beginning to use Group 4 Facsimile, which is a technical upgrading of Group 3 facsimile, of much higher quality.

The Commission of the European Communities has been active in telecommunications in technical developments, through programmes such as RACE and ESPRIT. It has played an important role in the development of the idea of Integrated Broadband Communication (IBC), which will eventually replace ISDN.

A major French experiment has been conducted at Biarritz, to evaluate interactive cable television. As yet, the Government has not chosen to act the findings and the experiment has been played down in recent months. However, interactive cable represents a logical extension of Minitel, with a number of advantages, including an enormous increase of the bandwidth for signalling and potentially very large audiences.

The Single Telecommunications Market

French telecommunications are at least technically comparable with other leading countries and arguably better. (See Table)

Table Telephone Statistics

CountryTelephone lines per 100 populationMobile lines per 100 population
France 45.232.5
Germany 45.902.0
UK 39.0011.5
Belgium 36.040.2
Italy 34.930.8
Norway 47.7638.4
Japan 40.68n.a.
Canada 51.20n.a.
USA 40.91n.a.

[Source: UIT 1990 & Financial Times 1989]

Where France is clearly lagging is in mobile telephony. France Télécom has been far slower to introduce cellular radio systems than the UK or the Nordic countries.

In the areas of regulation and liberalisation, France has been slow to change. It is unclear whether France has liberalised its telecommunications industry to the extent necessary to be able to face the current round of changes. The European Commission is endeavouring to create a single market in telecommunications, both data communications and value added services. The USbased RBOCs (regional Bell operating companies) and other liberalised telecommunications operators (e.g., Cable and Wireless) are developing global networks and are moving into Europe. Meanwhile, the French postal and telecommunications services are only now being separated.

At a meeting of the Telecommunications Council in December 1989, the European Community decided to create a single market in telecommunications and services. From 1 January 1991 there will be a free market in value added services which will be followed by a free market in data services from 1 January 1993. Greece, Portugal and Spain are to be allowed an extra two years to develop their data services before they would be exposed to competition.

The creation of this market occurs at a time when the RBOCs are beginning to flex their muscles in Europe. From the European perspective a danger lies in creating a market in time for the Americans to take the largest share. We have already seen AT&T acquire the UK firm ISTEL as part of its Global Messaging System. Given the large installed user base of Minitels it would be relatively easy for service providers to move into the French market.

There is little evidence of French providers of VANs striking out beyond France, other than in collaboration with France Télécom in a few small scale joint ventures to provide Minitel service in other countries. Some new traffic is being generated from links to other countries, allowing some consumers to access French Minitel services.

What the Customer Wants

The life of the technologist is continually confounded by the cussedness of the customer, whose unpredictability and disinterest are legendary. Videotex, outside France, failed to convince, partly because technology and not services were being sold.

"Many executives in this infant industry are haunted by the fear that the inventors once again trapped management into investing in something simply because it can be done [Meyer, 1983]."

We may live in the information society but, paradoxically, people do not appear to want information on a personal basis and certainly will not pay the full price for it.

Home banking has been a considerable success, with most banks participating. It was a logical extension of the automation of banking through the development of cash dispensers, treasury management systems, etc. However, evidence from the UK suggests that voice-based systems are a much cheaper and attractive alternative.

Teleshopping has also been successful. It to was a logical extension of automation in the retail sector, part of a growing rationalisation of the distribution of goods. There remains considerable scope for further developments. One very attractive area is comparison shopping, showing tables of prices for the same goods in different stores.

At present we are seeing a massive growth in voicemail, to such an extent that it might overtake electronic mail. This seems to reflect ease of use. It is in clear contrast to the relatively lacklustre performance of X.400.

[ Introduction | Invention | Marketing | French telecommunications | France Télécom | French videotex | Messagerie Conviviale | Unnatural market | Cour des Comptes | Quickening pace of technology and politics | Conclusion | Bibliography | Chronology | Web links ]
Copyright Ewan Sutherland, 1995.

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