The French System : A Successful Implementation of a National Information Technology Infrastructure Author(s): William L. Cats-Baril and Tawfik Jelassi Source: MIS Quarterly, Vol. 18, No. 1 (Mar., 1994), pp. 1-20 Published by: Management Information Systems Research Center, University of Minnesota Stable URL: http://www.jstor.org/stable/249607 Accessed: 04/01/2010 13:20

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http://www.jstor.org The French MinitelSystem

The French Videotex Introduction Establishingan advanced national information System Minitel: A technologyinfrastructure has been arguedto pro- vide competitiveadvantage not onlyfor the coun- Successful tries that develop it but for the companies that of a operate in those countries. For example, in the Implementation UnitedStates, a proposalto implementa national National Information data superhighwayhas been enthusiasticallyen- dorsed by the Clintonadministration as a means Technology to improveAmerican competitiveness (Markoff, 1993). Singapore has been offered as an exam- Infrastructure ple of a country with a national data highway (Kingand Konsynski,1990). Researchers have attemptedto explainthe degree of success of na- By: William L. Cats-Baril tionalinformation technology projects by analyz- School of Business Administration ing the politicaland economic environmentsof University of Vermont those countries. This article follows that line of Burlington, Vermont 05405 inquiry.It describes the developmentof the most U.S.A. successful nationalvideotex system-the French Teletel system-and explains why it was suc- Tawfik Jelassi cessful while most other national videotex Technology Management Area systems have been commercialfailures. INSEAD Thisarticle has two purposes.The firstis to docu- Boulevard de Constance ment the major decisions-technical and 77305 Fontainebleau political-that made Teletel the most successful France commercial videotex system in the world. The second is to understandthe factors that made Teletel successful in orderto generalize fromits Abstract lessons. The materialfor the article came from Building an advanced national information a series of interviews,from 1990 to 1992, with technology infrastructurecan provide a com- former and current senior officials of France British the petitiveadvantage for the countriesthat develop Telecom, Telecom, Bundespost, and US it as well as for the companies that operate in West; with service providersand users of those countries. This article describes the Minitel;from internaldocuments from a variety development of the French national videotex of government agencies, and from published system Teletel,also knownas Minitel.The factors materials. -technical and made Teletelsuc- political-that Inthe late 1970s, videotex2was an fix- cessful are and important explained contrasted against ture of the telecommunications of other national videotex landscape systems that became most industrialized countries. national commercialfailures. Political Many intrigue,technical Post, and creative Telephone Telegraph(PTT) companies capability, choices, and the deep and commercialventures started videotex of a pilot pockets government-ownedutility are allpart Videotex was seen as one of the driv- of the Teletel projects. story. ing forces in the movement towardan informa- tion society. In 1982, there were at least 50 Keywords: Information com- technology, videotex projects in 16 countries of Western of diffusionof in- puterization society, Europe, Japan, and NorthAmerica. novation, IS technology transfer, public policy, videotex, case study A decade latermost of those projectshave failed. One noted exception is France's famous ISRLCategories: A10102, BC03, BDO101, Teletel.3T6letel is the most commerciallyviable DD0502, EL05, HA0804 national videotex system so far. As of 1993,

MIS Quarterly/March1994 1 The French MinitelSystem

Teletel has over 6 millionsubscribers and 20,000 Telematiquedescribes the mergerof computers services, and handles close to 2 billioncalls and and communicationtechnologies so as to create 110 million hours of connection time a year. informationprocessing applicationswith broad These statistics dwarf,for example, the private- societal impact. Nora and Minc predicted that ly owned Americansystems Prodigyand Com- eventuallyTelematique would affect all aspects puserve,which have arounda millionsubscribers of society-education, business, media, leisure, each and two thousandservices. Britain'sPrestel and routineday-to-day activities. By increasing (150,000 subscribers and 1,300 services) and access to information,Telematique was expected Germany'sBildschirmtext (250,000 subscribers to decentralize government and business deci- and 3,500 services), which ranked second and sion making, increase nationalproductivity and thirdin the worldduring the 1980s, are todaycon- competitiveness, and improvethe abilityto re- sidered commercialfailures, and theirprospects spond to an increasinglyfast changing environ- for growthare not promising(Schneider, et al., ment (Nora and Minc, 1978).5 1990). Noraand Minc'svision would requirea new na- What made Teletel such a success? tionalcommunication infrastructure, a long-term strategy, and cooperation between the govern- ment and business sectors. One recommenda- tion was for the Direction Generale des Telecommunications(DGT), as France T6lecom was then named, to encourage cooperation Background among computerservices companies and hard- ware manufacturers.Together they would pro- duce the technical components of the required Informationtechnology and French infrastructure.Another recommendation was for industrialpolicy the DGT to implement a research programto develop applicationsto leverage the infrastruc- Inthe mid afterthe American 1960s, particularly ture investment (Nora and Minc, 1978). Congress denied a permitto exporta large IBM mainframecomputer to the Frenchgovernment, Such recommendationsare typicalof Frenchin- French politicalcommentators started to voice dustrialpolicy. The strategyof havingthe govern- concerns that France was falling behind the ment orchestrate and subsidize large in informationtechnology. Some technological projects by creating alliances predictedthis wouldsoon be an intolerablesitua- among companies had been used frequentlyin tion of technological and culturaldependence. the transportationsector (e.g., Ariane, Airbus, Forexample, PresidentValery Giscard d'Estaing Concorde, TGV).The government has gone as stated that "For France, the Americandomina- far as "rationalizing"an industrialsector (e.g., tion of telecommunicationsand computers is a electronics) by encouraging mergers. As Jean- threatto its independence in the cruciallysignifi- Paul Maury, director of Minitel at France cant if not overridingarea of technology and in Telecom, put it, "Thistype of large industrialproj- the fieldof culture,where the Americanpresence, ects, or as we [the French]call them, 'les grandes throughtelevision and satellite, becomes an om- aventures,' have always captured the imagina- nipresence."Similar concerns continuedthrough tion of French politicians." the 1970s and influenced a central piece of the industrialpolicy of the country.4 The French telephone system in the In 1975, PresidentGiscard d'Estaing asked two researchers-Simon Nora and Alain Minc-to 1970s suggest a strategyto computerizeFrench socie- In 1974, when Giscardd'Estaing became presi- ty. Their reportbecame a best-seller (Nora and dent of France, the French telecommunication Minc, 1978) and coined a new word "Telema- system was very weak. Less than 7 million tique" (from telecommunication and informa- telephone lines served a populationof 47 million. tique). It was proposed as the cornerstone of Thiswas one of the lowerpenetration rates in the French industrialpolicy. industrializedworld and equivalent to that of

2 MIS Quarterly/March1994 The French MinitelSystem

Czechoslovakia. Customers waited four years to well (e.g., Matra and Philips). To drive equipment get a new line, and most rural areas were still prices down, the DAIIannounced that an impor- equipped with manual switches (Chamoux, 1990; tant criterion in choosing suppliers would be their Mayer, 1988). ability to export and acquire larger markets.

President Giscard d'Estaing made the reform of The government push toward standardization the telecommunication infrastructurea top priori- and export of equipment was partially responsi- ty. In April 1975, the Conseil des Ministres (a ble for lowering subscription charges, resulting cabinet-level meeting among the secretaries of in more than doubling the number of telephone all agencies) approved the president's program lines between 1974 and 1979. By the late 1980s, under the banner "Le telephone pour tous" (a the penetration rate was at 95 percent, one of the telephone for everyone) (Marchand, 1987a). higher among the industrialized nations (Chamoux, 1990). Also in 1974, Gerard Thery took over as director The transformation of the French telephone net- of the DGT. At that time, the direction strategic work from the of to the most of telecommunication was set the "joke Europe" technology by modern of took some 10 and a Centre National d'Etudes des Telecommunica- Europe years tremendous amount of resources. Indeed, from tions (CNET). The CNET was, and continues to 1976 to 1980, the DGT was the largest investor be, the research and development arm of the in France, averaging around 4 percent of the total DGT. The CNET was dominated by engineers national investment in the country (Hutin, 1981). whose responsibility and vocation was the design The total cost of the transformation has been of new products. They focused on technical prow- estimated at around FF120 billion6 ess and innovation. (Dawkins, 1992). Once the design of a product was complete, the CNET negotiated directly with the telecom- Teletel munication industry for the development and commercialization of the product. The CNET engineers were constantly trying new A strategy to increase telephone technologies without a clear technological migra- traffic tion plan. This practice forced manufacturers in- to short production runs, made manufacturing The magnitude of the investment required to economies of scale impossible, drove prices up, create the telephone network raised questions of and made network compatibility difficult to how to maintain its expansion and how to achieve (Housel and Davidson, 1991). recuperate the modernization costs. In early 1978, with the telephone penetration rate grow- the orientation of the CNET. The Thery changed ing very quickly, Thery realized that telephone CNET a more commercial and adopted traffic alone would not be enough to pay back the attitude The pragmatic (Dondoux, 1990). change investment in the telephone network and the in culture was difficult at first and led to a long public packet-switched network (Transpac). and bitter strike. vision Eventually, Thery's Thery asked the CNET to generate ideas for new prevailed, and a new relationship between the services to increase traffic. These services would DGT and the French telecommunication have to: (1) provide greater access for all citizens manufacturers was and Davidson, forged (Housel to government and commercial information, (2) 1991; Marchand, 1987a). benefit as many elements of society as possible, A more commercial orientation at the CNET was (3) demonstrate the value of merging computing and be flexible realized by creating the Direction des Affaires In- telecommunications, (4) enough to avoid and dustrielles et Internationales (DAII)and by bring- quick technological obsolescence, be and ing an outsider in as its director. One of the (5) profitable (Housel Davidson, 1991). principalfunctions of the DAIIwas to ensure stan- Thery prepared a report for the Conseil des dardization of equipment. The DAIIinvited bids Ministres detailing six projects: the electronic not only from the traditional suppliers of the DGT telephone directory, the videotex, the (e.g., CIT-Alcatel, Thomson) but from others as videophone, the wide distribution of telefax

MIS Quarterly/March1994 3 The French MinitelSystem

machines, the launching of a satellite for data telephone directory required that a great majori- transmission, and the voice-activated telephone. ty of the subscribers be able to use it. To do so, The background for his presentation was the subscribers needed to have access to an easy- Nora and Minc (1978) report and the need, as to-use, inexpensive terminal. perceived by Thery, to counter the threat of the DAII a scenario of American computer manufacturers capturing planners explored distributing terminals free of to subscribers. critical strategic markets if left unchallenged. charge They reasoned that with the cost of each paper The Conseil des Ministres approved videotex and telephone book being FF100 (and increasing), the electronic telephone directory. Three years the FF5007 cost of a dedicated terminal could after the successful launch of the "Le telephone be recovered in less than five years.8 pour tous" campaign, "la grande aventure du Teletel" had begun. The initialtesting of the electronic directory began in July 1980, in Saint-Malo, a small town of 46,000 people in the county of Ille-et-Vilaine.The Teletel: A brief history town was chosen for its size and proximity to the of the CNET where the electronic Work on Teletel began in the mid 1970s. The first headquarters was The actual videotex ex- prototype was shown at the 1977 Berlin Trade directory developed. started in suburb of Paris with Fair. The Britishdemonstrated at that show a very periment Velizy-a a socio-economic and a impressive operational videotex system. Thery representative profile network in June 1981 realized he had to move fast. In late 1978, he per- good telephone place-in with a of 2,500 homes and 100 different suaded the government to allow the DGT to pur- sample services.9 After two the sue the Teletel project, and a test was set for years, Velizy experience December of 1979. showed that 25 percent of the users were respon- sible for 60 percent of all traffic, that a full one- France Telecom initially made plans for just two third of the sample never used the device (this applications: the development of an electronic proportion of non-users has remained constant telephone directory and classified ads. While the throughout the dissemination of minitels), and electronic directory service was a welcome in- that overall, households had a positive ex- novation, the press and its powerful lobby perience with Teletel. The experiment was con- generated a political furor over the government sidered a success in both technical and meddling in the classified ads business. The DGT sociological terms (Chamoux, 1990; Marchand, dropped the classified ads idea and concentrated 1987a). on justifying the videotex project on the electronic telephone directory alone. In February 1983, a full-scale implementation of the electronic directory was started in the whole With seven million new lines added telephone county of Ille-et-Vilaine. The county is made up between 1974 and 1979, a telephone directory of both rural and urban areas and is home to was obsolete before it was (and it was printed 250,000 people. In the opening ceremony, Louis twice a the cost of printed year). Also, printing Mexandeau, the new secretary of the PTT, ex- the French had so telephone directory gone up ulted "We are here today to celebrate the begin- that in 1979 the direc- rapidly paper telephone ning of a 'grande aventure,' an experience which tory lost FF120 million. Between 1979 and 1984, will mark our future." Francois Mitterrand had another 7 million lines were to phone expected replaced Valery Giscard d'Estaing as president be installed. The cost of the printing directory of France, the "left" was now in power, but the alone was to double in five and expected years, rhetoric on the importance of Telematique to the the of was to quantity paper expected quintuple future of the country and the underlying industrial from tons of in 1979 to a 20,000 paper projected policy were unchanged. 100,000 tons by 1985. Directory assistance was hopelessly overloaded. It required 4,500 Soon after the successes of Velizy and Ille-et- operators to provide a barely acceptable level of Vilaine, the voluntary and free distribution of service. The number of operators needed in 1985 minitel terminals began: There were only 120,000 was forecasted to be 9,000 (Dondoux, 1978; Mar- minitels in France by the end of 1983, but over chand, 1987a). But the success of the electronic 3 million by December 1987, and more than 6

4 MIS Quarterly/March1994 The French MinitelSystem

million by December 1992 (see Figure 1). by newspaperowners, in particularby Francois- Videotexservices went from2,000 in Januaryof Regis Hutin,owner of Ouest-France, who saw 1986 to 12,000 at the end of 1989 to more than among many philosophical reasons to stop 20,000 by December 1992 (see Figure2). Table videotex, a very pragmaticone (Hutin,1981).10 1 shows that trafficon the Teletel system and on A government-run,videotex-based classified ads the electronictelephone directoryhas steadilyin- service was a serious threat to one of the creased over the years. It is interestingto note, newspapers' main sources of revenue. Aftera however,that the average monthlyusage per ter- long fight, a politicalcompromise was reached. minalhas gone down from 106 minutes in 1986 The newspaper owners agreed to drop their to around90 minutesat the end of 1992. Indeed, resistance to the videotex concept in exchange the numberof calls per minitelhas remainedcon- for a say in the developmentof Teletel services, stant through that period and has even shown subsidies and technical help from the DGT to a slight increase. The answer seems to be that developtheir own services, and a virtualmonopo- not onlythe transmissionrate is fasterfor the new ly on services for two years. generation of minitel terminals, but also that users are becoming more efficient and the A second challenge came from politicianswho system's interfacesfriendlier to use, thus reduc- felt the system could be abused by the state. ing the average lengthof a call by almost 20 per- They saw this new mode of information cent. France Telecom's commitment to disseminationas a potentialthreat to the liberty, continuouslyexpand and improvethe system to and Teletel as the latest attempt,of the state to matchthe increase in overalltraffic can be seen manipulateinformation. Later, the rapidprolifera- in Table 2. tion of "chat" (messageries) services, some of which range from the mildlyerotic to the por- The nographic(messageries roses), broughtcriticism early challenges from both government and privategroups who Teletel had to overcome fourserious challenges were concerned that the state was billingand in- in the earlyyears. First,there were viciousattacks directlysubsidizing immorality.1"

7,000 - 6,001 6, 6,000 - 5_670

,) 5.062 -0 5,000 - 4.228 -- 4,000 - C 3,373

C 2,237 1,887 0 2,000 -

- 1,000 531 120 0 - - I-r I 1985 1986 1987 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 source France Telecom Figure 1. Rate of Minitel Distribution

(Adaptedfrom "La Lettredu Teletel," France Telecom, December 1992 and December 1993)

MIS Quarterly/March1994 5 The French MinitelSystem

25,000 ?-

20,112 20,000 17.297

15,000 - 14,800 w: 12,377 o

. 10,000 9,578 E 7.196 C 5,000 4,152 1,899

0 -4-----' 1985 1986 1987 1988 1989 1990 1991 1992 source: France Telecom Figure 2: Growth of Videotex Services (Adaptedfrom "La Lettredu Teletel," France Telecom, December 1992 and December 1993)

A thirdchallenge was the earlybattle to establish volumes, and there has not been another crash an internationalvideotex standard. The moread- since. The perceptualproblem that Teletel was vanced videotex system in the 1970s was the mostlyabout "sex" lingeredmuch longer, slowed Britishsystem, . Prestelwas based on the down Teletel's development, and, paradoxical- CEEFAXstandard, which was differentfrom the ly, increased its internationalvisibility. one being used by the French.The DGT,realiz- these controversies made ing that it was at a disadvantage, tried to have Overcoming public its own videotex standardrecognized at several Teletel stronger in the long run. Indeed, the in internationalforums. In a decision typicalof the politicalfury that Teletel generated the period and later in led to a full and rich regulatory politics in Europe, the Conference 1978-80, 1985, on the of authori- Europeene des Postes et Telecommunications discussion issues privacyrights, of the telecommunication (CEPT)established in 1980 a Europeanvideotex ty agency, regulation "standard"with 10 variations!One of these varia- of computer services, and the need to prevent tions was the Frenchstandard. The fact that this the creationof a second class of citizens shut out These discussions decision assured the incompatibilityof the Euro- of the information age. involvedthe of France and the most pean videotex systems during the 1980s not- president notable commentatorsand intellectuals withstanding,the decision allowed the DGTto political in created a broad continuethe developmentof Teletel as planned. the country.They eventually nationalconsensus on the use and limitationsof The fourthchallenge that Teletel had to survive the technology. was the negative publicitycreated by the "crash of '85," the only system failuresince its incep- Today, Teletel is an integral part of the French tion. The crash was the resultof very heavy traf- life-style.A surveyconducted by FranceTelecom fic of "messageries roses" services. The heavy in October 1992 indicated that 48.5 percent of trafficcaused an overloadof the Transpacswitch- the workingpopulation had access to minitelsat ing system, and the networkwent down gener- home or at work.Another survey, conducted in atingconsiderable attention in the nationalpress. 1992, showed thatthe system was used regularly The technical problem was easy to solve: the by a broad cross-section of the populationin a switchingsystem was changed to handle higher variety of ways. Table 3 shows that users are

6 MIS Quarterly/March1994 The French Minitel System

Table 1. Teletel Traffic Statistics Including ETD* (1986-1992) (Adapted from "La Lettre du Te6ltel," France Telecom, April and December 1992, and June 1993)

1986 1987 1988 1989 1990 1991 1992

Total Number of Calls (in millions) 466 807 1,010 1,242 1,482 1,656 1,775 Total Connect Hours (in millions) 37.5 62.4 73.7 86.5 98.2 104.9 110 ETD Connect Hours (in millions) 6.0 10.0 13.2 16.4 19.9 22.0 23

Average Number of Calls per Month 21.9 24.0 22.2 22.3 23.2 23.8 24.2 Average Usage per Month (in minutes) 105.9 111.3 97.0 93.2 92.4 90.2 87.6 Average Call including ETD (in minutes) 4.8 4.6 4.4 4.2 4.0 3.8 3.7 Average Call excluding ETD (in minutes) 6.3 6.2 5.8 6.5 5.5 5.3 5.1

* Electronic Telephone Directory.

Table 2. Evolution of the Electronic Telephone Directory (ETD) and Videotex Networks (1987-1992) (Adapted from "La Lettre du Teletel," France Telecom, 1989-1991, 1993)

1987 1988 1989 1990 1991 1992

Number of Access Points to the ETD 58 72 78 82 86 88

Number of Ports to the ETD 14,220 17,280 19,020 19,020 20,640 21,120 Number of Information Centers 31 40 42 44 47 49

Number of Documentation Centers 15 18 22 23 25 27

Number of Videotex Access Points (VAPs) 43,160 49,611 50,500 53,000 57,000 59,500

almost equally divided by gender, with 60 per- telligence and functionality(e.g., color screen, ex- cent of the users being in the 25-49 years-of-age tended keyboards, compatibility with ASCIIstan- range. More than 55 percent of the users are ex- dards, service number memory). These second ecutives, and office and skilled workers. Calls for and third-generation terminals are no longer free; all professional applications represent 52 percent they must be paid for or leased. More than 1.5 of the connect time. The proportion of calls to the million had been installed as of June of 1992. The electronic telephone directory represents more latest model, which includes a color monitor and than 43 percent of all calls to Teletel but only 21 an expanded keyboard, sells for FF4,420. percent of the connect time. Interestingly, the The new generation of minitel terminals allows most (in)famous calls of all, the calls to the "chat" the user to prepare a message before placing a services, represent only 6 percent of all calls but call, to monitor call setup, and to switch between still make a significant 15 percent of the total con- voice and text transmission during a call. They nect time (Table 4). also serve as an automatic answering device with Recent developments protected access. A portable minitel that can be used over the cellular telephone network is also The line of minitel terminals has been expanded available. ISDN12 terminals have already been to include eight models with varying levels of in- tested for the Teletel system. Numeris, as the in-

MIS Quarterly/March1994 7 The French MinitelSystem

Table 3. Demographic Statistics of Minitel Users and the Overall French Population (Adaptedfrom "La Lettredu Teletel," France Telecom, December 1991)

Minitel Users (in % ) French Population (in %) Gender Male 49.8 47.9 Female 50.2 52.1 Age 15-24 Years 15.6 19.4 25-34 Years 30.3 18.8 35-49 Years 36.2 25.7 50-64 Years 13.5 19.4 More Than 64 Years 4.4 17.7 Job Category Agriculture 4.4 3.4 Small Business, Handicraft,Trade 10.8 6.0 LiberalProfessions, Executives 23.2 11.1 Office and Skilled Workers 38.1 23.1 Non-SkilledWorkers 15.3 25.2 Non-Working 8.2 31.2

tegrated services digital networkis known, had ond instead of the usual 1,200 bits per second, 150,000 subscribersat the end of 1991. An elec- thus making possible the transmittalof images tronic mail service, Minicom,was implemented and photographs. in 1991 and December 1992 was by carrying Withthe internalvideotex marketprogressively more than 5 millioncalls a and its volume year, being saturated and growth slowing down, was growing at a rate of 5 percent per month. France T6lecom has made the international marketa In 1989, France Telecom Telecom is also with high priority. France experimenting created divisionto sell videotex interfacesfor Teletel services. Intelmatique-a naturallanguage infrastructureand know-how.Recent clients in- The MinitelService Guide came on-line in 1989 clude the Italianand Irishtelephone companies. withan interfacethat allows users to access the has also 17 percent of to minitelservices French, without Intelmatique purchased guide using the Dutch videotex operator. the need for special commands or the correct spelling. This service averaged around2 million Intelmatiquemarkets the Minitelnetservice that calls a month in 1992. A new routingcapability providesforeign users withaccess to the Teletel allows informationproviders to use several host network.T6letel is now availablein 27 countries, computers under a single minitelaccess code. and the service generated 287,600 hours of traf- This new routingcapability also allows the caller fic in 1992, close to a 100 percent increase over to access another service withinTeletel without 1990. Italy(42 percentof the traffic)and Belgium makinga new phone call. Anotherproduct is the (23 percent)are the two majormarkets (see Table Teletel "a vitesse rapide" (Teletel fast speed), 5). The new service greets foreign users with a whichopens a whole new series of potentialpro- personalized welcome in their native language ducts. Ittransmits at a rate of 4,800 bits per sec- and utilizes the same multi-tariffbilling scheme

8 MIS Quarterly/March1994 The French MinitelSystem

Table 4. Utilization per Type of Application in General Characteristics of Percent of Connect Time and Percent of Calls (1992) Teletel (Adapted from "La Lettre du Teletel," France A comparison between the technical Telecom, December 1992) characteristics and policies that were used in im- plementing Teletel and those of the other com- mercial videotex systems explains to a certain % Time % Calls degree the great success of Teletel and the rather Business Applications 23 19 tepid development of the other government- owned systems and the more recently im- ElectronicTelephone Directory 21 43 plemented, privately owned American systems. "Chat" Services (Messageries) 15 6 Videotex systems can be compared on four basic Banks/Stock Market/Insurance 11 12 characteristics: (1) the terminal design and the strategy of terminal distribution, (2) the system 8 5 Games/Tests/Astrology architecture and other aspects of service delivery, Recruitment/Training 9 6 (3) the billing system, and (4) the regulatory en- Leisure/Tourism/MailOrder 7 5 vironment (see Schneider, et al., 1990). Tranport/Automotive 6 4 The terminaldesign and distribution Two arguments made it clear that Teletel's suc- cess was criticallydependent on the development of an easy-to-use, dedicated, and inexpensive ter- used on Teletel. Users have direct access to all minal for mass distribution. The first argument the Teletel services, but the utilization of those came from the British experience. In Britain, the services differs somewhat from the one in France. Table 5. International Teletel Major efforts are currently being made to export Usage minitel services to the U.S. market. A number of per Country in 1992 companies (e.g., US West) have established (Adapted from "La Lettre du Teletel," France gateways with the minitel system. The Minitel Telecom," December 1992) Service Company, another entity of Intelmatique, was set up for the sole purpose of selling videotex know-how in the United States. France Telecom % of Total and US West launched a videotex service in Country International Use Omaha, Nebraska, using French technology and Italy 42.0 have signed a contract to offer an electronic 23.0 telephone directory service in Minneapolis/Saint Belgium Paul, Minnesota. Finally, US Videotel offers Switzerland 9.0 Teletel-based services to minitel owners con- Luxemburg 7.0 nected to access points operated by Southwestern Bell (France Telecom, 1991). Portugal 6.5 There is a broad consensus in France that Teletel Andorra 4.0 is a success from a social of development point USA 3.5 view. Its positive impact on the technological literacy of the population is unquestionable. The Germany 1.0 concern primary about Teletel now is its pro- Ireland 1.0 fitability. But before exploring this concern, this paper describes some of the technical choices Holland 1.0 and characteristics that made Teletel so far the Other (Spain, most successful commercial videotex in system Britain, Finland) 2.0 the world.

MIS Quarterly/March1994 9 The French MinitelSystem

high price of the chosen TV-based videotex con- This design approach had three basic advan- figuration was a barrier to implementation. The tages. First, Transpac charges are based on traf- second argument was that the Teletel investment fic (i.e., minutes of connect-time) and not on would be paid back through increased telephone distance. The use of Transpac meant that any traffic and savings on the production of the provider, independent of its geographical loca- telephone directory. The Velizy experience had tion, had equal access and costs to gain a na- also established the need for a user-friendly ter- tional audience. Second, it established a minal with an easy-to-use interface. The motto common, standard protocol (i.e., the CCITTX.29) for Teletel became "make it simple"-simple to making connections to the system straightfor- install, simple to use, simple to manufacture. ward and relatively cheap (FF100,000), which was crucial to attract service providers. Third, the In an approach typical of French industrial policy, networks were already in place, consisted of the the government, rather than the consumer elec- latest technology, and could support a rapid tronic industry, decided on the specifications of expansion in the number of subscribers and the videotex terminals. The DAIIopened the pro- providers. curement of terminals to multiple vendors, and the promise of a production run of some 20 More importantly, the decision of using the million terminals encouraged low bids. Transpac network kept the DGT from becoming an informationprovider. With the exception of the The key decision on whether to distribute minitel electronic directory, the DGT acted as a common terminals free of charge generated intense con- carrier and was responsible only for the transmis- within the DGT. On the one hand, some troversy sion of information and administration of the net- senior officers that a nominal fee thought monthly work.13 This is in contrast to the centralized would recover development costs, while counter- solution offered by the British and German acting an attitude that "if-it's-free-it-cannot-be- systems where British Telecom and the very-good." They also reasoned that once the BundesPost provided the storage and structure was distributed for free, it would be prac- system of the databases. In Teletel, the storage and tically impossible to charge for it later without manipulation of informationwas left to the private generating intense public resistance. information providers. On the other hand, to distribute minitels on a free Building Teletel on a decentralized network and and voluntary basis gave it an aura of democracy; with an open architecture alleviated many of the those who wished to have a minitel would not be "big brother" concerns of the press and politi- impeded by its cost. It also made it easier for the cians, and encouraged innovation in information mass public to try out the device and the services services. With no government interference, a it offered. In what turned out to be a critical deci- clear set of standards, and easy access to the sion in the success of Teletel, it was decided that network, the entry barrier to the information pro- minitel terminals would be distributed free of vider market was very low. The number of ser- charge. vices exploded.

The system architecture The billing system Another critical factor in the success of Teletel Another critical element in the success of T6letel was the decision to implement the Teletel con- is the billing system introduced by France cept by interfacing the public-switched telephone Telecom in March 1984. The billing is done by network with the Transpac packet-switching data France T6lecom and not by the service providers. network. The subscriber was to be linked to the The system's name, "kiosk," came from the electronic directory or any other database via his newsstands where a variety of publications can or her telephone through a gateway-called a be bought without leaving a record of what was videotex access point or "VAP"--giving access bought or who bought it. The Teletel charges ap- to the public packet-switched network-called pear on the regular telephone bill as "minitel "Transpac"-to which the servers and host com- use" with no reference whatsoever as to what puters were to be connected. specific service was used.14

10 MIS Quarterly/March1994 The French Minitel System

The kiosk works as follows: when the connection Teletel users could access and use without stay- to the desired service has been set up through ing connected for very long. The user paid no fee the VAP, the VAP sends charging pulses to the because the tariff allowed free access. Because subscriber's meter at a faster than usual rate to of the revenue-sharing arrangements with the cover the cost of using the Transpac network and service providers, however, France Telecom had the cost of the service. The Transpac network to pay for each connection. France Telecom keeps track of the connection time and pays each asked the regulatory bodies to charge provider as a function of that time. The billing subscribers a small access fee for every connec- system now allows the service providers to tion regardless of its duration. The request was choose from eight levels of pricing. barely scrutinized, and the charge was approved without debate. The strengths of the kiosk concept are that it pro- tects the anonymity of the users (important on Another benefit of the regulatory environment in both a financial and philosophical level), that it France was the ability of France Telecom to run does not require passwords or payments in ad- the kiosk billing system. The arrangement has vance, that service providers do not have to worry come under fire on two fronts. First, the fact that about billing and its associated administrative the billing system results in the state (in the form costs, and that it allows differently priced services of France Telecom) collecting fees for the to be offered easily through a series of different distributionof services, which, in some instances, numbers (Dondoux, 1990). may be deemed pornographic, is seen by some as unlawful. Second, it has been suggested that even if it is not illegal, billing, which could be a very profitable stand-alone operation, should be The regulatory environment a service offered by a third party and not by The monopoly that France Telecom had in the France Telecom. These criticisms have not basic telecommunication services and the fact stopped France Telecom from performing the that it did not have the return on investment billing. pressures of a commercial firm, provided Teletel The environment in with its with the necessary time to mature.15 regulatory Europe, of standards and was for Infrastructure-based services like Teletel require myriad protocols, good Teletel because it served to the a longer time horizon to assess and determine initially protect service from battered profitability. The regulatory umbrella that shield- fledgling being by competi- tion from abroad. that same environ- ed T6letel in the early years appears to be one However, of the critical factors in its success. ment became a barrier to Teletel's penetration of other European markets. Indeed, it took almost Another component of the French regulatory en- 10 years to make Teletel available throughout vironment that was important to the development Western Europe (Greece is the only country with of Teletel was the ability of France Telecom to no access). Finally, despite operating in a heavily subsidize ventures from its subscribers' revenue. regulated environment France Telecom pursued Such subsidies are forbidden by American and an open network architecture and stayed out of British regulations. The subsidies allowed France the informationservices business with the excep- Telecom to take a long and patient view on tion of the electronic telephone directory.16 Teletel and helped amortize the free distribution of minitel terminals, which amounted to a cost This policy of decentralization and liberalization of FF6 billion over 10 years. of services, contrary to the centralization policies in Britain and Germany, led to an explosion of There was one specific benefit of this protective services. Indeed, while in France the number of regulatory environment (Housel and Davidson, providers has grown steadily and the number of 1991). The ability to quickly implement changes services today surpasses 20,000, in Britain the of tariffs without going through a lengthy political number has stagnated at around 1,300, and in process to justify them allowed France Telecom Germany the number has not only stagnated but to respond quickly to changing market conditions. has actually declined to around less than 3,000 For example, there were many services that (Schneider, et al., 1990).

MIS Quarterly/March 1994 11 The French MinitelSystem

Evaluation of Teletel some industries have been profoundly affected by Teletel applications. For example, the For like technologies videotex, for-profitorganiza- Telerouting system has influenced the transpor- tions use return-on-investment predominantly tation industry in France. Transportation com- criterion to determine success. in- However, panies have minimized the number of return trips frastructure like Teletel should not be projects when their trucks and moving vans are empty by on return on investment. analyzed exclusively posting the schedules of these return trips on to be The sociological impact needs assessed minitel and matching them to requests from and evaluated as well Mechlin (Mansfield, 1983; customers (Marchand, 1987b; Sentilhes, 1989). of and Berg, 1983). Measures of the success The impact of these new electronic markets on the of dif- technological adoption include (1) rate the efficiency of transactions among firms is pro- fusion and growth, (2) the impact of the found; these markets are not only restructuring of user technology (e.g., number users), (3) how companies do business but are reshaping with the the satisfaction technology, (4) facilitating entire industries (Malone, et al., 1989). performance of an old task or enabling a new one, and (5) the economic impact of the Almost every single bank has developed its own technology and its returnon investment (Edosom- minitel-based home-banking system, allowing wan, 1989; Rogers, 1983; Souder, 1987; their customers to check the status of their ac- Zaltman, et al., 1984). Though measuring the counts, order checks, pay utility bills, and trade non-financial (i.e., social, educational, and stocks. Most retailers have also developed an political) benefits brought by Teletel is difficult, electronic catalogue business, and although the increase in technological awareness and volumes are moderate at present, they are ex- literacy of society, for example, has to be factored pected to explode as soon as payment can be in any cost/benefit analysis of the system. The done directly with the minitel terminal. next two sections discuss the social impact of the stations run minitel-based surveys every night. four criteria listed above and the financial assess- Travel agencies, insurance companies, and con- ment of the return on investment issues. sumer products companies have developed Teletel services. Social impact Whether it is to be in greater touch with the client, to increase efficiency in distribution, to gain its 20,000 services the Teletel Through system market share, or to develop videotex products offers information about entertainment events, and services, Teletel has become an important train schedules, television and radio programs, component of the business strategy of companies and classified ads, interactive games, bank- jobs operating in France. Business-related volume services, and home shopping, home ing grocery represents today more than 50 percent of the and other banking, comparative pricing, many overall Teletel volume, and while the overall consumer services 1987b; Mayer, (Marchand, volume increased by 5.1 percent in 1992, the 1988; Sentilhes, Most services follow the 1989). utilization of professional services increased four and the same rules and command structures times as fast. same multicriteria search process (e.g., a subscriber deciding on whether to go to the From a social point of view, Teletel has had an movies can search what films are showing in a impact in a wide variety of ways. For example, given area, on a given topic, or starring a par- the success stories of the various Teletel chat ser- ticular actor or actress), making it very easy for vices (messageries) range from relatives users to move from one application to another. separated by World War II having found each other to faster matching between organ donors is hard to assess the of Teletel on It impact and people in need of a transplant. business because it varies by company size and industry sector. France Telecom estimated in The anonymity that the chat services provide has 1990 that the overall penetration of the business encouraged the sick (e.g., cancer, AIDS) and the sector was at least 30 percent and growing and troubled (e.g., drug addicts, divorced, abused) to that the penetration for large companies (more discuss their more intimate problems with others. than 500 employees) was 95 percent. Indeed, Also, Teletel has played a role in helping in-

12 MIS Quarterly/March1994 The French MinitelSystem

dividuals who have difficulty getting out and is another Concorde: a high-technology, money- around (e.g., the disabled, the elderly) to shop, losing proposition. A recent report from the state bank, and make reservations. Universities now auditor general has stated that T6letel revenues use Teletel to coordinate student registration, have not covered its operating, depreciation, and course delivery, and examination results. Other capital costs and that as of the end of 1987 the services give students access to help from tutors deficit was FF 5.4 billion (Savattier, 1989). The at all times. secretary of the PTT disagreed with that assess- that the of the auditor took Teletel services have also been used in the ment, arguing analysis into consideration only the direct revenue political in innovative ways. During the last generated by the telephone traffic but did not in- presidential election, a service allowed minitel clude all the other indirect revenues generated users to exchange letters with the candidates. by Teletel (Abadie, 1989; Prevot, 1989). Any voter accessing the service could view the open letters and the politicians' replies. Another Settling the argument is difficult for a variety of example is how the student unrest in December reasons. First, from a cost-allocation point of 1986 was followed by using minitel terminals. A view, determining T6letel's share of the costs is service, sponsored by the newspaper Liberation, a murky proposition. Indeed, it can be argued that allowed organizers to issue instructions to any Teletel is just a by-product of providing other minitel user to participate in various political ac- telephone services, and therefore, little or no cost tivities without the mediation of a third party. of the actual infrastructure should be allocated to it. Second, it is difficultto determine the indirect These examples illustrate how broadly Teletel value-added to the French has been used as a decentralized, grass-roots economy (e.g., greater efficiency of electronic markets). Third, France vehicle for the discussion of a variety of societal Telecom continuously introduces new products issues. This utilization is very much in keeping and services that affect cost-allocation with the original vision of Telematique proposed previous and calculations. France by Messrs. Nora and Minc in 1978. Today, 34 per- profitability Finally, Telecom is not with the cent of the population of France has access to particularly forthcoming financial data Teletel. a minitel either at home or at work. Furthermore, surrounding a recent survey conducted by an independent The total investment in Teletel consists of the cost consulting firm found that 93 percent of all T6letel of the minitel terminals plus the costs of the users are satisfied or very satisfied with the ser- gateways to the Transpac network (VAPs) plus vice, that 19 percent of all professionals using the costs of ports to the electronic directory net- Teletel rate it "indispensable," and that 75 per- work. The following are approximate but non- cent of users rate it "increasingly useful" (France controversial17figures describing the investment Telecom, 1993). Based on the number and varie- of France Telecom in Teletel as of 1989: ty of services being offered (from the original 145 Minitel terminals in 1983 to more than 20,000 in 1993), the broad FF6.2 bn penetration of the service (an installed base of Electronic directory FF1.0 bn R&D over 6 million minitel terminals and only 5 per- directory FF0.2 bn VAPs cent of the ones in homes not being used), the FF0.6 bn growth in connect time (from 14 million hours in R&D (Teletel) FF0.3 bn 1985 to 110 million hours and almost 2 billion Transpac FF0.3 bn calls in 1992), and the high level of satisfaction Total FF8.6 bn of its users (only 1 percent of users declared The official revenues from themselves "dissatisfied"), one can only con- gross Teletel were ap- FF5.8 clude that from a social point of view,Teletel has proximately billion in 1992. These been a success. revenues include fees from revenue sharing with information providers. That amount was close to FF1 billion in 1992.18 The revenues also include Financial assessment advertising, electronic directory usage above and beyond the free allocation, and rental and sale There is a public perception, in part based on the of minitels. The Transpac revenue generated by free distribution of minitel terminals, that Teletel Teletel -FF1 billion in 1992-is not included in

MIS Quarterly/March1994 13 The French MinitelSystem

the FF5.8 billion. The additional revenues based satisfaction) and the financial evidence (positive on value-added tax from products, services, and internal rate of return, profitable, creation of more increased employment spawned by Teletel efficient markets) supports the notion that Teletel should also be included but are difficult to is a French industrial policy success story. calculate.19 The secretary of the PTT estimated that the total value-added of Teletel amounted to approximately FF6 billion in 1988 (Prevot, 1989). Analysis Documents from a telecommunication consulting The Teletel story is a story about a successful firm put the amount at FF5.4 billion (TERSUD, government-directed technological push sus- 1989). Finally, the cost savings from printing tained by political will and technical vision. It is fewer telephone books (FF147 million) and hav- also a story about how, even within a fairly deter- ing less directory assistance operators must also ministic industrial policy framework, individuals be considered. still need to make decisions on the fly to adapt to and en- France Telecom claimed in 1985 that the break- changing social, political, technological vironments. Teletel offers some interesting even point for Teletel would be achieved in 10 lessons that can be generalized to government- years. France Telecom calculations in 1989 sponsored IT initiatives. The lessons from the showed that the yearly revenue per minitel ter- Teletel story are the following. minal was FF432 and that the payback period was 5.7 years (Abadie, 1989). The official version is that Teletel revenues and Vision, deep pockets, technical expenses were in balance at the end of 1989 and capabilities, and understanding of the system was expected to start showing a network externalities as enabling significant return on investment in 1992. A recent factors audit by Coopers and Lybrand for France Telecom has confirmed that the breakeven point Teletel's development is a stereotypical case of was reached at the end of 1989. The audit the French industrial policy of "les grandes aven- pointed out that Teletel will have made a profit tures." The uniqueness of the success of Teletel of FF4.3 billion from 1984 through the year 2000, can only be understood by analyzing the in- equivalent to an internal rate of returnof 11.3 per- dustrial policy and political environment of France cent (Dawkins, 1992). that nurtures high technology ("technologies de But are there any lessons that On the basis of the numbers we have been able pointe") projects. can be learned and applied to other products and to and cross-reference (though they are gather services in other contexts? After all, the govern- practically impossible to confirm), we can con- ments of Britainand Germany, among others, at- clude (1) that T6letel has reached an economic tempted to develop a similar product without break-even point and (2) that from a long-term success. To answer this question, the critical suc- economic point of view (say 1978-2000) Teletel cess factors in the implementation of Teletel must will make a sizeable with an overall possibly profit be examined. return on investment of around 10 percent. On a political level, the will to see this project Senior officials of France Telecom view this type through was maintained through at least three of as and potentially accounting premature administrations of different political persuasions is a infrastructure misleading since Teletel major and several secretaries of the PTT. This unwaver- for which profitabilityshould be measured project ing commitment to "la grande aventure du on a basis and should not be the sole long-term Teletel " was crucial to overcoming the large criterion of success (Abadie, 1989). Still, France start-up costs of the project. The political Telecom has become sensitive to very pricing discourse that addressed head on, and then com- and is fees to match de- adjusting continuously bined, the need for a computer-literate society mand and to create demand for new products. with the protection of personal liberties and The sociological evidence (rapid growth and privacy diffused all sources of resistance. It also adoption, impact on a large number of users, led the government to stay out of the information enabling new tasks to be performed, high user provision business.

14 MIS Quarterly/March1994 The French Minitel System

On a regulatory level, the monopoly of the basic the effectiveness of the communication between services and networks allowed the DGT (now the owners of the innovation and the target au- France Telecom ) to subsidize the start-up costs dience. In turn, the effectiveness of communica- and free distribution of terminals, to have a long- tion is affected by the degree of heterogeneity term perspective on videotex services as an in- of the audience, the social norms, and the in- vestment, and to be able to create one standard volvement of the opinion leaders (Rogers, 1983). and enforce it. These were all critical factors in How do these concepts apply to Teletel? the success of Teletel.20 The subsidies removed The to which an innovation is some of the most pervasive barriers to adoption degree perceived as of innovations, their initial cost to the users better-in terms of efficiency, cost, conveni- ence-than the idea it is its (Rogers, 1983; Zaltman, et al., 1984). For exam- supersedes relative France Telecom established the ple, a study of 11 customer-oriented strategic advantage. relative of Teletel it to systems found that those systems that had a advantage by "selling" subscribers as a and to small nominal charge were adopted more rapid- quick easy way get in- formation at no extra cost. France Telecom's in- ly than those that charged a larger fee (Horner- formation services had a terrible Reich and Benbasat, 1990). reputation. Most telephone users were aware of how hard it was On a technical the factors that made level, Teletel to obtain telephone number information through successful include the to ability develop and im- an operator. And given the rate of growth in a state-of-the-art plement (1) telephone and data telephone lines, the telephone books were quick- transmission network, (2) an easy-to-use inter- ly obsolete. This presentation of Teletel was also an and face, (3) inexpensive terminal, (4) a an effort to sell the system as a response to a transparent billing system that ensured anonymi- specific customer need. Awareness of customer These technical ty. capabilities reduced the com- need has been reported as a predictor of fast of the and its costs and thus plexity system adoption (Horner-Reich and Benbasat, 1990). contributed to the rapid adoption of Teletel. The degree of compatibility with the existing An important element in the success of Teletel values, past experiences, and needs of was the intuitive the DGT of the poten- understanding by tial adopters affects the success of an innovation. dynamics involved in network externalities.21 Teletel was highly compatible with the values of The DGT created a critical mass by aggressive- French society. Teletel was very much part of the ly distributing an easy-to-use terminal at no cost government campaign to make France a "first to its subscribers. The DGT also made im- world" power in high technologies. As such, mediately available a highly useful "trigger" ap- Teletel was, like Ariane, the Concorde, and the plication (i.e., the electronic telephone directory). high-speed train (TGV),a project intimately linked Also, by establishing clear and simple technical to the French values of independence and great standards, the DGT allowed information pro- engineering achievement. It remained so through viders to offer services quickly and cheaply with several changes in government. very few administrative headaches. These three factors generated a fast-feeding virtuous cycle. The degree to which an innovation is perceived as difficult to understand and use, i.e., its com- plexity, negatively affects its rate of adoption. The Teletel as an example of minitel terminals and the first service offered (the successful technological diffusion electronic telephone book) were purposefully designed to be both easy to understand and use. The diffusion of technological innovations can be characterized by their relative advantage; their The degree to which an innovation may be ex- compatibility with the existing values, past ex- perimented with on a limited basis, i.e., its rever- periences, and needs of potential adopters; their sibility, positively affects the rate of diffusion. The complexity; their trialability or reversibility; their minitel terminals were free and optional. The susceptibility to successive modifications; and subscribers did not need to commit to using the their observability and communicability (Rogers, system, and if they decided to use it they could 1983; Zaltman, et al., 1984). Furthermore, the stop any time they wanted. They could also use rate of adoption of an innovation is affected by whatever service they wanted whenever they

MIS Quarterly/March 1994 15 The French MinitelSystem

wanted because there were no subscription fees, no document where the strategy for implemen- and the charges were based on use. This tation was discussed in all its details. The pro- "divisibility"(Zaltman, et al., 1984) led to a faster cess of diffusion seems to have been started with rate of adoption. a sound idea and a clear vision and then managed by continuously monitoring the environ- The to which the innovation can be re- degree ment and adjusting to it. Teletel is not only an fined, elaborated, and modified, as to opposed example of a successful diffusion of a obsolete because of is becoming inflexibility, technological innovation but can also be seen as related to its The commitment positively adoption. a "gateway" innovation (Zaltman, et al., 1984), to the the improve system (for example, quick i.e., an innovation that has opened opportunities of the crash of the constant wave repair 1985), for other innovations and increased their pro- of new and the in services products, explosion bability of success. Indeed, after the success of offered Teletel establish that being through Te6ltel, automated transactions systems (e.g., Te6ltel was here to and was not to stay going teller and ticket machines, parking attendants, become obsolete, therefore the attrac- increasing gas stations, tourism kiosks, etc.) have sprung tiveness of the adopting system. up throughout the country. Finally, the rate of adoption is affected by the ef- Finally, France Telecom's deep pockets and vi- fectiveness of the communication between the sion allowed it to enact a comprehensive process provider of the innovation and the users and of technology assessment without having to potential users of the innovation. A key aspect worry about the costs. The technological assess- of that communication is the visibility, clarity, and ment was well-aligned with the national objec- demonstrability of the results. France Telecom tives. The comprehensive process matched key reported through the mass media the number of strategic national and organizational issues to an connect hours, satisfaction of users, and number appropriate and clever technological solution. of services on a regular basis. The metrics were This carefully crafted match led to the fast adop- simple to understand: They described how many tion of the technology. hours people were using the system and what Huff and Munro in their field of In- they were doing with it. Even the tremendous ex- (1985) study formation Assessment and posure given to T6letel through the "chat" ser- Technology Adoption found that the ITAA-related behavior of vices proved to be a positive push for adoption (ITAA) some firms was driven the issues deemed to as was the involvement of almost every impor- by be critical at the while in other tant political figure in the debate. moment, firms, the ITAA behavior was driven by a new tech- A variable that can negatively affect the effec- nology. Though Huff and Munro did not find an tiveness of communication is the heterogeneity organization that exhibited both behaviors at the of the target users. France Telecom followed a same time, they commented on the desirability staged implementation process. Itcarefully chose to develop such an ability. They described such the communities where Teletel was to be offered a potential scenario as "somewhat idealistic" first. The plan was to balance likely adopter areas because of the large costs involved and as "a (e.g., Paris and its suburbs) with representative target model toward which sophisticated organi- adopters (e.g., more conservative counties) to en- zations may wish to move" (p. 331). They labeled sure that more users felt that Teletel was "for such scenarios as "Normative-ldeal." them." We believe that France Telecom's approach to From the process discussed above, one can con- the design and implementation of Teletel-a top- clude that France Telecom managed the in- down effort closely geared to the strategic plan- troduction of Teletel very well. Indeed, France ning process of the country and a thorough Telecom established the relative advantage of bottom-up identification of opportunities and Teletel, aligned it with the political and social scanning of the technological environment-is a values of the time, reduced the complexity and rare example of the "Normative-ldeal" model of cost of the system, made becoming a user highly ITAAsuggested by Huff and Munro (1985). As reversible, and communicated the results and such, Teletel offers an opportunity to understand benefits very effectively. However, we have found the difficult and complex process of building a

16 MIS Quarterly/March1994 The French Minitel System

successful national information technology The authors also acknowledge the editor and the infrastructure. anonymous reviewers for their many valuable comments and suggestions. Conclusion Teletel can be seen as the epitome of an infor- Endnotes mation technology product spawned by govern- 1 This articleis based on a case writtenwhile ment industrial There are few partially study policy. examples the firstauthor was a visitingprofessor at INSEAD.The study of a technology having been introduced so suc- was fundedin partby the INSEADR&D Division, and its sup- cessfully by a government on such a large scale. port is gratefullyacknowledged. What can other countries learn from the Teletel 2 Videotexis a genericterm for a computer-based,interactive experience? The French government made a system to access and selectivelyview text and graphicson success of Teletel by: (1) developing a vision, ex- a terminalscreen. The contentis usuallyorganized into tree structuresof thatare selected froma series of hierar- plaining it to the public, and sticking to it; (2) pages chical menus. Videotexsystems typicallyoffer a wide range building and maintaining a state-of-the-art net- of informationretrieval, interactive and transactionalservices work; (3) taking a long-term perspective on return such as directoryand reservationssystems, financialreports, on investment; (4) giving the public gateways to home banking,and shopping. Videotex was developed in the network free of charge; (5) giving incentives Europein the mid1970s forconsumer applications. Because of its consumer videotex excels at infor- to hardware manufacturers to build a dedicated, origins, delivering mationto untrainedor casual users. The user may use a simple to use terminal; (6) offering immediately dedicatedvideotex terminal or otheraccess deliveries(e.g., an easy-to-use and useful application; (7) creating personal computer).The primaryobjective of commercial an open architecture and a set of standards to videotexsystems is the efficientdelivery of value-addedin- communication formationand services to a maximumnumber of users prof- simplify protocols; (8) enforcing for both the and the information an interface to the use of information itably system operator simplify ser- providers. vices; (9) taking care of administrative details 3 The system is popularlyknown as Minitel.In strictterms, (e.g., to allow information to con- billing) providers however,minitel refers only to the dedicatedterminal itself. centrate on services; and (10) getting out of the Throughoutthis case Teletel is used when we referto the way to let the creativity of private enterprise drive whole system and minitelwhen we allude to the device. the We believe that these 10 decisions system. 4 Althoughthe "enemy" has changed and Japan is now the constitute sound strategy to introduce informa- morecommonly perceived threat, the policyis stillvery much tion technology on a national scale. in placetoday as illustratedby the Frenchgovernment's deci- sions to save the consumerelectronic companies Bulland There are critics that still argue that Teletel is not Thomsonfrom insolvencyin 1991 and again in Octoberof profitable and that it is mostly a local success 1993. because its penetration of the international 5 These are very much the same argumentsthat Vice Presi- markets remains modest. People also argue dent Gore is using in selling the idea of a NationalData whether the reputation of what was one of Superhighway(see Markoff,1993). 6 Europe's worst telecommunication services, and Thoughthe exchange rateof the Frenchfranc (FF) has fluc- now is one of the best, has been enhanced or tuatedin the last decade between4 and 10 FF perAmerican tarnished by Teletel. However, with 34 percent dollar(US$), its trading"band" is typicallybetween 5 and 6 FF/US$.The value over the last decade has been of the overall population being users of Teletel, average close to FF5.15 per US$. By comparison,the U.S. govern- there is little that as a disagreement Teletel, ment has been predictedto spend only $1 billionannually gateway innovation, has had a substantial and of the $200-400billion expected cost of the Americannational positive effect on the computerization of French data highwayover the next 15 to 30 years (Wright,1993). society. 7The cost turned out to be FF1000. By 1989, the cost was FF1600. 8 This break-evenanalysis was very conservativesince it did Acknowledgements not include the savings of slower growth in directory assistance costs. The authors thank Messrs. Jacques Dondoux, 9 the British David Hood, Francis Kretz, Jean-Paul By comparison, television-basedsystem Prestel Maury, had a field trialwith 1,400 in 1978 and started Alain Gerard and Ms. participants Texier, Thery, Lynda commercialservice in the Fallof 1979. Fullnationwide - Laskowski for their time and insightful comments. tion was established in March1980. At the end of 1981,

MIS Quarterly/March1994 17 The French Minitel System

Prestel had only one-tenth of the users predicted for that time percent ratedthem potentiallyprofitable, 8 percent did not (Thomas and Miles, 1989). The major reasons for this failure know, and 7 percent rated them as unprofitable(France have been attributed to the late delivery and high prices of Telecom, "La Lettredu Teletel," 1990). television monitors (Prestel was television-based and need- 20The willingnessto take a longhorizon perspective on recover- ed a connection between the telephone and the television ing the start-upcosts removedthe one barrierthat has in- set), uncoordinated marketing, and bad quality of the hibitedthe developmentof videotex in the USA. The issue databases (Schneider, et al., 1990). of governmentbeing more "patient"with infrastructurein- 0 Typical of the attacks is the "call to arms" by the political vestmentsand thereforemore willing, indeed responsiblefor commentator George Suffert. He argued - in an article titled them, is a very currentone. For example, Vice President "The fight of the century: Teletex versus paper" published Gore, in defendinggovernment involvement in the National in Telequal magazine in 1979-that it was dangerous to let DataSuperhighway, has stated thatthe privatesector won't the DGT have a monopoly on the videotex system. He wrote, gamble on such a riskyinvestment (Markoff, 1993). "He who owns the wire is He who owns the wire powerful. 21The value of a networkfor any memberof the networkin- screen is He who owns the the and the very powerful. wire, creases withthe numberof memberson the network(Allen, and the has the of God" screen, computer power (Suffert, 1988; Kahn,1971). Also, as the numberof uses of the net- 1979). workincreases, so does the perceivedvalue of the network. the more "The chat services are very lucrative since both individuals Finally,the moremembers there are on a network, will on that network. "talking" pay for the "conversation," unlike a telephone con- likelyit is that uses be offered Reducing and versation where only one party gets charged for it. the entrybarriers (usually cost) to the service providers to users (usuallyease of use and cost) startsa virtuouscycle. 121SDN (Integrated Services Digital Network) is capable of handling data, voice, text, and image transmission on the same line.

'3That has now changed. France Telecom decided in 1990 to References enter the information provision business by offering what they called added-value services. Most of these services are be- Abadie, M. "La Strategie Secrete de Teletel," ing offered through joint ventures with privately owned Telematique Magazine (36), October 1989, pp. companies. 1-4. 14The lack of details in the bill as to the specific service pur- Allen, D. "New Telecommunications Services: chased is to protect privacy. Subscribers that have a ques- Network Externalities and Critical Mass," tion about the billing can either (a) request a detail bill every Telecommunication Policy (12:3), September FF8 a or to check a month at a cost of month, (b) request 1988, 257-271. on a month. In either case, the infor- pp. particular charge given J.P. "The French Ex- mation provided by France Telecom is the connection's date, Chamoux, Tblematique time, duration, and the rate that was charged for it. France perience," paper presented at the Conference Telecom never divulges the actual service purchased. on IT/Telecommunications, Budapest, November 1990. '5 France Telecom is directly accountable to the French govern- Hungary, 5-6, ment for all its ventures and is required to justify its fee struc- Dawkins, W. "France Looks Far Beyond Home tures. France Telecom, more so than other state agencies, Base," The Financial Times, Special Section is asked to demonstrate the viability of its investments and on InternationalTelecommunications, October therefore, is under some profitabilitypressures, mild as they 15, 1992. may be. Dondoux, J. "Problemes Poses par la Presen- have taken such a 6 Whether France Telecom would position tation de I'Annuaire Telephonique," Internal without the of the lobbies and con- strong pressures press Generale des PTT, sumer watchdog groups is debatable. Document, Inspection Paris, 1978. not about the costs but about the revenues 7The controversy is Dondoux, J. "Present et Avenir du Minitel," Le that Teletel has generated. Communicateur (11), Fall 1990, pp. 19-24. '8France Telecom takes a 30 percent fee on the revenue Edosomwan, J.A. Integrating Innovation and information made by generated by providers. Payments Management, John Wiley and France Telecom to service providers for their share of Teletel Technology revenues increased from FF278 million in 1985 to FF1.3 Sons, New York, NY 1989. billion in 1987 to FF1.8 billion in 1989 and reached over FF2.5 France Telecom. Annual Reports and Special billion by December 1992 (France Telecom, 1993). Documents on Minitel,Paris, France, 1985-93. "La Lettre du newslet- '9Keeping track of all the revenues generated by services France Telecom. Telete," directly or indirectly provided through Teletel is practically im- ter series, Paris, France, 1988-93. possible because more and more businesses are using Horner-Reich, B. and Benbasat, I. "An Empirical in a of A of business users of Teletel variety ways. survey Investigation of Factors Influencing the Suc- Teletel showed that 65 percent of the businesses that had cess of Customer-Oriented Strategic developed telematic applications rated them profitable, 20

18 MIS Quarterly/March 1994 The French MinitelSystem

Systems," Information Systems Research Savattier, J.C. "L'Avenirdu MinitelS'Assombrit," (1:2), September 1990, pp. 325-347. Informatique (69), July 1989, pp. 12-14. Housel, T.J. and Davidson, W.H. "The Develop- Schneider, V., Charon, J.N., Miles, I., Thomas, ment of Information Services in France: The G., and Vedel, T. "The Dynamics of Videotex Case of Public Videotex," International Jour- Development in Britain, France and Ger- nal of Information Management (11: 1), 1991, many," paper presented at the 8th Con- pp. 35-54. ference of the International Telecommuni- Huff, S.L. and Munro, M.L. "Information cation Society, Venice, Italy, March 18-21, Technology Assessment and Adoption: A 1990, pp. 12-14. Field Study," MIS Quarterly (9:4), December Sentilhes, G. La Minitel Strategie, Business- 1985, pp. 327-339. man/First, Paris, 1989. Hutin, F.R. "Telematique et Democratie," Souder, W.E. Managing New Product Innova- Etudes, (35:2), February 1981, pp. 179-190. tions, D.C. Heath and Company, Lexington, Kahn, A.E. The Economics of Regulation, John MA, 1987. Wiley and Sons, New York, NY, 1971, pp. 236- Suffert, G. "Le Match du Siecle: Teletexte Con- 238. tre Papier," Telequal (10), October 1979, pp. King, J. and Konsynski, B. "Singapore Tradenet: 1-8. A Tale of One City," Harvard Business School TERSUD. "Teletel: Impact Economique, Rapport Case #9-191-009, Cambridge, MA, 1990. d'Etude," France T6lecom, internal docu- Malone, T.W., Yates J., and Benjamin, R.J. "The ment, January 1989. Logic of Electronic Markets," Harvard Thomas, G. and Miles, I. Telematics in Transi- Business Review (67:3), May-June 1989, pp. tion, Longman, London, 1989. 166-172. Wright, R. "The New Democrat From Mansfield, E. "How Economists see R&D," in Cyberspace," The New Republic, May 24, The Management of Technological Innova- 1993, pp. 18-27. tion, A. Kantrow and R. Rosenbloom (eds.), Zaltman, G., Duncan R., and Holbek, J. Innova- Harvard University Printing Press, Boston, tions and Organizations, John Wiley and MA, 1983, pp. 46-54. Sons, New York, NY, 1984. Marchand, M. La Grande Aventure du Minitel, Larousse, Paris, 1987a. Marchand, M. Les Paradis Informationnels, Masson, Paris, 1987b. About the Authors Markoff, J. "Building the Electronic William L. Cats-Baril is an associate professor Superhighway," The New York Times, of Information and Decision Sciences at the January 24, 1993, Section 3, p. 1. University of Vermont School of Business. He R. N. Mayer, "The Growth of the French Videotex received his Ph.D. from the University of System and Its Implications for Consumers," Wisconsin-Madison. Besides his appointment at Journal of Consumer Policy (11:1), 1988, pp. the University of Vermont, he had several visiting 55-83. appointments including stays at INSEAD and the Mechlin, G. F. and Berg, D. "Evaluating London School of Economics and Political Research-ROI Is Not Enough," in The Science. He has published over two dozen ar- Management of Technological Innovation, A. ticles and book chapters on a variety of topics Kantrow and R. Rosenbloom (eds.), Harvard in information and technology, chargeback University Printing Press, Boston, MA, 1983, mechanisms, and decision-making models. His 79-86. pp. book Systems to Support Health Policy Analysis Nora, S. and Minc, A. L'lnformatisation de la was published by the Hospital Administration Societe, La Documentation Francaise, Paris, Press in 1992. His current research interests in- 1978. clude the determination of leading indicators of Prevot, H. Report on the Future of the PTT, La long-term organizational performance, the design Documentation Francaise, Paris, 1989. of measurement systems for continuous improve- Rogers, E. M. Diffusion of Innovations, The Free ment initiatives, and the management of software Press, New York, NY, 1983. development projects.

MIS Quarterly/March1994 19 The French MinitelSystem

Tawfik Jelassi is an associate professor of In- European Perspective (Wiley, 1994) and Decision formation Systems at INSEAD (Fountainebleau, Support Systems: Experiences and Expectations France), and Dean of the College of Commerce (North-Holland, 1992). Dr. Jelassi contributed ar- and Economics at Sultan Qaboos University ticles to several academic journals including (Muscat, Oman). He received a Ph.D. in MIS from Decision Sciences, Journal of MIS, Decision Sup- New York University and graduate degrees from port Systems, European Management Journal, the Universite de Paris-Dauphine. His recent Information & Management, Journal of Strategic research focuses on the competitive use of in- Information Systems, European Journal of formation technology in Europe. He is author of Operational Research, and OMEGA. He is the forthcoming book Strategic Management of editor/associate editor of several academic jour- Information Technology: Case Studies from nals, chairman of the EURO Working Group on Europe (Prentice-Hall, 1994) and co-editor of two DSS, and vice president of the TIMS College on books: Strategic Information Systems: A Group Decision and Negotiation.

20 MIS Quarterly/March1994