Against All Odds: the State of Videotex in France

ABSTRACT - The French videotex system, Teletel, has been hailed as the world's most successful effort to make videotex into a mass medium. This article reviews the key factors to which the system's initial success has been attributed. In addition, a number of recent developments in the system's organization and consumer use patterns are discussed based on data provided by the French telecommunications authority. The implications of the French experience for videotex elsewhere are also considered.

Citation:

Robert N. Mayer (1989) ,"Against All Odds: the State of Videotex in France", in NA - Advances in Consumer Research Volume 16, eds. Thomas K. Srull, Provo, UT : Association for Consumer Research, Pages: 629-633.

Advances in Consumer Research Volume 16, 1989      Pages 629-633

AGAINST ALL ODDS: THE STATE OF VIDEOTEX IN FRANCE

Robert N. Mayer, University of Utah

ABSTRACT -

The French videotex system, Teletel, has been hailed as the world's most successful effort to make videotex into a mass medium. This article reviews the key factors to which the system's initial success has been attributed. In addition, a number of recent developments in the system's organization and consumer use patterns are discussed based on data provided by the French telecommunications authority. The implications of the French experience for videotex elsewhere are also considered.

INTRODUCTION

The purpose of this paper is to provide an up-to-date, descriptive report on the state of the world's most successful videotex system oriented toward the general public--the French Teletel system. [Unlike the United States where there are several distinct videotex systems, the vast majority of videotex services in France are organized in a single government-run system and are carried by one data transmission network (TRANSPAC).] [Virtually all of the data reported in this paper were collected, either directly or indirectly, by the French telecommunications authority, Prance Telecom. While data from other sources seems consistent with that reported by France Telecom, obtaining independent data remains one of the major difficulties in assessing the French videotex experience.] This report comes at a time when hopes in videotex in the United States have been rekindled by the introduction of Prodigy by an IBM-Sears partnership and by an easing of court-imposed restrictions on the ability of Bell regional operating companies to enter the field. Still, any optimism generated from an examination of the French videotex system must be extremely guarded given the amount of money has been lost in videotex investments in the United States to date.

HALLMARKS OF THE FRENCH VIDEOTEX APPROACH

To the extent that the French videotex system can be considered a "success," five factors seem to have been important: (1) the distribution of free terminals; (2) the development of a nationwide electronic telephone directory; (3) a pay-as-you-go pricing mechanism ("kiosk"); (4) an innovative, dynamic, and entrepreneurial group of small service providers; and (5) a loose and flexible legal environment. These factors will be discussed very briefly here for those readers unfamiliar with the French system. More extended descriptions can be found elsewhere (Hall and Terren 1987; Mayer 1988).

Free Terminals

Beginning in 1983, the telecommunications authority (formerly the WT but recently renamed France Telecom) distributed terminals (Minitels) free of charge to telephone subscribers. In addition to the basic model offered free, individuals and organizations can rent enhanced versions from the telecommunications authority. The total supply of videotex terminals is expected to exceed 4 million by the end of 1988 (DACT 1988b). In the view of many observers, the free distribution of terminals was the critical step in overcoming the chicken-and-the-egg problem of consumer reluctance to invest in equipment for unknown services and service provider unwillingness to invest in services until the dimensions of the potential videotex market were clearer. Indeed, the Minitel terminal is so closely linked with the entire French videotex system that the latter is typically referred to as Minitel.

Electronic Directory

The electronic telephone directory serves as an icebreaker for users who are unfamiliar with or skeptical about the utility of videotex. It provides videotex users with easy, rapid, and flexible access to nationwide directory assistance. The directory combines the functions of both the white and yellow pages. Moreover, it allows for searches by name, address, or line of business. It even accommodates misspellings. It is free for consultations of up to three minutes, and there is no limit on the number of calls an individual can make. As of mid-1988, the electronic directory logged over a million connect hours per month (DACT 1988b), the rough equivalent of 100.000 three-minute inquiries per day.

Kiosk Pricing

Although there are essentially three networks with three different pricing mechanisms available in the French videotex system, the most common one used for-services oriented to the general public is the kiosk. Under this mechanism, consumers are free to call up any service on the kiosk network without having to subscribe in advance or receive a password. Originally, all kiosk services were priced at a fixed hourly rate of about 60 francs per hour.

Unlike videotex system where users incur multiple charges for subscriptions, access, and telephone use, the kiosk mechanism (as well as the other French pricing options) involves a single charge. In addition to the simplicity of a single charge, the spontaneity of the kiosk pricing system is also attractive to consumers. For service providers, it holds out the possibility of being profitable based on light use from a large number of unknown users. Furthermore, billing and collection are performed by the telecommunications authority, which reimburses service providers monthly in accordance with their level of consultation (after taking a portion for itself).

Entrepreneurs

France is not generally known for its entrepreneurial approach to business, but the videotex market revealed an untapped vein of entrepreneurial spirit. Many of the most innovative services, especially those utilizing the interactional rather than the simple information retrieval capacities of videotex, were begun by small service providers. Except for some initial restrictions designed to favor the participation of the French press, barriers to entering the videotex market have been minimal.

Legal Flexibility

Rather than pass new laws in anticipation of videotex-related abuses, and thereby possibly discourage service provision, the French adopted a wait-and-see approach. Consumer protections applicable to mail order and door-to-door sales were slowly extended to videotex purchasing. In addition, the content of videotex messages was initially regarded as a form of private communication and therefore beyond censorship.

NEW DEVELOPMENTS ON THE FRENCH VIDEOTEX SCENE

In the past two years, a number of changes have occurred in the French videotex system. The most important of these changes can be grouped into the categories of pricing, services, distribution, and regulation.

Pricing

Perhaps the most important and long-awaited change in the French videotex system involves the kiosk pricing mechanism. Instead, of a single price for all services, service providers can choose among three possible prices, including one slightly lower -450.05 francs per hour) and one significantly higher (75.1 francs per hour) than the former single price level (now 58.4 francs per hour). This pricing change allows for the possibility of price competition based on quality differences.

In addition to the expansion of the kiosk pricing mechanism, 800-type numbers now exist which consumers can call without any charge. Previously all users had to pay at least for a local telephone call.

Two other pricing developments remain for the future. One is the continuous display of charges as they accumulate. For obvious reasons, neither service providers nor the telecommunications authority are eager to increase consumer awareness of costs by creating the equivalent of a taxicab meter. The other pricing developments that remains on the horizon is the proliferation of "smart cards" and smart card readers among members of the general public. Smart cards look like credit cards but contain microchips. Because of their capability of storing and processing relatively large amounts of information, smart cards are thought to hold the key to the popularization of banking and shopping via videotex.

Services

The growth in the number of videotex services available to professional and nonprofessional users continues unabated. In December 1985, for example, there were 2278 access name abbreviations issued to service providers on the three networks, with the kiosk network having the fewest, 500 (DACT 1986a). By June 1988, there were 8774 name abbreviations issued, the majority of which (4449) were for the kiosk network (DACT 1988b).

The French telecommunications has defined its role as transmission rather than provision of videotex services. The electronic telephone directory obviously deviates from this rule, and over time, two more developments have occurred which blur the distinction between transmission and service provision. In 1987, France Telecom introduced a greatly improved guide to the services. The cost for using the guide is 21.9 francs per hour, and it can identify services by their name, the name of their provider, or their principal subject matter (e.g., sports, banking, shopping, forums, games). The guide then-provides a brief-description of the service, including how to access it. In addition to the guide to services, the French-telecommunication authority also now uses the videotex network to transmit telegrams. (The cost is 28 francs for the first twenty-five words.) While not providing message content, France Telecom is clearly engaging in a function, electronic mail, that could be provided by private service providers.

Distribution

When one thinks about the distribution of videotex services, one really is referring to the terminals. Two recent innovations in this regard are the introduction of the bi-standard terminal (Minitel 1B) and the placement of terminals in public places on an experimental basis. The bi-standard terminal allows users to enter data in ASCII format (80 columns) in addition to the French Teletel videotex format (40 columns) and allows the terminal to be compatible with commonly used data terminals. The Minitel 1B is available free to telephone subscribers, although the basic Minitel 1 suffices for most residential users.

The Point-Phone Minitel is the videotex equivalent of the pay telephone. It also contains a small printer that allows the user to copy the information provided by a particular service (e.g., the times and locations of various movies playing that night). The pay terminals are currently being tested in 80 sites. The plan is to eventually make them commonplace in hotels, restaurants, bars, service stations, post offices, airports, and government buildings.. The party renting the machines would be responsible for their safety and would share in their receipts (DACT 1987).

Regulation

After the loose regulatory regime that characterized the first years of the Teletel system, a number of legal issues are slowly being resolved. In early 1988, three laws clarified issues pertaining to shopping via videotex, fraud, and privacy. For instance, the buyer's right of recision applicable to door-to-door sales was extended to purchases conducted over the videotex medium.

Probably the most important feature of these legal changes involved the differentiation of private and public communication. This had been a persistently hot topic given the popularity of the messaging services and their sexually explicit content. Because of France's permissive traditions regarding matters of the heart, the authorities were reluctant to get involved in the control of messaging services, but a ruling became inevitable. Essentially, private correspondence is defined as a message destined for one or several specific individuals; it enjoys the same protections as mail. Public correspondence is defined as a message sent to an undifferentiated audience and whose content is not tailored to a particular individual. Public correspondence is subject to the same constraints as audiovisual communications, for example, television broadcasts. As a result of these definitions, messaging services can continue to be uncensored and therefore retain their popularity.

PATTERNS OF CONSUMER USE

The best source of data on videotex attitudes, knowledge, and behavior by members of the general public is a panel study sponsored by the France Telecom. It consists of a nationwide sample that has a number of unusual features. First, it is supposed to be representative not of all French adults but only those with government-provided terminals in their homes. Second, the sample increases in size over time, not so much due to replacement, but to the fact that free distribution of terminals occurred gradually from region to region, and the sample expanded in parallel. As a result, the sample grows from 1400 respondents in the first wave (June 1985), to 1601 respondents in the second wave (March 1986), to 1758 respondents in the third wave (December 1986), to 3172 in the fourth and most recent wave (January 1988). Only during the study's fourth wave was the sample representative of all regions in France. Unfortunately, additional details on sample selection and replacement are not found in publicly available documents

Continuities

In several respects, there has not been a great deal of change across the four waves of the panel study. Four such continuities are the overall frequency of use, the concentrated pattern of use among a few heavy users, the perception of the services as expensive, and the services of which consumers are most aware.

There has been only a slight increase regarding frequency of use. Using 3-6 times per week as a standard, the number of heavy users increased from 31 to 35 to 36 to 42 across the four waves. Similarly, there has been a slight decrease in the extent to which French videotex use is concentrated in the hands of a relatively small percentage of heavy users. Data on user concentration are only available for the third and fourth waves of the study and even then are not strictly comparable. Nevertheless, during the third wave the top 23% of users accounted for 68% of total volume, while the top 24% accounted for 71% of volume in the fourth wave.

Regarding perceptions of the costs of using videotex services, there has been little improvement over time. Only 43% of respondents in the first wave described the services as expensive or somewhat expensive. In the three additional waves, the percentage has hovered in the sixties (61, 69, and 61 percent respectively).

A final continuity involves consumer awareness of services. Across all waves the electronic telephone directory is clearly the best known service, whether measurement is based on aided or unaided responses. In the most recent wave of data collection, 92% of respondents spontaneously mentioned the directory and 99% cited it in an aided response format. After the electronic directory, the most commonly known services consist of those offered by newspapers, banks, transporters (e.g., trains and planes), and mail order sellers. Unaided and aided awareness of these service providers has remained fairly stable since the second wave, with typical figures being 30% for unaided responses and 60% for aided responses.

Changes

The most notable respects in which change has occurred are the rates of service consultation, the degree of consumer satisfaction, the segmentation of consumers by the types of services they use, and the degree of consumer acceptance of advertising in the videotex medium. Regarding rates of consultation, almost all categories have experienced increases throughout the study period. Table 1, based on unaided responses, shows the rates of increase for most of the important service categories.

Levels of consumer satisfaction have also risen noticeably. Respondents were allowed three forced-choice responses: very satisfied, somewhat satisfied, and not satisfied. The clearest pattern is for the percentage of respondents selecting not satisfied; their percentage declined consistently from 40 to 27 to 20 to 10 across the four waves.

The most interesting pattern of change concerns the differentiation of users into market segments. A plausible nine-category classification was derived from a factor analysis of first wave results, and the categories were retained in the analysis of later waves of data collection. Table 2 presents the nine categories as well as their changing distribution across time.

Based on table 2, one might say that the good news is that the percentage of respondents who used only the electronic directory has declined over time, although the only dramatic decrease occurred between waves one and two. Also, videotex advocates might be heartened by the fact that the respondents who use a variety of services (All Services: Heavy and All Services: Light) increased from 9% in the first wave to 33% in the fourth wave. From the point of view of maximizing service provider and telecommunications authority revenue, the bad news is that the respondents who are heavy users of services (Kiosk Only: Heavy and All Service: Heavy) declined distinctly between the third and fourth waves, constituting only 10% of the total sample. Overall, there does seem to be growing diversification of individual use, if not growing intensity of use.

TABLE 1

CHANGES IN RATES OF SERVICE CONSULTATION

TABLE 2

TYPES OF MINITEL RESIDENTIAL USERS

A final example of change in consumer response to the French videotex system concerns the use of advertising as a source of information regarding videotex services. Respondents were asked to name, without assistance, any methods they use to become informed regarding existing videotex services. The percentage of people spontaneously citing advertising has increased steadily across the four waves, from 1290 to 18% to 20% to 38% The other most frequently mentioned sources of information about videotex services are the paper directory, the on-line guide to services (described above), and the various magazines that cover videotex developments.

CONCLUSION

Videotex is a fact of life in France, but it took an enormous investment by the government--not just deep pockets, but bottomless pockets. Thus, unless entities on the scale of the Bell regional operating companies increase their involvement in the videotex arena, it is unlikely that a videotex system in the French mode will be established in the United States. Nor is it unclear whether such a massive investment in videotex would be justified on either economic or social grounds.

Given these reservations, what lessons can be drawn from the French videotex experience that might be applicable to other nations? First, videotex services get used in France "because they're there." This not only refers to the free distribution of terminals, which greatly reduces the cost of becoming a videotex user, but also to the growing presence of terminals in schools and other public places. The Minitel terminals, although they come in a variety of styles, have become a familiar sight to the average Frenchmen and have worked their way into popular culture, including a number of folk legends (De Lacy 1987). A further respect in which the diffusion of French videotex occurred in a nondisruptive manner involves its method of billing and collection; it is all done by the telecommunications authority, with videotex charges simply being added to bimonthly telephone bills.

A second general lesson is that services get used when they are either inexpensive or provide a unique benefit. The electronic telephone directory and banking via videotex exemplify inexpensive yet highly useful services. For example, videotex users can use banking services to keep funds in interest-bearing savings accounts until immediately before a bill is due. The various real-time dialog and forum services ("messageries") illustrate the potential popularity of a service that cannot be duplicated in other media. In contrast to "chat lines" using telephones, messageries afford users a higher degree of anonymity and playfulness, although at the cost of having to do communicate through text rather than speech.

A final lesson that can be drawn from the French videotex system is the need to encourage small service providers as a mean of unlocking entrepreneurial energies. It is a truism that a great deal of innovation originates with small companies, but this fact tends to get lost in light of the huge financial investments needed to operate a nationwide videotex system. The key to the French approach is the combination of the vast telecommunications authority as the carrier of services with a dynamic sector of relatively small providers of service content. In contrast, videotex systems in other nations have often combined these two roles (e.g., Prestel in the United Kingdom) or largely confined service provision to large institutions (e.g., several systems in the United States). Thus, the most important lesson that can be derived from the French videotex experience is how to combine the best of large- and small-scale organizations.

REFERENCES

DACT (Direction des Affaires Commerciales et Telematiques). 1986a. La lettre de teletel, No. 8, first trimester.

DACT (Direction des Affaires Commerciales et Telematiques). 1986b. La lettre de teletel, No. 9, second trimester.

DACT (Direction des Affaires Commerciales et Telematiques). 1987. La lettre de teletel, No. 12, second trimester.

DACT (Direction des Affaires Commerciales et Telematiques). 1988a. La lettre de teletel, No. 14, second trimester.

DACT (Direction des Affaires Commerciales et Telematiques). 1988b. La lettre de teletel, No. 15, third trimester.

De Lacy, Justine. 1987. ''The Sexy Computer," The Atlantic 260 (July): 18-26.

Hall, Alix and Jean Terren. 1987. "An Effective Strategy for Information Delivery," Journal of Business Strategy 8 (Summer): 21-27.

Mayer, Robert N. 1988. "The Growth of the French Videotex System and its Implications for Consumers," Journal of Consumer Policy 11 (March): 55-83.

"Teletel mode d'emploi." 1987. Videotex magazine, No. 11 (January/February): 37-40.

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