http://www.businessweek.com/stories/1997-09-28/a-french-internet-revolution-intl-edition

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A French Internet Revolution? (Int'l Edition)


International -- European Business: FRANCE

A FRENCH INTERNET REVOLUTION? (int'l edition)

Prime Minister Jospin is actually pushing to wire France

During a recent speech, French Prime Minister Lionel Jospin uttered the unthinkable. France, he said, lags dangerously behind other countries in embracing the Internet. French politicians have all but ignored that fact as the rest of the world has raced to the Information Superhighway. France has become a backwater, tied to a 15-year-old teletex service called Minitel. Officials have even attacked the Internet as an English-language Trojan horse that could threaten French culture. Now, finally, the elite in Paris realize that France needs to get wired. "Failure to do so could rapidly have serious consequences on competitiveness and jobs," says Jospin.

Indeed, the Internet could help speed the globalization of France's inward-looking society and its highly centralized economy. The most immediate impact: consumers' ability to compare prices of products and services over the Net, forcing greater competition on a clubby and protectionist retail sector. Jospin's call for free Net access to government information could even challenge some of the privileges wielded by France's elite caste of politicians and big business leaders. "The Internet runs counter to a hierarchical society," says French Senator Rene Tregouet.

The main obstacle to getting France on the Net is the old-fashioned Minitel, which was developed by the government in the 1970s and around which was created the world's first and biggest market in electronic commerce. That $1 billion-plus market refuses to die. Despite its black-and-white screen, lack of memory or graphics, and crawling baud speed, Minitel boasts some 25,000 merchants that sell information, services, and products over its network. French consumers use it to do everything from looking up train and airline schedules to making electronic bank transfers. "I can't imagine living without Minitel," says Paris consultant Bertrand de Quillacq.

To shift electronic commerce to the Internet, the government is pushing France Telecom to develop an Internet-related business that will eventually cannibalize its Minitel operations, which rake in $500 million a year for the phone monopoly. Customers are charged for Minitel services on their phone bill. France Telecom takes a 50% cut and transfers the rest of the payment to merchants.

DUAL PLATFORM. To move Minitel's businesses and its 17 million users to the Internet quickly, France Telecom aims to launch a dual-mode Minitel-Internet terminal in mid-1998. Akin to a stripped-down network computer that can handle both Minitel operations and Internet access, the terminal will cost between $400 and $500. France Telecom would cash in on electronic commerce much as it does now. An association of Minitel merchants is lobbying the government to slash Internet access costs to 10 cents per minute, with no monthly subscription fees--much less than Net users pay now.

The appeal of a dual platform is that French companies offering services on Minitel can set up shop on the Internet without losing their existing Minitel customers or revenues. And French citizens, who are less apt than Americans or Germans to buy a personal computer, may upgrade to the new Minitel terminal and gradually build their skills on the Internet. "It's the answer to the fact that many people simply won't use a PC, which is expensive and complicated," says Jean-Noel Tronc, technology adviser to Jospin's Cabinet.

However, some critics say France Telecom's Minitel-Net PC will be obsolete by mid-1998 as Internet technologies such as Web TV, Web phones, cable modems, and digital satellite interactive services gain momentum. London-based market researcher Ovum Ltd. predicts some 3.2 million French households will have access to digital satellite interactive services by 2000.

Thierry Carmes, associate partner and interactive multimedia expert at Andersen Consulting in Paris, says Europeans may prefer to access the Internet over a Web TV or Web phone, since many already have digital television sets and digital cell phones. "I bet on a big Internet development [in Europe] over the next 12 months, but not over personal computers--over other networks," says Carmes. Only 15% of French households have computers, compared with 45% in the U.S.

READING LAW. The French government argues that the new Minitel-network PCs are not its only strategy to get France wired and that other Internet access providers should thrive. "I am convinced that solutions cannot be imposed on society from the top down," says Jospin. Still, officials aren't willing to say how much France Telecom aims to spend on developing the new terminals--and whether anyone believes they will be profitable.

For now, Paris cares more about speed than cost. Jospin has pledged to get every school wired, to aid Net entrepreneurs, and to make access to government information free and easy on the Net. But the more that access to information spreads, the more classic French political, economic, and social hierarchies may be thrown into question. "Debate about the Internet can open a debate about our whole society," says Tregouet. Jospin's initiative to get wired may bring more of a revolution to French society than he ever dreamed.By Gail Edmondson in ParisReturn to top


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