PARIS -- In October 2000, France Telecom ran its most expensive publicity campaign ever for a technology considered cutting-edge when Ronald Reagan was in the White House and Pac-Man and Asteroids ruled the arcade game roost.
Many critics seriously wondered whether France Telecom had lost its collective mind in throwing such money -- 30 million francs ($4.1 million) -- into a promotion for Minitel, the monochrome teletext system founded in 1981.
After all, this was technology that had been expected to go the way of the dinosaurs once the technicolor big bang of the Internet won over Gallic hearts and minds. Alongside the all-singing, all-dancing Web, the small plastic terminal with a slide-out keyboard and black-and-white screen looked decidedly passé and unsexy.
Even French Prime Minister Lionel Jospin claimed in 1997 that the Minitel was holding back France’s entry into the information age.
But despite the brickbats and the frequent predictions of its imminent demise, Minitel has steadfastly refused to go gently into that good night. While the number of old-style Minitel terminals is undeniably in terminal decline, France Telecom has compensated somewhat by making it easier to access Minitel services from a variety of devices such as PC, PDA or mobile phone.
More crucially, at a time when most Internet players are still searching vainly for a sustainable business model, Minitel is showing its flash multimedia cousin a thing or two about turning a profit.
France Telecom, not surprisingly, rejects any notion that Minitel acted as a brake on the development of French e-commerce.
"Our strategy has been to promote Minitel as a complementary service to Internet -- not in direct competition to it," said Nicholas Duforcq, director of France Telecom’s Multimedia Division. "We have focused on Minitel’s strengths: its ease of use, the security of the network and the rich variety of services it offers to maintain its appeal to French users."
Olivier Beauvillian, an analyst with Jupiter Media Metrix, agrees that the Minitel is often wrongly fingered as the scapegoat for all of France’s e-commerce woes.
"I don’t think the Minitel is an issue at all in French e-commerce," Beauvillain said. "It’s not an inhibitor or an accelerator or anything else that people have been saying about it. It’s really a non-event in those terms. Minitel is not going to fundamentally change the way e-commerce is being conducted in France."
France Telecom has worked hard to revamp the Minitel’s image for the Internet age.
Late last year it launched i-Minitel, high-speed, easy-to-use software that enables Minitel’s services to be accessed from PCs and Macs. Then in January, France Telecom unveiled Et hop Minitel, a service which enables companies to publish their Web content on the Minitel, using an application service provider model to store and manage the content.
"It’s starting to look like a very good investment for France Telecom, and other companies are now sitting up and taking notice," said David Israel, founder and CEO of real estate portal Immopratique, which offers access to its property database through both the Internet and Minitel.
Consider the numbers. Minitel is estimated to have 16 million regular users in France, compared to about 8 million for the Internet. The 9 million Minitel terminals in homes and offices are typically accessed to buy train or movie tickets, check stocks, publish small ads, search databases, use chat rooms or send faxes and e-mails to other Minitel or Internet users.
Yet while the user logistics are impressive, the real story is Minitel’s ability to convert online traffic into money in the till -- not only for France Telecom but also for the 7,000 or so companies that depend on the bulk of their business from teletext customers.
France Telecom raked in over 690 million euros ($614 million) in revenues from Minitel services in 2000, 440 million ($392 million) of which was then divvied out among participating companies. These revenues, generated by charging users between 0.6 euros (50 cents) and 1.35 ($1.20) euros per minute, depending on the service accessed, are collected as part of customers’ bimonthly phone bills.
Archaic or not, such a tried-and-trusted business model proved alluring enough for dyed-in-the-wool Internet giants such as Altavista and Yahoo, who have opened Minitel service as part of their French sites in recent months.
Olivier de Vecchi, commercial director at Easance, a multi-access software provider in Paris that has helped develop Minitel software, says that today’s startups are far more inclined to look favorably at the Minitel than their entrepreneurial counterparts of 18 months ago.
"It’s attractive for startups because Minitel is a proven business model and enables companies to raise short-term revenue while they are trying to gather second-round funding. Reaching 15 million Minitel users is also a nice way to increase the traffic on their Web," he said.
These points are echoed by Immopratique’s Israel, who confesses that he was one of the original Minitel skeptics when his company was putting together its business plan over two years ago.
"Everyone was talking about Internet and all the great features it offered," he said, "while Minitel was seen as well past its sell-by date." Minitel’s established user base, however, convinced Immopratique to plump for a dual Internet/Minitel strategy.
While this was an attempt to have "the best of both worlds," Israel said that Minitel, in fact, firmly eclipses the Internet as a platform for making money. He estimates that in the last three months, about 40,000 unique connections to Immopratique came from Minitel customers -- and this was without any real advertising or direct marketing.
"More than 90 percent of our business comes through the Minitel, which was something I never originally expected. But we sometimes forget how deeply rooted the Minitel is in our daily lives in France. It might not be big on graphics or multimedia, but it’s quick, easy to use and people trust it completely for financial transactions."
Certainly, financial institutions such as banks and stockbrokers account for a large percentage of Minitel usage. Over 3.9 million French use Minitel for online banking, compared to 1.9 million using the Internet, according to Forrester Research, a technology market research firm based in Cambridge, Massachusetts.
Fréderique Dompeyre, commercial director of online banking at Société Générale, one of France’s biggest financial institutions, said that Minitel will constitute a central plank in the company's business strategy for the foreseeable future.
"Over 30 percent of the stock market transactions conducted by our customers come through Minitel. While we have seen strong growth in the number of people accessing our services through Internet, the numbers for Minitel remain stable," she said.
Nevertheless, even its most ardent proponents recognize that Minitel can’t hold out forever against the onslaught of the Internet. The momentum behind the Net is simply too great for this enduring symbol of l’exception française to survive in the long term.
But analysts still give Minitel a two-to-five-year window for survival.
That’s enough time for France Telecom and its partner companies to continue making healthy profits from Minitel -- and e-commerce firms to try to figure out how to work the same magic for the Internet.
