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Minitel network: the beta Internet breaks out

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Industry Standard

(IDG) -- Three years ago, brash young Internet companies scoffed at Minitel.

France Telecom's text-based online service, which offers travel reservations, banking and dating services, reeked of the 1980s, they said. Worse, it was hindering growth of the real digital revolution -- the Internet. Now, former revolutionaries Yahoo! and Wanadoo are rushing to join longtime devotees, such as banks Credit Lyonnais and Societe Generale and catalog retailers 3Suisses and La Redoute, on the Minitel network.

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As the Internet firms confront shrinking ad revenues, Minitel offers a ray of light. The service boasts 15 million users, compared with the paltry 8 million Net users in France. And it makes money.

"It's a brutal awakening as companies begin to realize they need to make their sites pay," says Vincent Barnaud, spokesman for France Telecom's Minitel and Internet division. Barnaud points to the burst Internet bubble and the WAP wireless flop to explain why "Web companies are becoming interested in the Minitel again."

Seizing this opportunity, France Telecom has started to let companies replicate their Web content on Minitel. One such firm, Job Finance, a Web recruitment site for the banking and finance industries, joined Minitel in February and is already making money. The company expects its Minitel service to generate $2,666 a month in revenues, and figures that could grow to as much as $7,000 a month in the near future, according to CEO Loic Lecharny. Not a fortune, but a start.

For many Internet companies, Minitel is a cheap way to augment their online presence. Portals such as Yahoo!, Wanadoo and Free allow users to consult their e-mail messages via Minitel, a service that many use in conjunction with PC-based Web surfing. At the same time, longtime Minitel clients are happy to rely on a tried-and-true online model while pure Internet e-commerce remains so risky.

Minitel has always been lucrative. France Telecom charges a minimum rate of about 2 cents a minute for a connection to the Minitel network. In turn, Minitel companies charge users about 5 cents to $1.20 a minute to connect to their services (though charges can sometimes soar even higher). Last year, France Telecom collected $614 million in revenues from Minitel services, $391 million of which it turned over to participating companies.

To be sure, Minitel's sunny profile might have a lot to do with the dark clouds that envelop the rest of the online world. In real terms, Minitel's revenues are down 12 percent from 1999, and traffic and revenues have been falling steadily since 1993.

One of the most popular services on Minitel -- right up there with online banking and adult chat rooms -- has always been SNCF, the French rail network. It still receives more bookings via Minitel than over the Web -- 3 percent of overall sales in 2000, against 2.4 percent -- but Minitel is expected to fall behind shortly.

It's part of a pattern: Web usage in France is expected to jump to 15 million users by the end of this year, and few doubt that Minitel ultimately would be eclipsed in France by the Net. But even when that does occur, Minitel has already made its points: The online world can be a profitable one. And no one should dismiss the granddaddy of the digital age.



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