Internet in France 2002: An overview

Last week, I was in France for a short vaca­tion. Dur­ing that time, I got a chance to talk to peo­ple locally and get a bet­ter idea as to what was going on within the Inter­net mar­ket in France. Here are a few obser­va­tions based on my under­stand­ing of what is going on.

Strong Growth

France had been a leader in terms of estab­lish­ing an infor­ma­tion soci­ety but was start­ing to get trapped by its legacy Mini­tel tool. The Mini­tel was intro­duced in France in the late 70s as essen­tially a pre­cur­sor to the web. The ser­vice allowed users to read online ver­sions of mag­a­zines and news­pa­pers, shop in online cat­a­logs, chat, play games, and have access to every gov­ern­ment office. In the early 80s, Mini­tel pen­e­tra­tion became so high that the government-owned phone com­pany decided to drop print­ing of phone books and move that ser­vice to the Minitel.

Fast for­ward to the late 90s. France is still on the Mini­tel and the Inter­net has got­ten wide accep­tance in the United States. At that point, Inter­net pen­e­tra­tion in France is slug­gish as few peo­ple see any value in it. As a result, the French gov­ern­ment issued an ambi­tious plan to move France onto the Inter­net. As is the case for every major gov­ern­ment project, lit­tle hap­pened for sev­eral years.

How­ever, the com­bi­na­tion of gov­ern­ment sup­port for a new Inter­net ini­tia­tive and the rise of global ser­vices finally started a rev­o­lu­tion in French online ser­vices. Accord­ing to sev­eral peo­ple I talked to in Paris and in the south of France, the effects of the Inter­net were not really felt until about a year ago, when a sud­den usage explo­sion started. From 1999 to 2001, the num­ber of Inter­net users in France tripled and it is expected to dou­ble this year to about 30 mil­lion. As more and more ser­vices are now mov­ing away from the Mini­tel and onto the Inter­net (as I was told by an Amer­i­can liv­ing in France, the Mini­tel is now fairly use­less as most every­thing has moved onto the Internet.)

Com­bined with growth in other Euro­pean coun­tries, this rep­re­sents a mar­ket of almost 150 mil­lion users in Europe.

Broad­band

While most Inter­net users in Europe still use nar­row­band, a few peo­ple are start­ing to make the move to broad­band. How­ever, pro­hib­i­tive costs for DSL mean that most broad­band users in France are access­ing the net via cable. A DSL line can cost over 100 euros whereas a cable modem con­nec­tion can be had for as lit­tle as 15 euros, with aver­ages of 30–45 euros per months for a 500Kbps con­nec­tion. The big advan­tage of such con­nec­tions in Europe is that local phone is metered whereas broad­band is not. As a result, heavy Inter­net users are find­ing that it is less expen­sive to get a broad­band cable con­nec­tion than it is to use a modem and phone line.

The Euro

For the first time in his­tory, 12 coun­tries have simul­ta­ne­ously got­ten rid of their cur­ren­cies and moved to cre­ate a sin­gle mon­e­tary block: the Euro is here and it has wide impli­ca­tions on global E-commerce.

No more Aus­trian schillings, Bel­gian, Lux­em­bourg or French francs, Finnish markka, Ger­man Marks, Greek drachma, Irish punts, Ital­ian lira, Dutch guilders, Por­tuguese escu­dos, or Span­ish pese­tas. No more com­plex­ity in try­ing to con­vert those from one to the other when doing elec­tronic trans­ac­tions. Now, the Euro is the cur­rency for this whole zone (dubbed the Euro­zone) and it rep­re­sents a very large mar­ket, larger, in fact, than the Amer­i­can mar­ket in terms of customers.

One the biggest chal­lenges in deal­ing with the Euro­pean mar­ket was the lack of stan­dard­iza­tion when it comes to laws, ship­ping, cur­rency, and lan­guage. With the Euro, a large por­tion of that prob­lem can be taken care of as mem­bers of the Euro­zone start mov­ing towards devel­op­ing a sim­i­lar set of eco­nomic policies.

Essen­tially, the Euro takes away the bar­rier of mul­ti­ple cur­rency trans­ac­tions that held back some users from shop­ping online and some ven­dors from launch­ing e-commerce sites.

A cou­ple of years ago, I alerted our read­ers to the fact that Europe was qui­etly ris­ing as a new giant in the global E-commerce arena. With the rise of the Euro, this mes­sage is becom­ing more impor­tant. Now that a mar­ket of almost 150 mil­lion peo­ple has been cre­ated, the US is no longer the only place where E-commerce can work and as such, it is impor­tant for peo­ple in the US to start look­ing at tech­no­log­i­cal devel­op­ments in Europe. In the long run, a num­ber of Euro­pean com­pa­nies will prob­a­bly become some of the larger play­ers in the online space.

Wire­less connectivity

While every­one in the U.S. is start­ing to pay atten­tion to WiFi, the wire­less com­put­ing rev­o­lu­tion has not yet taken hold in Europe. On the one hand, cell phones keep get­ting smaller and offer­ing more fea­tures (Mul­ti­me­dia mes­sag­ing is started to take hold among Euro­pean digerati), there seems to be some lag in the adop­tion of wire­less com­put­ing offer­ing. A few under­ground efforts are get­ting orga­nized, in a fash­ion sim­i­lar to that seen in the USA a cou­ple of years ago.

Con­clu­sion

The Inter­net space in France seems to now fol­low a curve sim­i­lar to the one expe­ri­enced in the United States in the late 1990s. How­ever, the lack of ven­ture cap­i­tal and the fact that, much like the United States, France is suf­fer­ing from an eco­nomic slow­down, have tam­pered the explo­sion. While accep­tance for every­thing Inter­net is grow­ing, the adop­tion of net­worked tech­nol­ogy is fol­low­ing a course that is dif­fer­ent from that of the US and UK. While there will be strong growth in the Inter­net field in France over the next year, expect that rev­o­lu­tion to be rel­a­tively quiet, com­pared to what was expe­ri­enced in other countries.