BUSINESS/ECONOMY

Showdown in Montreal

TOM FENNELL March 14 1988
BUSINESS/ECONOMY

Showdown in Montreal

TOM FENNELL March 14 1988

Showdown in Montreal

BUSINESS/ECONOMY

The battlefield is Montreal. At stake are world-class technology, national prestige and a multibillion-dollar bonanza. Next month CETI of Montreal, founded by a group of aggressive Quebec executives in 1986, plans to turn that city’s telephone system into a gigantic computer grid, which will allow its clients to communicate directly with one another and with hundreds of computer systems. Just before CETl’s system is scheduled to go into operation Bell Canada officials say that they will unveil the technology that it hopes will stop CETl’s advance. Bell will use Canadian hardware based on Canada’s internationally acclaimed Telidon technology, while CETI will deploy Minitel—a highly successful French-built system. Said James Carruthers, president of Norpak Corp., the Kanata, Ont.-based firm that designed Bell’s hardware: “If they can bring the French system into Canada, it will kill us internationally.”

The struggle in Montreal is between two global communications standards—the North American NAPLPS syntax, which was developed from Canada’s Telidon system, and Minitel, which operates under the French Teletel standard. Carruthers said that Norpak and its corporate allies, including Bell, have been holding their own against France’s Minitel for the small, but potentially huge, videotex market. But he said that the French are now going for the jugular by attempting to establish a Minitel bridgehead in Montreal. If the French succeed, he said, they will deprive NAPLPS operators of a national home base comparable to the one that Minitel now enjoys. They would, said Carruthers, be able to go abroad and claim that their Canadian competitors could not even sell their system in their own backyard. Said Carruthers: “Whatever standard is established will be there forever.”

The two competing videotex systems were conceived and developed independently in the 1970s by scientists in France and Canada. The systems use existing telephone grids and small com-

puter terminals to create a vast communications web. Individuals can send and receive messages and call up hundreds of services from a wide variety of data banks. They can also do complicated banking and stock market transactions on the system. Ottawa ultimately spent $67 million developing Telidon videotex

technology before handing the system off to the private sector, primarily Norpak, for further development.

Now Bell is proposing to use Telidon technology in its Montreal videotex system. Bell executives estimate that the service will quickly grow to have 20,000 subscribers, about 16,000 of whom will rent compact Norpak-designed ALEX terminals —named after Alexander Graham Bell—while another 4,000 customers are expected to adapt their own personal computers to the system.

Both the ALEX and Minitel terminals are about the size of a small television set and are almost as simple to operate. They can be carried around like a telephone from room to room, and operate from the nearest electrical outlet and telephone jack. Bell officials say that they expect to take de-

livery of their first ALEX terminals next month and will launch a massive advertising campaign to introduce the service this spring. CETI is now taking delivery of 1,000 Minitels a month and is close to launching its service.

Although the ALEX terminals are untried, CETI president Gérard Sa-

bourin said that Minitel has been a spectacular success, with close to four million in France. The French state-owned telephone company not only financed development of the system in the late 1970s, but gave away three million terminals to get the system into operation. As well, the company forced its clients to adapt to Minitel by refusing to issue standard telephone books. That compelled customers to use, instead, the electronic directory in their Minitel computers. And as they did so, they quickly learned to use many of the 5,500 services offered on the system as well.

Norpak and its allies, which include not only such large firms as Bell, but scores of smaller software manufacturers that produce NAPLPS-compatible products, are now locked in a struggle

for supremacy with Minitel. Norpak has scored some major victories. Chase Manhattan Bank rents out NAPLPS standard computer terminals, with parts built under licence from Norpak. And the Chicago Board of Trade is equipping 600 traders with terminals using Norpak’s teletext technology to provide up-to-the-splitsecond information on stocks and commodity prices.

ALEX’s main advantages in its battle with Minitel are its graphics capabilities and efficiency. Although the Minitel system transmits text, with some crude graphics capabilities, the Canadian system has a graphics option, which Carruthers says makes it infinitely more useful. Said Carruthers:

“Not everybody can read a financial statement, but anyone can look at a chart and understand it instantly. The Canadian technology is the best in the world.”

Bell Canada initially considered using the Minitel system.

But Alan Walters, Bell’s vicepresident of marketing and development, said that Bell decided against it because the firms supplying technology for NAPLPSbased systems are dominant in North America. As a result, he said that

Bell was not convinced that Minitel could survive over the long term in that environment.

CETI executives seem to be moving

at a faster pace than Bell. The firm is already taking delivery of 1,000 Minitel terminals a month, while the only ALEX terminal Bell has on display is a wooden model in Montreal. As well, CETI plans to open a Toronto office this summer in preparation for its assault on Canada’s largest metropolitan area. Indeed, CETI’S projections are far more ambitious than Bell’s. CETI chairman Roger Charland said that the firm hopes to have 64,000 terminals installed in Quebec by the end of 1989, while Bell is forecasting just 20,000 during the same period. Said Charland: “All we had to do with the existing Minitel unit was make some very minor modifications. The amount we paid was totally insignificant.”

But no matter which firm wins, Carruthers said that he is convinced videotex, like the g telephone before it, will change I how people work, shop, educate z themselves and, at root, how 9 they communicate. And the outcome of the Montreal battle will determine which technology they do it with.

-TOM FENNELL

MARC CLARK

GEORGE FERZOCO