Ten-Year Anniversary of Minitel’s End Offers a Reminder of the Limits of Industrial Policy

Ten years ago today, France Télécom retired the Minitel service. I recount this history because Minitel was one of France’s less-disastrous examples of industrial policy. My colleague Adam Thierer reminds us of the service:

Minitel was France’s attempt to develop its own early version of the internet in the 1980s and ‘90s. Minitel terminals were distributed free of charge and eventually gave an estimated 25 million French citizens access to bank accounts, the yellow pages and various other services. But Minitel’s centralized and closed network model ultimately could not serve consumers as well as the wide-open global internet.  “It was the whole model that was doomed,” says Benjamin Bayart, the former head of France’s oldest internet provider, French Data Network. “Basically, to set up a service on Minitel, you had to ask permission from France Telecom. You had to go to the old guys who ran the system, and who knew absolutely nothing about innovation.” Users of Minitel also faced steep costs, roughly $22.95 per hour accounting for inflation, which has been noted as a major downside of the technology. As for the French government, the development of the service cost tens of billions of French francs

Growing up in France, the Minitel was a big deal to me. I remember the excitement when my family received ours. The problem, though, as I remember well, is that if you wanted to search anything, you had to go really fast because this service was so expensive. The bummer, of course, is that you paid twice for the privilege of Miniteling: once through your tax bill (whether you used it or not) and a second time through your phone bill.

Looking back, the Minitel was a glorified electronic phone book, which eventually upgraded to include the ability to check one’s bank account and movie schedules (and, I’m told, it also became the ancestor of adult chat rooms). It was also a place where retailers could advertise, like they used to do in the phone book. I have no idea if it paid off, since people never stayed connected long. The bottom line is that over several decades, the product barely changed, and if it did, the speed of innovation was so slow that no one noticed.

As far as industrial policies go, however, the Minitel wasn’t a total failure. After all, until its launch in 1983, it was fairly innovative, and it survived for several decades while enjoying a high adoption rate. But nor was it a success. And here the story of the Minitel, even though not a resounding failure, offers a great illustration of one of the problems with industrial policy. When thinking of the Minitel story, we are lucky to have a perfect product to compare it to: The iPhone. As Mercatus Center’s Dan Rothchild reminded me, the iPhone came out 15 years ago, and its evolution offers a sharp contrast with the Minitel. While the iPhone has changed and improved dramatically over the years, thanks to Apple investment and innovation, the Minitel pretty much stagnated. The difference couldn’t be more stark.

So there you have it. Even when industrial policy doesn’t fail, it doesn’t adapt. It stagnates. It often hinders innovation. The result is a mediocre product that’s unnecessarily costly. So think about the Minitel if you are tempted to argue for industrial policy as a solution to some of our problems, in particular in the area of technology.