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  • Ian Ritchie : Business AM

Why BSkyB should have witnessed the Berlin Wall

Open's lack of success came as no surprise, given the closed nature of its business

IT IS NOW OVER a decade since the Berlin Wall came down. Anyone who visited Eastern Europe in the 70s and 80s could see that the people wanted more choice but their government would not give it to them. As soon as they saw a chance of being given the freedom that they wanted they grabbed it; some of them by taking a sledge hammer to the Wall itself.

There is an analogy of this in the new economy. As personal computers and modem connections improved over the last 20 years various companies set up electronic communities of online users.

One of the first anywhere was Prestel in the UK, a simple device connecting to the phone and the TV, which was launched by the telecommunications part of the Post Office (now BT) in the early 80s. Prestel provided news and information, e-commerce and online banking.

Prodigy, Compuserve, and America Online (AOL) were launched in the US in the 80s, and each gathered a strong community of users. However the most successful early online service, in terms of market take up, was actually in France.

Minitel, promoted by France Telecom by supplying subsidised text phones to their customers in an attempt to reduce the costs of printing telephone directories, became the basis of a huge online community.

All of these services at first were closed communities, dubbed "walled gardens". Just as in East Germany, the only content available was that organised and approved by the service providers. Information providers, such as news and sports information, received a share of the subscription and online charges collected by the operator. Microsoft planned to launch their version of a ‘walled garden’ in the mid-90s.

Then the web came along. The world wide web was made freely available in the early 90s and ran on the non-commercial Internet. It was relatively inexpensive for small businesses to set themselves up as an Internet Service Provider and offer cheap access to the Internet and the Web to customers with a computer and a modem.

As the web is not managed by anyone, and is non-commercial, people with information to publish could decide to make it available directly, without having to make arrangements with others such as AOL. More and more people and organizations did exactly that.

As a result the web took off dramatically. Soon the walls in the walled gardens came tumbling down. As more and more people used the Web to publish information and the Internet to send e-mail they became less enamoured of the closed areas of Compuserve and AOL.

Customers were canceling their accounts and the leading online service companies had to rapidly re-engineer their systems to allow access to the internet and the web.

Microsoft never did launch their closed system, instead going for the open standard internet and the web as the basis of MSN.

So it was very surprising when BSkyB launched Open, the interactive service which runs on their Digital TV service in the UK. Despite it’s name, Open was actually “closed”. In other words, it was a new “walled garden”, even though some of the largest corporations in the world, like AOL and Microsoft, had given up on the idea.

BSkyB believed that they could create a complete online experience which would keep their users happy.

Open would then be able to charge retailers for the privilege of selling on their highly popular site, providing a valuable extra revenue stream for BSkyB.

Having established the dominant digital TV platform for the UK, they were ambitious enough to think that they could so the same for online services.

Open users, told that they were getting access to a comprehensive modern interactive service, have been disappointed by the very limited offerings available – it’s certainly not comparable to the internet.

Retailers have found it tough selling in Open’s walled garden. The experience has been slow and tedious, and despite high street names like WH Smith and Woolworths, it has a appropriately East Berlin feel to the shopping experience. It compares very badly, for example, to internet online shopping providers such as Amazon and Tesco.

In the last six months of 2000, Open reported only 655,000 retail orders booked through its system, despite having over 6m users. Open’s parent company lost over £116m in the same period.

So yesterday, it was no real surprise when BSkyB decided to integrate Open with its other interactive TV services.

Surely it will not be long before Open will be officially closed.

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