Microsoft, Unitel sign network deal

Software colossus Microsoft has signed a deal with Unitel of Canada to create a high-speed telephone network for the Canadian component of its Microsoft Network, initiating the local version of the inevitable worldwide turf war between online services.Online services offer customers...

Software colossus Microsoft has signed a deal with Unitel of Canada to create a high-speed telephone network for the Canadian component of its Microsoft Network, initiating the local version of the inevitable worldwide turf war between online services.

Online services offer customers a controlled and organized environment in which to get access to smaller online services and information suppliers.

Many also offer limited to full access to the internet, where countless additional services can be found.

Unitel Communications is one of four telecommunications carriers assisting in the creation of the Microsoft Network in about 35 countries.

Microsoft plans to activate the network in the u.s. and Canada sometime in the first half of next year with the launch of the Windows 95 operating system.

The system will include the tools needed to decode and navigate the network, and will incorporate many of the management features of the Windows environment, including drag and drop file downloading.

The Microsoft Network will offer subscribers access to electronic mail, bulletin boards, ‘chat rooms,’ file libraries, and internet newsgroups as well as online tips, product information, and technical support from Microsoft.

Significantly, Microsoft also plans to let competing software companies offer services on its network.

‘The success of Windows as an operating system has been because all of our competition is in the Windows environment as well,’ says David Carter, product manager at Microsoft Canada.

‘If this was Microsoft-specific, there would be a number of people that would not want to be on it,’ Carter says. ‘It limits the audience.’

If Windows 95 launches as successfully as anticipated, Microsoft will gain a potential subscription-base of about 30 million North Americans within the first 12 months – many times more than the combined number of subscribers to existing online services, which require the purchase of special decoding software.

Carter says it has not yet been decided if the network will be available to users of Macintosh computers.

Leading services

The leading North American online services, accounting for more than four million subscribers, include CompuServe, Prodigy, and America Online.

Apple Computer has recently started an online service called eWorld.

While some other online services offer content providers as little as 20% of connection time charges, Microsoft says providers will retain the greater part of the revenues generated by their services, and will be given complete control over fee collection.

‘We want them to realize their revenues any way they want to,’ Carter says.

The network will equip providers with revenue earning options such as subscriptions, online transactions, advertising subsidies, and ticketed events.

Microsoft also says its programming tools will give content providers more control over the appearance of their services.

The subscription cost of the Microsoft Network is unknown at this point, but, Carter says ‘it will be competitive with other online services.’

Advertising opportunities for Canadian companies are also difficult to gauge.

‘That sort of thing is still in the discussion stage,’ Carter says. ‘We wouldn’t be able to provide that information yet. It’s still very early.’

There is also no information as to how the Microsoft Network might be tailored specifically to the Canadian environment.

The online service will be promoted next year in conjunction with the Windows 95 operating system in advertising created by u.s. agency Wieden & Kennedy.

Despite the muscle behind Microsoft’s claim to imminent online superiority, the current networks are not conceding defeat.

Evaluating this market

Since early this year, Prodigy of White Plains, n.y. has been evaluating the Canadian market through tests done in co-operation with the Southam Information and Technology Group.

It recently launched a service specifically for Canadian subscribers that filters out about 10% of applications, such as those involving American banks, that are of no use to Canadians.

Prodigy has also helped u.s. businesses that want to ship to Canada adjust their ordering practices to take into account the different tax systems.

At present, there are no Canadian advertisers on Prodigy, but Peggy Miller, Prodigy’s executive director of new business ventures, anticipates greater interest as the network attracts more Canadian customers.

‘There have been a lot of inquiries,’ Miller says. ‘I have been taking calls from [Canadian] advertisers, but we don’t have enough subscribers yet .’

Next year, Prodigy plans to scrap intrusive billboard-style advertising on its system, reducing the advertising space to small corner boxes from 20% of the screen.

Canada Centre

Services of relevance to Canadians will be grouped in a new Canada Centre area on the network, and a Canadian Bulletin Board has been created by Southam to discuss national, regional and local issues.

With the co-operation of Southam, ads for Prodigy have been running in major Canadian newspapers throughout November, offering an introductory deal of 10 free hours on the service for the first month, with a regular subscription rate of US$9.95 for five hours service per month.

America Online of Vienna, Va. offers a similar free trial and subscription deal, but apparently no incentives targetted directly at Canadians.

Compuserve, of Columbus, Ohio, says it, too, is interested in increasing its presence in Canada, where it already has 75,000 subscribers.

‘We are planning on expanding our services significantly in Canada,’ says Pierce Reid, a spokesperson for CompuServe.

At the moment, Compuserve offers discussion forums on Canadian issues, local news services, and billing in Canadian currency, as well as quotes from the Toronto and Vancouver Stock Exchanges.

At present, CompuServe is offering a free sign-up package for Canadians with three hours’ credit for its extended services, after which subscribers can pay C$12 to C$25 a month, depending on the level of service and modem speed.

Like the other services, no Canadian advertisers have gone on CompuServe yet, but the company is anxious to attract them in the future.

‘As we go forward, we’ll be very interested,’ Reid says.

CompuServe kicked off its advertising this month in Maclean’s and Canadian Business magazines, and the Canadian editions of several u.s.-based publications.

The advertising was done in-house.

An option to the structured subscription-based world of online services is local bulletin board services, some of which offer an array of features that could keep most users and advertisers quite happy, and for less money.

Canada Online, a stripped-down commercial service, offers full access to the internet for $69.95 a year.

Its services include e-mail post boxes, chat rooms, customized online library and data searches, and games.

The announcement last week that u.s. telecommunications powerhouse mci is also establishing a comprehensive online service is an indication that the already fierce competition for online dominance is just warming up. AB