Background

Information technology and French industrial policy

In the mid 1960s, particularly after the American Congress denied a permit to export a large IBM mainframe computer to the French government, French political commentators started to voice concerns that France was falling behind the United States in information technology.
In 1975, President Giscard d'Estaing asked two researchers-Simon Nora and Alain Minc-to suggest a strategy to computerize French society. Their report, called Telematique, describes the merger of computers and communication technologies so as to create information processing applications with broad societal impact. One recommendation was for the Direction Generale des Telecommunications (DGT), as France Telecom was then named, to encourage cooperation among computer services companies and hardware manufacturers. Their recommendations were adopted as French industrial policy.

In 1974, when Giscard d'Estaing became president of France, the French telecommunication system was very weak. Less than 7 million telephone lines served a population of 47 million. This was one of the lower penetration rates in the industrialized world. Under this condition, President Giscard d'Estaing made the reform of the telecommunication infrastructure a top priority.
During that time, Gerard Thery was director of the DGT and the Centre National d'Etudes des Telecommunication (CNET) was the research and development arm of the DGT to design new products. Originally, once the design of a product was complete by CNET, CNET negotiated directly with the telecommunication industry for the development and commercialization of the product. This practice has serious disadvantages which made manufacturing economies of scale impossible, drove prices up and made network compatibility difficult to achieve.
Thery then changed the orientation of the CNET in order to drive equipment prices down by choosing suppliers who were able to export in large volumes and bring about standardization of equipment. As a result, the number of telephone lines between 1974 and 1979 doubled and by the late 1980s, the penetration rate was at 95 percent, one of the higher among the industrialized nations.