T-Online International AG History
Telephone: 49 61 51 6 80 0
Fax: 49 61 51 6 80 6 80
Sales: EUR 1.8 billion ($1.84 billion) (2002)
Stock Exchanges: Frankfurt
Ticker Symbol: TOIGn.DE
NAIC: 514191 On-Line Information Services
Strategy. Spotlight on the customer. At the core of all our activities are our customers' needs. We bring them online to the Internet, where we collect and refine content and services from the wealth of offerings in the interactive media world. We help our customers to communicate with each other and take advantage of the Internet shopping experience via an entire range of services. Our goal. Our goal is to extend our existing customer relations both in Germany and in the countries where we have shareholding. This includes steadily increasing the depth of use and customer profitability. To do this we follow a two-pronged approach, consisting of expanding our access business on the one hand and developing high-quality content, services and new Internet worlds on the other. Technological progress and the emergence of attractive new services allows us to offer our customers things that were previously unavailable in this form. Innovator and integrator. As an innovator and media integrator, T-Online is present everywhere, since we offer our customers everything via all media and terminal devices in a seamlessly integrated fashion. T-Online wants to continue to be a leading player in promoting Internet growth. It is also determined however to ensure that this pure growth is accompanied by the profitability of all our services for T-Online.
- Bundespost adopts name Bildschirmtext (BTX) for Videotext technology developed by Sam Fedida in England.
- Bundespost begins field trials of BTX service.
- BTX service rolls out nationally.
- BTX subscribers reach 100,000.
- Deutsche Telekom begins offering Internet access, which is then bundled with BTX, along with e-mail services, and rebranded as T-Online.
- Online Pro Dienste GmbH & Co. division of Deutsche Telekom is created, takes over operation of T-Online.
- First international expansion occurs with creation of Austrian T-Online service.
- Company changes its name to T-Online International; T-Online goes public with listing on Frankfurt exchange.
- Launch of paid content offering is pursued as part of new strategy designed to reduce reliance on subscriber fee revenues.
- Company launches music download and video on demand services.
T-Online International AG is one of Europe's largest Internet service providers, with some 12.5 million subscribers--including some three million ADSL customers--in Germany, France, Spain, Portugal, Austria, and Switzerland. In addition to its T-Online brand, the company operates as Club Internet in France and Ya.com in Spain and Portugal. The bulk of the company's operations remain, however, in its German home base, where the former Deutsche Telecom spinoff is the leading ISP with more than 9.5 million customers. Fully 75 percent of T-Online's revenues, which topped EUR 1.8 billion ($1.9 billion) in 2002, come from Internet access fees. Yet the company is reducing its reliance on subscriber charges, stepping up its efforts to generate revenues from advertising and e-commerce fees and services. As such, the company has been developing its paid content services, such as fee-based newsletters, a music download service, online gaming sites, and other e-commerce sites such as online banking services and a stake in the Booxtra online shop. Many of T-Online's content ventures are developed in partnership with other groups, such as France's Lagardere, which holds a 5 percent stake of the company, and publishing group Axel Verlag. T-Online is also investing in new wireless and mobile Internet access technologies. The company is listed on the Frankfurt stock exchange.
European Online Pioneer in the 1970s
The age of online communication began in the late 1960s when Sam Fedida, an engineer at the British Post (which later became British Telecom) connected his television to a computer mainframe using a decoder to transmit via ordinary telephone lines. The Prestel system, as it was then called, debuted in 1972. Expensive to acquire and to operate, the system, later renamed as Viewdata and then Videotext, never became widely popular, attracting no more than 100,000 customers before the advent of the Internet. Nonetheless, the system garnered a great deal of interest, notably among other European countries. In 1976, Fedida brought the Viewdata system to the Bundespost, which then controlled Germany's postal and telephone monopolies, and successfully transmitted data from England to Germany.
By the end of that year, a German name for the system, Bildschirmtext, had been chosen and by 1977 Bundepost presented its own system. Field testing began in the summer of 1980, and by the end of that year, Bildschirmtext, or BTX, had been officially launched with content and services available from such sources as Quelle, Neckermann, Verbraucherbank, and Otto. Access remained restricted, however, as testing of the system continued.
In 1981, the Bundespost debuted a new service--the ability to send messages via the BTX system, foreshadowing the later email protocol. Two years later, as the full-scale rollout of the BTX network came closer, businesses were granted access to the network in order to set up their own services. At last, in September 1983, the Bundespost officially launched the BTX service nationwide.
Subscriber response was relative subdued--by 1986, only 50,000 subscribers, in a country of more than 50 million, had signed up for the BTX service. The launch of a terminal device in 1987 helped encourage consumers to join the BTX network. Patterned after the French Minitel terminal launched some years earlier, the new Multitel combined a screen, keyboard, and telephone modem, making it easier for consumers to connect to and navigate the BTX network. The launch was a success, and by the end of 1987 the BTX network counted more than 100,000 subscribers.
At the beginning of the 1990s, the BTX services was ported for use within the new Windows 3.0 operations, as personal computer use began to take off in earnest. In 1991, also, a new "Telebrief" service debuted on the BTX network, providing the ability to send letters across the network. The need for speed drove the Bundespost to upgrade its entire telephone network to support the new higher-speed ISDN protocol in 1993. That year, the BTX was linked into similar systems in neighboring countries, giving German subscribers access to services in Austria, Switzerland, the Netherlands, and Luxembourg. By 1994, the BTX service counted more than half a million subscribers.
The breakup of Bundespost, which resulted in the creation of Deutsche Telekom, also set the stage for the creation of a dedicated online services subsidiary, called Online Pro Dienste GmbH & Co. KG, in 1996. By then, however, Germany was experiencing the first wave of the Internet revolution, stimulated by the growth of online services such as AOL and Compuserve and by the huge success of the new World Wide Web protocol which provided a graphical interface for the Internet. In 1995, Deutsche Telekom made its first demonstration of Internet access and e-mail functions at the important CeBIT trade fair. That year, also, the company introduced a nationwide access number capable of connecting 14.4K modems. By the end of the year, Deutsche Telekom had decided to phase out the BTX service, which was bundled, along with Internet access and e-mail capabilities, into a newly branded service, T-Online.
Leading the 21st-Century European Internet Market
T-Online soon shifted fully to the use of Internet protocols, a move confirmed by the launch of a new generation of its software, version 2.0, which became available in 1997. The new software signaled the start of the Internet era in Germany, and by the end of that year the company had signed up more than 1.6 million subscribers, and topped the two million mark by March of the following year. The company also began testing a new high-speed protocol, ADSL that year, while also rolling out IDSN access to T-Online customers.
T-Online now began seeking partners to help it develop its range of services. In 1999, T-Online added international dial-up access, teaming up with iPass to allow subscribers to connect to the service from more than 150 countries. Similarly, the company launched a new webmail service, enabling subscribers to consult their messages online from any computer. In another partnership, T-Online joined with three publishing groups to form the online book service, Booxtra. In 2000, the company added online banking services through a partnership with Commerzbank, then acquired a stake in online auction site Atrada.
T-Online changed its name to T-Online International AG in 2000, in part to emphasize the group's extension beyond Germany, with the launch of Internet access services in Austria at the end of 1999. France became T-Online's next target, and in February 2000 the company agreed to transfer 5 percent of its shares to Lagardere in exchange for its takeover of popular French Internet provider Club Internet.
By then, Deutsche Telekom's rapid expansion had left it heavily in debt. In an effort to pay down some of that debt, T-Online was spun off as a separate company and listed on the Frankfurt stock exchange in 2000. Following its public offering, T-Online continued its international expansion, entering Switzerland with the launch of T-Online.ch AG, and buying up Ya.com, one of the leading Internet providers in the newly developing Spanish and Portuguese Internet markets. By the end of 2000, T-Online boasted more than 4.5 million customers in Germany alone--giving it the number two rank among Internet providers worldwide.
The arrival of Thomas Holtrop as CEO announced the start of a new period of growth for T-Online, which now set out to reinvent itself as a full-fledged media content provider in addition to its Internet access operations. As part of this effort, the group adopted new access fees, lowering its off-peak access rates. At the same time, the company developed a new range of services, such as the Bilt. T-Online site developed in partnership with Axel Springer Verlag, and the launch of the T-Online Instant Messaging service. Other content-related partnerships formed that year included an online travel service, news and information sites in conjunction with the Heute newspaper, and ZDF television. The company also acquired a 50 percent stake in Interactive Media CCSP AG, Germany's largest online marketing group, previously wholly owned by Axel Springer.
The year 2001 marked the wide-scale adoption of the Internet by the German public. By the end of that year, T-Online had successfully attracted more than ten million subscribers, including roughly half of all Internet users in Germany itself, in part by offering a new unlimited access package. The company rushed to claim its status as the leading Internet provider in the world--but lost a court challenge by AOL, which pointed out that more than 90 percent of the group's subscribers were in Germany.
Undaunted, T-Online continued adding new subscribers, especially through its full-scale rollout of ADSL access, signing up more than two million customers to the new high-speed protocol by mid-2002. In that year, also, the company announced that it was abandoning the traditionally free concept of the Internet and would begin charging for content and other services, such as online games and information newsletters. The company also debuted its own e-commerce site, T-Online Shop, selling computers and other multimedia equipment.
T-Online's "monetarization" efforts continued into 2003, with the launch of Internet-based pay-television and video-on-demand services. In September of that year, the company also debuted its own music download service, initially offering some 20,000 titles. At the end of 2003, the company announced a new expansion of its content offering with the acquisition of Scout24 AG, which had developed the Scout24 brand name into a variety of segments, including AutoScout24, JobScout24, FreindScout24, and others, with operations in Switzerland, Germany and elsewhere in Europe.
T-Online efforts to develop revenue streams in addition to its subscriber access fees appeared to be paying off by the new millennium, as the group reported rising operating profits and strong sales--by the end of 2003 the company's revenues had grown by more than 21 percent over the previous year. T-Online looked forward to continued international expansion as one of the world's leading Internet access and content providers.
Principal Subsidiaries: Atrada; Bild.T-Online.de; Booxtra; comdirect bank; Day by Day; Interactive Media; T-Online Travel; T-Online Venture Fund; Club Internet SA (France); Scout24 AG; Ya.com SA (Spain); T-Online.ch AG (Switzerland); T-Online.at AG (Austria).
Principal Competitors: Time Warner Inc.; Viacom Inc.; Centrica PLC; Groupe Cegetel; Tiscali SA; Wanadoo SA; Terra Networks, S.A.
- Ackley, Ayla Jean, "T-Online Battles to Win over German Investors," New Media Age, April 13, 2000, p. 30.
- Sullivan, Bruce, "T-Online's Bandwidth Hog Heaven ... and Hell," ISP Business News, February 12, 2001, p. 7.
- "T-Online Charges Customers for Exclusive Content," EuropeMedia, January 17, 2002.
- "T-Online Sets up Music Download Service," Online Reporter, September 6, 2003.
- Warner, Bernhard, "For T-Online, the T Stands for Turmoil," Industry Standard, October 16, 2000, p. 164.
Source: International Directory of Company Histories, Vol.61. St. James Press, 2004.