Telerate Tightens Reins On U.S. TDPF Resellers

Fresh from its courtroom triumph over Programit Inc.,Telerate Systems Inc. is laying down the law for U.S. distributors of Telerate's digital page feed, TDPF, formerly known as SOP.

A recent letter to trading system vendors would take the value out of value-added Telerate applications sold by anyone but Telerate. The letter outlines a strict new set of data display acceptance criteria and explicitly discourages vendors and their clients from designing trading systems that manipulate or redistribute TDPF.

Telerate denies that the letter represents a policy change, saying it has merely shifted the administration of its vendor qualification policy from a global to a regional level.

The letter reveals Telerate's plans to install proprietary TDPF servers at client sites to collect "statistical information" on the use of data delivered by the feed. The new servers will sit between TDPF and client systems and keep track of Telerate data entitlements and applications.

The servers could act as meters, allowing Telerate to bill for redistribution and value-added application of TDPF data by the installed base of third party trading systems.

Telerate's legal strategy -- as expressed by the letter -- will inhibit development of new third-party applications, thus clearing the way for of Telerate's own line of value-added products. Telerate and Lotus Development Corp. are jointly developing a real-time spreadsheet application for Telerate's digital ticker feed.

"Our strategy is to provide a calculable form of Telerate data and we are going to encourage clients to work with that calculable form of data rather than take information off the pages," says Gerald Mintz, vice president of marketing at Telerate.

The letter is part of Telerate's continuing campaign to control the business generated by value-added application of Telerate market data feeds. Telerate's page-based broadcast feed has been a continuing source of friction between Telerate and value-added resellers, such as Rich Inc..

Telerate's letter lists six Commercial Considerations Covering Display and Use of Telerate Data.

Demonstration and Display of Data -- Until the system meets Telerate's new acceptance criteria, "vendors are prohibited from demonstrating or displaying in any form, Telerate data on said System, either live or otherwise. Telerate will not install any data feeds into said system until the criteria is [sic] met."

Telerate Server -- Telerate will be designing and installing a server to collect "certain statistical information concerning Telerate's data feed" including "the number of workstations/positions capable of accessing Telerate data, a description of data being displayed, etc."

Installation Statistics -- Vendors are required to supply Telerate with "schematics of all installations providing feeds, inhouse computer communications and workstations" on request.

Calculations,Derivation and Manipulation of Data -- "Telerate does not encourage nor support calculation, derivation and/or manipulation of Telerate data derived via page-based feeds. The client is contractually obligated to obtain written permission from Telerate to perform any such manipulation. Vendor is prohibited from designing, developing and/or marketing to the general marketplace any software and/or hardware specifically for the purpose of calculating, deriving and/or manipulating Telerate data."

Redistribution of Data -- Vendors are prohibited from redistributing Telerate data outside the location at which Telerate installs the data feed without prior written consent. Ditto for clients.

Vendor Representation of Telerate -- Vendors are required to notify Telerate of "any reference made to any Telerate system, or any Telerate product or service." This requirement extends to "product literature, proposals, and/or communication with either clients or prospects, either verbal, written or otherwise."

The newly-expanded and unabridged list of data display acceptance criteria includes such old favorites as "full video formatting" (flashing vertical bars for example) alongside relative newcomers such as the requirement that "any portion of Telerate data displayed in composite form must be clearly labeled as Telerate data."

The full list of emulation features runs to 23 items, covering everything from audible alerts to scrolling headlines. The unscrambled message conveyed by this list and the accompanying letter is: "Don't mess with our data."

Third-party vendors of Telerate data are being restricted to delivering Telerate pages, or clearly labeled pieces of them, while Telerate handles anything more complicated through its own line of value-added products.

Telerate's plans to control the business of value-added applica- tions is just another turn of the screw for third party software developers. The increasing likelihood of another source of U.S. government securities broker prices and possible saturation of the market for new Telerate units lends added urgency to Telerate's value-added business campaign.