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Italians Pick Up First 3G Mobile Phones
By Rebecca Pike, BBC News

March 17, 2003 - - Italy is among the first countries in the world to use commercially available 3G phones.

Italians love their mobile phones. Most people in Italy have at least two - one for business and one for pleasure - which they update more often than their wardrobes.

So it seems entirely appropriate that they should be among the first consumers in the world to actually get their hands on the new third-generation mobile phones.

After a huge advertising campaign and months of false starts, Hutchison's Italian subsidiary, H3G, finally started sending them out at the end of last week.

They hope to have a million subscribers to "3" in Italy within a year.

Expressive

At H3G's head office in Milan, I was invited to test the new service. The handsets can handle huge quantities of data, like video clips, TV news broadcasts, share price information or city maps.

["As soon as you show the video call to someone, they want to get the service".  Sandro Marchetti - Hutchison 3 ]

They can also send e-mails and show the latest sporting events. But the feature that Hutchison hopes will draw the most people in is the video call.

Having now experienced it myself, I think they could be right.

It's one thing to be able to get more information on your phone. But speaking to someone at the same time as seeing the expression on their face, as well as being able to see their surroundings, is a different experience altogether.

I felt rather emotional.

Mass-market

Sandro Marchetti, executive vice-president of 3's commercial division, says: "A lot of our customers feel the same way.

"With new technology, market reaction at the beginning is usually quite cold. Both with WAP and with GPRS it took time to get people interested.

"With 3G it is exactly the opposite. As soon as you show the video call to someone, they want to get the service.

"That's why we think this will become a mass-market product...We believe it's not limited to just a few users."

But the current price of the handsets - which cost a minimum 780 euros (£530; $840) - will inevitably exclude a large part of the population.

The tariffs also suggest that 3 is targeting a high-volume, contract user rather than a typical pay-as-you go customer.

Subscribers pay a flat rate of 85 euros a month for almost unlimited use of the content and 40 hours of video and voice calls.

Patchy

For high-volume users like these, coverage could be a problem. Around 40% of Italy is covered - mostly in the major cities, like Milan, Rome and Turin.

[The risk is that as soon as they open up the market, the others will come in and destroy everything-Monica Basso - Gartner Research]

Elsewhere, users have to transfer to traditional mobile networks in order to make voice calls.

But, according to Monica Basso, senior research analyst at Gartner Research, it doesn't always work.

"It could be a problem for them," she says. "It is good that they are concentrating so much on providing new content, unlike other companies, which are working solely on the network. \

"But this means that users may not be able to make calls wherever they like. And it may put off the high-volume, enterprise customers that they seem to be targeting."

First-mover disadvantage?

Another potential problem is the life of the battery.

Multi-media services use up much more power than traditional phones. The danger is that the battery will not be able to support the constant use of the services available.

So while there are advantages in being first, there are plenty of disadvantages too.

"H3G has a big challenge," says Gartner's Ms Basso.

"It has to create a market from scratch, and demonstrate that there is the demand for this kind of service.

"But once it has done this, and the business is starting to go well, it will face competition from other operators, the big players like TIM (Telecom Italia Mobile) and Vodafone. BBC NEWS | Business | Italians pick up first 3G mobile phones

"The risk is that as soon as they open up the market, the others will come in and destroy everything."

BBC NEWS | Business | Italians pick up first 3G mobile phones
news.bbc.co.uk/go/pr/fr/-/2/hi/business/2856127.stm


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