In Italy: One Cellphone for Business
and One for Pleasure - by
Tom Dibble
Italy is among the first countries in
the world to use commercially available 3G phones. Like fashion,
the Italians can be preoccupied with their technology-led accessories.
Most Italians have at least two mobile phones: one for business
and one for pleasure, both constantly being updated. Therefore,
what better deserving consumers than Italians to be among the
first to get their hands on the new 3G phones?
H3G, Hutchison's Italian subsidiary, has been
advertising the forthcoming services for the past few months,
and after some early hiccups and false starts, the phones started
to hit retail outlets in March. The business plan is to reach
one million subscribers in Italy within its first year of operation.
A tall order some might say.
Like any vision of a 3G service, the "3"
network is offering users the ability to make a video call to
another 3G-enabled handset. In fact, this seems to be a main
reason for the early sales, which are being made by early adopters
who don't represent the true market. The new phones do have
an immense "cool" factor mind you "at a price."
With a new technology brought to market, the reaction
from the outset is usually cold. Take a look back at both WAP
and GPRS; it took time to get people interested and even then
take-up didn't reach mass adoption. It seems as if the video
call is expected to be a popular reason for migrating to the
new services. Early market research about 3G services, when
researchers have demonstrated a live mock-up using a "cabled"
3G phone, is that it definitely gets the "Cool, where can
I get one of those" attitude. Then they blow it with the
pricing.
The market entry price of the handset is a minimum
of $840. This will definitely exclude a large percentage of
the Italian population. The tariffs also suggest that H3G is
targeting a high-volume, contract user rather than a typical
pay-as-you-go customer.
Subscribers are expected to pay a fee of $90 a
month for almost unlimited use of the content and 40 hours of
video and voice calls. Other bundling options are being marketed
but they're not cheap and not at a price point at which they
are likely to woo your current average mobile network subscriber.
But is that the plan?
The industry is divided between whether 3G companies
with heavy costs to recoup are out for a quick win or are in
it for the longer term, but as soon as they come to market,
investors and other institutions are going to expect results
rather swiftly. No one says it has to be immediate financial
returns, but there needs to be some real-life indication that
this is going to work, rather than focus group studies, which,
for the most, take a finger-in-the-air approach.
In addition, coverage is going to be a major inhibitor
to the take-up in Italy. Only about 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.
Content though seems to be in H3G's favor. They
are concentrating on providing new content, unlike other MNOs
that are working solely on next-generation networks. The coverage
will disallow users to make calls of all descriptions wherever
they like. It will most likely also affect the high-volume business
customers that they seem to be targeting initially.
H3G has to effectively create a new market
for itself and openly show there is a need for these services
supporting the hype. It's crunch time now in Europe for 3G,
and once H3G opens up the doors in Italy, for example, the big
players like TIM (Telecom Italia Mobile) and Vodafone will be
right on their heels.
Copyright © 2006 SYS-CON Media.
All Rights Reserved.
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