It was New Year's Eve and the gathering of 30 friends and guests at a Tuscan farmhouse had just drunk a glass of "prosecco" by way of bidding welcome to 1999. The evening had been pleasant, the company lively, the food excellent and the local Chianti guzzle-good. Then, just as one began to wonder what the Tuscan version of "Auld Lang Syne" might be, out popped the mobile phones.
Within five minutes of midnight, at least seven members of the company were busy starting the new year as they had no doubt spent much of the old, namely on their mobile phones. The Italian love-affair with the mobile phone has recently touched new heights. Vigorous Christmas marketing saw Italy and Europe's largest mobile phone company, TIM (Telecom Italia Mobile) pick up no less than 850,000 new clients in December to bring its total to 14.3 million. Not surprisingly in a country where the native has a "last-minute" shopping tendency similar to the Irish, TIM registered no less than 213,000 new clients on Christmas Eve itself.
At the moment, TIM and Omintel Pronto Italia are the only mobile phone networks available in Italy. Between them, they have more than 20.5 million clients, which means that more than one in three Italians now uses a mobile phone.
Not only does this give the Italian mobile phone market a penetration rate that is quickly catching up with Scandanavian countries (where up to half the population uses a mobile phone) but it also makes the Italian market the single biggest in Europe. Furthermore, not only the Christmas sales rush but also overall 1998 figures show that the Italian market is still growing. TIM recorded a 53.7 per cent growth rating in increasing its clients from 9.3 to 14.3 million, while Omnitel did even better with a more than 100 per cent growth rate which saw it attracting 3.5 million new clients to bring its total to more than six million.
TIM and Omnitel now head into 1999 knowing that at least two new rival companies will soon join battle with them for a slice of the lucrative action.
Wind, a consortium involving state electricity provider ENEL, Deutsche Telekom and France Telecom, is due to begin operations in March, having won Italy's third mobile phone licence last year. Furthermore, last week the Communications Minster, Mr Salvatore Cardinale, announced the formation of a inter-ministerial committee to award a fourth license, due to be granted in May. At the moment, just about all those who lost out to Wind in last year's bidding will be throwing their hats into the ring for the fourth licence. TV company Mediaset, oil company ENI, British Telecom, Hong Kong's Distacom and motorway company Autostrade competed as members of two different consortia last year and, after losing out to Wind, have combined forces to form a new group expected to win this year's bidding.
Given the appetising nature of the market, it is still possible that yet another consortium including Swisscom (Swiss Telecom), Royal KNP of the Netherlands, Telefonica of Spain and UK operator Orange, could put in a bid but market analysts suggest that the prohibitive investment costs (an initial £2.6 million), as well as the weighty nature of the Mediaset-BT-Autostrada group (as yet without a name), will scare off rivals.
The extent to which the Italian "mobile" consumer is sensitive to phone costs became dramatically apparent last week, however, when TIM and Omnitel announced rate rises (up to 153.4 per cent in some cases) for the cost of calls from fixed line to mobile phones. From the Green Party to ex-Fascist Alleanza Nazionale and from radio phone-in callers to the consumer group Codacons, everyone was agreed - No Way, Jose.
In the length of time it takes to say telefonino (the Italian for a mobile phone), TIM and Omnitel had backed down, agreeing to revert to the old rates while the Communications Authority assesses the problem. Some 450,000 mobile phone users even staged a supposed strike on Monday by switching off their phones (it is not clear how the organisers of this "protest" differentiated between those on strike and those who had just turned off their phone for a nap).
The consumer outcry did have one other very immediate and important effect since it prompted Mr Cardinale to speed up the allocation of the fourth licence. He, like many others, believes that increased competition will work in the consumer's favour.
