Omnitel Pronto Italia announced it has launched its Global System for Mobile communications cellular network in Italy, competing with government-controlled Telecom Italia Mobile SpA for the first time.
In March 1994, the Italian government awarded a contract for its second nationwide cellular license to Omnitel, a consortium comprised of Italy’s computer giant Olivetti, Bell Atlantic Corp., AirTouch Communications Inc., Cellular Communications International, Telia, Lehman Brothers, Mannesmann AG, the Bank of Rome and other smaller Italian companies.
Omnitel said it reached the 40 percent national coverage target, or 70 percent of the population, required to begin commercial service as called for in its license agreement. The company launched a limited market trial service in October for a selected 10,000 customers with the aim of fine-tuning its operations before starting full-fledged commercial service.
“In just a few months, we have built a cellular network which ranks at the top worldwide in terms of quality and technology,” said Francesco Caio, Omnitel’s managing director. “Italian customers will finally be able to benefit from the advantages of competition; better quality, greater innovation, more convenience.”
TIM, a spinoff of government-owned Telecom Italia, launched its own GSM system in April, despite protests from Omnitel that by doing so TIM would receive an unfair advantage in the market. TIM now operates on both analog and GSM networks and has close to 3 million subscribers on both; nearly 330,000 are on the GSM network. The company has been offering handsets with free activation and monthly subscription until the end of the year.
Omnitel’s marketing package includes a cellular phone, free activation and no advanced payments provided the customer uses a credit card, until Feb. 29. The company also introduced three pricing plans; Business Time, Free Time and Night and Day. TIM recently followed suit with pricing plans of its own.
Still unresolved is whether TIM will be required to pay for its GSM license. Omnitel had to pay $750 billion. In November, the European Commission officially asked the Italian government to create a level playing field between the two cellular operators, citing that the use of auctions for the selection of a second operator only leads to unfair conditions and threatens competition in the developing GSM market.
The commission has demanded that the government find a way to balance the situation by either requiring TIM to make an identical payment or to make corrective measures equivalent in economic terms to Omnitel’s payment.
