Don't forget the voice. This was
the message from Stefano Pilari, Telecom Italia's president of
domestic services, speaking at Marconi's press and analyst
conference in Genoa. Many incumbent operators, terrified at the
potential losses in revenue from VoIP and broadband cable
operators, have been looking for new sources of income, such as
TV on demand. However, Pileri acknowledged that, while this is
important, they shouldn't ignore voice.
Yes, new operators pose a threat,
with cheaper services, but voice is still the cash cow, the
killer application. In fact, voice revenues make up over 50% of
TI wireline's total and, despite the emergence of successful
triple-play operators in Italy, most notably FastWeb, this
revenue fell only 0.8% in the last year.
As Pilari put it, "Voice is still
our first priority." The trick in maintaining high voice
revenues is, according to Pileri, in making voice more exciting
to the customer, with extra features. "Now there is a new world
we have to propose to our wireline customers that involves
value added services. We must defend our core voice business,
increasing loyalty and expanding usage though innovative
terminals and value added services."
One main risk, he explained, is
"the migration from fixed to mobile", which would be almost a
certainty if the incumbent operator "doesn't invent products to
It is for this reason that TI is
embarking on a quest to dramatically alter the experience of
wireline users in Italy. Pileri spoke of a household where each
member would have their own handset, much like a mobile, with
their own personal number. Installing a wifi point in the home
would give access within a limited area but enough for every
member of the household.
Calls to each member of the house
would produce a different ringtone, so that the right person
could pick up the phone. Added features for the wireline user
would include SMS messaging, a personal phonebook and video
calling, all available "only if we use the approach of IP".
And this isn't something Pileri
sees as a future prospect. "We expect the wifi connectivity
approach in homes by the end of 2004 or into 2005". Indeed,
later in October Telecom Italia launched its Alice Mia option,
routing calls over broadband internet and making it possible
for six numbers to be carried into the home. Over a single
phone line, using Telecom Italia's system, three phone calls
can now be made at the same time.
During his energetic talk, Pileri
even managed to pull off something that perhaps only an Italian
could do with style. After letting his mobile ring —
on silent — throughout the morning discussion, he
eventually answered it in front of the assembled analysts and
journalists, declaring his preference of phones.
"I am a wireline man, mobiles don't
work with me." Unfortunately, with my Italian not progressing
further than "Si", I was unable to ascertain whether the caller
was someone from TI, or his wife wanting to know where he had
left the car keys.
Speaking later at the annual event
organized by Marconi, a main provider of equipment to TI,
Gionata La Torre, director of consumer internet, outlined the
value added services that would be included. "Until 2003 the
value added service was the alarm clock on the phone," he
To compete with the others, La
Torre said that TI had to add the kind of feature already
available on the mobile. And how did they do that? "We just
copied it," announced an unashamed La Torre. Making something
that was customizable, with personal numbers and a PIN to
protect its use, a new handset range, the Aladino, was
introduced. It even looks like a mobile, creating what La Torre
described as a "sexy product".
This product converts the old
fixed-line telephone into a terminal with a colour display,
icon-based menus, predictive text SMS messaging and a vast
range of ringtones and games.
Without any remorse, he admitted
that they hadn't even bothered to try to invent something new.
"Why bother, we just copied Nokia. Most people know their
handsets, so we just copied their menu system." For a later
addition to the Aladina range of handsets, La Torre admitted
that they had simply copied Motorola's idea, and introduced a
There are distinct advantages over
the mobile, La Torre claimed. "Many people speak of video
communication being a killer application for mobile phones, but
I don't think that it is, it won't work." He enthusiastically
acted out the potential difficulties to the delegates. "You
can't walk, talk, look at your phone and still look where you
However, on a fixed phone within
the house, "it is the killer application". He spoke of future
ideas being considered for fixed handsets, including IP Radio.
"My dream is to have instant messaging". TI wants to have these
phones in all Italian households. In just five months, numbers
of these phones have grown from 221,000 to over 500,000.
La Torre later admitted that the
strategy of copying the mobile market had spread into TI's
broadband offering. Due to the nature of the Italian market, he
said that most people weren't willing to sign up to monthly
contracts that they might not use. To combat this, with an eye
on what mobile operators had been doing for many years, they
introduced pre-pay and pay-per-use onto broadband.
Alice and Big
Actually, within TI, La Torre
announced that broadband had become a banned word. When it was
first introduced it hadn't been that popular, being an unknown
entity and using English words that many Italians wouldn't
According to La Torre, the majority
of broadband's original users when it was first launch in 2001
were "geeks" who tended to "stay indoors, without any friends".
Sales started to rise more steadily when they changed the name
of the service to "Alice" (pronounced "aleechay"), complete
with attractive imagery. Since then the word broadband had been
In order to make the service
popular and profitable, it is essential to create content, said
La Torre. "If you want to make money in the internet business,
many told me that the only way is through online gambling and
However, he admitted, perhaps with
a hint of disappointment, that gambling and pornography was
strictly off TI's menu, his bosses having told him that they
were not part of their strategy. "Therefore, we needed
something with the same appeal."
Perhaps to garner the same
attraction as gambling, TI acquired the game rights to 16
Italian football teams for three seasons, offering their
customers the opportunity to pay per match or for the whole
season. Looking more towards the pornographic side of things,
rights to the Italian version of reality TV show Big Brother
were acquired, and customers could pay to watch and also pay to
With this type of content, La Torre
sees the main competitor as pay-tv companies, such as FastWeb.
"But," he added, "we are cheaper, much cheaper."