Telecom Italia Launches Unica Again - the Carrier is Gradually Polishing the Diamond

| October 2, 2007 | Wireless Services - Europe | Competitive Intelligence Report

| Analyst: Joel Stradling

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event

On October 1st Telecom Italia announced its quadruple-play package ‘Unica’. The offer gives end-users Telecom Italia’s dual-mode (WiFi/UMTS) mobile phone (branded ‘Unico’) based on the Nokia E65, which is bundled with the carrier’s DSL Internet and TV ‘Alice Voce’ range.

Analytical Summary

• Current Perspective: Positive on Telecom Italia’s launch of Unica quadruple play, because the offer is the only one of its kind in the Italian market. The move takes advantage of the carrier’s synergies (i.e., owning both fixed-line and mobile operations). There are two major strong selling points: the first is the convenience of a single handset for use both in the home (WiFi access) and while out and about (UMTS), and second: a single supplier for four services under one roof, namely fixed and mobile telephony, IPTV and Internet access.

• Vendor Importance: High to Telecom Italia, because the MVNO market is gradually gaining momentum in Italy, and the incumbent carrier needed to make its early move into quad-play to prevent its competitors from poaching customers. This move builds on previous attempts made by Telecom Italia to launch a dual-mode handset service in 2006 that were stifled by regulatory intervention.

• Market Impact: High on the Italian consumer telecommunications market, because Telecom Italia is the largest national player with significant entrenched market share and assets, and is now an early mover into quadruple-play. Therefore any company, be that an ISP or wireless provider, targeting the areas of IPTV, fixed-line voice, mobile telephony, or Internet access, will now be under increased pressure. Companies that offer just one service (e.g., mobile telephony, or DSL access plus fixed-line telephony) will feel themselves increasingly isolated to small niche segments.

Recommended Competitor Actions

• Competitors should be looking to discourage the concept of receiving all services from a single vendor, citing problems with less customer influence and ability to negotiate effective pricing, and the problem of keeping all eggs in one basket – i.e., should one egg smash and customer become disenchanted with one aspect of the service, then all the other services have to be cancelled in order to fix the first egg problem.

• Vodafone and FastWeb need to look at a dual-mode handset launch to avoid being left behind by the incumbent carrier. In fact, all the mobile operators need to look to partners or acquisition/merger to be able to keep up the pace with triple and quadruple play moves. If the French market can be used as a measuring stick, dual-play operators are now extinct and the leading providers all offer quadruple play packages as a matter of survival.

Recommended End User / Customer Actions

• Customers need to be careful with trying to order Unica right away, because Telecom Italia’s subsidiary Web sites, namely Alice and TIM, show no evidence of the product’s availability. Telecom Italia representatives need to be contacted to get a full explanation on ordering procedures, handset delivery and provisioning times.

• TIM customers should push TIM for a motivational start-up pack to help migrate over to Alice DSL and a WiFi router installation. The additional costs of such customer premise equipment needs to be examined before making a decision, as additional charges may well apply.

• Unica offers an interesting proposal for end-users that strongly desire a single handset for use in the home and while outside on the mobile networks. Furthermore, Telecom Italia is unique in that it is possible to order four services – i.e., quad-play from a single vendor.

• The parts of the sum might be more cost-effective and efficient in the long term. Several Italian companies offer compelling IPTV services, and the same is true for ISP services such as DSL access and mobile telephony. Using multiple vendors makes it easy to shop around and chop and change for any given reason.

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