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Telecom Italia Untangles WLAN

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LR Mobile News Analysis
Light Reading
5/30/2003

Telecom Italia SpA (NYSE: TI) (TI) has finally managed to launch its public hotspot service after an embarrassing brush with local regulatory law earlier this month.

Following a previous foul-up with partner Hewlett-Packard Co. (NYSE: HPQ) -- when the carrier discovered it didn’t have regulatory approval for launch just days before its big rollout (see Italia's Hotspot Hiccup) -- communications minister Maurizio Gasparri signed a technical law on wireless connection this week giving TI the go-ahead to supply wireless services in the 2.4 to 5GHz band.

The launch, set for June 15th, will see a total of 60 hotspot sites providing free wireless LAN access before a subscription model kicks in on October 1st. Prime locations include the Olympic Stadium in Rome, all major airports, railway stations, and hotels. The carrier aims to have access to 200 sites by the end of 2003.

Fifteen of the initial 60 hotspots are previous Megabeam sites. Three days after the high-profile Swisscom AG (NYSE: SCM) acquisition on March 7th this year (see Swisscom Buys a Bevy of PWLAN), Telecom Italia snuck in and quietly purchased the startup’s Italian assets for €11.5 million (US$13.5 million). According to Richard Dineen, research director for wireless at Ovum Ltd., the deal involved four major airports -- Fiumicino, Linate, Malpensa, and Verona. “That’s a lot of money for that few hotspots,” he notes, "although at least they are Tier 1 venues."

According to company spokesman Massimiliano Paolucci, Telecom Italia’s launch follows a “positive” response to a 3,000-user trial in Milan and Rome airport earlier this year.

And that's about as much as Paolucci is prepared to reveal. The company declined to comment on potential plans to open up the network to other carriers through roaming agreements, or whether the business would embark on a Swisscom-style acquisition spree.

Telecom Italia is the latest Tier 1 European carrier to stake a claim in the public wireless LAN market, following recent moves by Swisscom, KPN Telecom NV (NYSE: KPN), and France Telecom SA (NYSE: FTE) (see KPN Signs Piddly Deals and FT Outlines WLAN Plans). Analysts and other wiseguys are already predicting that the nascent industry will be dominated by operators benefitting from financial muscle and an existing customer base (see Big Dogs Chow on WISPs and Europe's Vanishing WISPs).

— Justin Springham, Senior Editor, Europe, Unstrung

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