Italy insists that mobile phone deal is in hand

Date: 13/03/1997

ITALY has reacted to criticism that it is dragging its feet on fair play in the booming mobile telephone market with a promise that all outstanding issues are ready to be resolved.

Officials suggested that Competition Commissioner Karel van Miert had jumped

the gun by suggesting in an interview that fresh problems could arise from the opening up of new GSM frequencies in Italy.

Rome says it is close to finalising a deal which will force state-owned mobile operator Telecom Italia Mobile (TIM) to give a package of concessions worth 370 million ecu to rival Omnitel Pronto Italia.

“Letters finalising the deal are being exchanged between the telecommunications ministry and TIM,” said a source.

The concessions, such as cheaper access to TIM's network for Omnitel, would put the two operators on an equal footing by effectively cancelling out the entry fee that the second Italian mobile operator was forced to pay to win its initial licence in 1994. TIM never had to pay an equivalent fee.

Final agreement on this question would draw a line under an issue which has soured relations between the European Commission and Rome for over a year.

Italian officials added that the opening up of fresh GSM frequencies, by freeing some of the airspace no longer needed by the military, should neither present competition problems nor require intervention by Van Miert.

The Commissioner had warned the Italian authorities that they could face renewed conflict with the Commission if Omnitel, or a third or fourth mobile operator, was forced to pay for a frequency earmarked for it under the latest share-out.

“At the moment, there is no question of any payment for new frequencies. They should be free. The only issue is that using some of the military frequencies will require investment in new equipment and this must be resolved between the defence and telecommunications ministries,” said an Italian official.

TIM, like most initial mobile operators in the Union, already occupies the most favourable GSM frequencies.

The frequency problem has been highlighted by Van Miert's officials, who are keen to promote competitive, low-cost, mobile services across the EU so that they can put pressure on the dominant fixed network companies such as British Telecom, Deutsche Telekom and France Télécom.

Omnitel is 41.3&percent; owned by Olivetti, with the participation of US company Bell Atlantic Air Touch and German engineering firm Mannesman.