Italy is among the first countries in the world to use commercially available 3G phones. Like fashion, the Italians can be preoccupied with their technology-led accessories. Most Italians have at least two mobile phones: one for business and one for pleasure, both constantly being updated. Therefore, what better deserving consumers than Italians to be among the first to get their hands on the new 3G phones?

H3G, Hutchison's Italian subsidiary, has been advertising the forthcoming services for the past few months, and after some early hiccups and false starts, the phones started to hit retail outlets in March. The business plan is to reach one million subscribers in Italy within its first year of operation. A tall order some might say.

Like any vision of a 3G service, the "3" network is offering users the ability to make a video call to another 3G-enabled handset. In fact, this seems to be a main reason for the early sales, which are being made by early adopters who don't represent the true market. The new phones do have an immense "cool" factor mind you "at a price."

With a new technology brought to market, the reaction from the outset is usually cold. Take a look back at both WAP and GPRS; it took time to get people interested and even then take-up didn't reach mass adoption. It seems as if the video call is expected to be a popular reason for migrating to the new services. Early market research about 3G services, when researchers have demonstrated a live mock-up using a "cabled" 3G phone, is that it definitely gets the "Cool, where can I get one of those" attitude. Then they blow it with the pricing.

The market entry price of the handset is a minimum of $840. This will definitely exclude a large percentage of the Italian population. The tariffs also suggest that H3G is targeting a high-volume, contract user rather than a typical pay-as-you-go customer.

Subscribers are expected to pay a fee of $90 a month for almost unlimited use of the content and 40 hours of video and voice calls. Other bundling options are being marketed but they're not cheap and not at a price point at which they are likely to woo your current average mobile network subscriber. But is that the plan?

The industry is divided between whether 3G companies with heavy costs to recoup are out for a quick win or are in it for the longer term, but as soon as they come to market, investors and other institutions are going to expect results rather swiftly. No one says it has to be immediate financial returns, but there needs to be some real-life indication that this is going to work, rather than focus group studies, which, for the most, take a finger-in-the-air approach.

In addition, coverage is going to be a major inhibitor to the take-up in Italy. Only about 40% of Italy is covered - mostly in the major cities, like Milan, Rome, and Turin. The risk is that as soon as they open up the market, the others will come in and destroy everything.

Content though seems to be in H3G's favor. They are concentrating on providing new content, unlike other MNOs that are working solely on next-generation networks. The coverage will disallow users to make calls of all descriptions wherever they like. It will most likely also affect the high-volume business customers that they seem to be targeting initially.

H3G has to effectively create a new market for itself and openly show there is a need for these services supporting the hype. It's crunch time now in Europe for 3G, and once H3G opens up the doors in Italy, for example, the big players like TIM (Telecom Italia Mobile) and Vodafone will be right on their heels.