Blu

» see blu.it as it lived, on the wayback machine

~ the obit ~

Blu S.p.A. was incorporated in Rome on 19 April 1999 to be the fourth mobile network in a country that already had three. Autostrade held 32 percent of it through its Sitec arm and British Telecom held 20 percent. The other 48 percent was divided in blocks of nine and seven among six more holders, among them Benetton's Edizione Holding, Mediaset, BNL and the Caltagirone family. A motorway operator and a television company were therefore joint owners of a telephone network, which should tell you something about how Italian industrial consortia were assembled in the late 1990s.

The consortium bid under the name Blutel and BT announced on 23 July 1999 that it had won the license, a national DCS 1800 concession issued by the Ministry of Communications as license number 61. Service started on 15 May 2000, with the company's own radio network covering only Milan and national roaming filling in everywhere else. Its numbers began 380 or 388 or 389, and it had a slogan: il futuro che non c'era.

Growth was not the problem. Blu had 430,000 customers by September 2000, against an internal target of 350,000 by the end of that year. GPRS arrived in December 2000. The millionth user followed in March 2001, and the year closed at 1.9 million customers and 13 percent of all new activations in Italy. For a network two years old with coverage borrowed from its competitors, that is a real business. It was dismantled anyway, for reasons none of these numbers can explain.

~ the rap sheet ~

~ the auction ~

Italy auctioned its UMTS licenses in October 2000, at the top of the European 3G frenzy, and Blu entered. Then on 23 October it withdrew. The reason given was not that the price had gone too high for a fourth operator to bear, though it had; it was that British Telecom and the other shareholders could not agree among themselves on how the new shares would be allocated. A consortium of nine owners turned out to be a structure that could launch a network and could not make a decision.

The withdrawal collapsed the auction. With Blu gone the bidding stopped well short of what the treasury had budgeted for, and the government responded by moving to cash Blu's bid guarantee, which was worth 4,000 billion lire. That figure is itself a date stamp: Italy was two years from the euro and still counting in thousands of billions. The seizure did not stand. In January 2001 the regional administrative court for Lazio annulled it.

After that the owners started leaving. Edizione gave up its stake in September 2001, having moved into the Telecom Italia camp. Mediaset sold its 9 percent to British Telecom in December 2001 for 106 million euros. Shareholders selling to each other is what the exit looks like from inside, and BT by then carried the balance sheet problems of every European incumbent that had spent 2000 bidding for spectrum. It was buying into Blu at the moment it could least afford to.

~ the break-up ~

On 6 August 2002 the board approved the break-up. What makes this one unusual is that Blu was not wound up and not sold whole. It was disassembled and the parts were handed to the competitors, with the European Commission clearing the arrangement as case M.2958.

Wind took the customer base and the brand. TIM bought the share capital along with roughly 900 sites and about 680 employees, paying shareholders a provisional 18 million euros. The rest of the network went to Vodafone Omnitel and to H3G. The 15 MHz of spectrum Blu had been using went back to the state and was redistributed in 5 MHz blocks. Il Sole 24 Ore put Wind's share of it, covering the customers and the antennas, at 160 million euros on the day. Blu switched off its signal on 8 October 2002.

~ the last SIM ~

The customers took longer to die than the company. Ex-Blu SIMs kept working through roaming on TIM's network for another four months while they were supposed to port their numbers elsewhere, and porting them turned out to be contentious. In January 2003 Vodafone's Vittorio Colao said publicly that it was unacceptable for an operator to have suspended portability away from Blu, by which he meant Wind, which had taken close to 600,000 of those customers. Wind's answer was that a consultation had been opened at the communications regulator.

28 February 2003 was the last day a Blu SIM worked. Roaming closed the following morning and unspent prepaid credit was refunded. The customer service line stayed up for about another year to deal with the aftermath. I never had the chance to use Blu, and the brand is not the part of this that travels anyway. A network that reached 1.9 million people in two years was taken apart by shareholders who could not agree on a funding round, and its competitors were each better off for it. That is a shape the 3G auctions produced all over Europe, and Italy's version of it just happened to come with the best slogan.

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