This article is from the Italy FAQ, by Gianluigi Sartori gg@angel.stanford.edu, Paolo Fiorini fiorini@telerobotics.jpl.nasa.gov with numerous contributions by others.
Most telephone equipment purchased in the U.S. works properly in Italy.
If the equipment needs to be plugged into an electrical outlet, a
110/220 transformer is needed (see the POWER SUPPLIES section above).
The following precautions must be taken:
---for telephone sets and fax machines, make sure that the set has a
tone dial/pulse dial switch (most do). Most Italian phone lines are
still on the pulse system. Some are on the tone system: and,
surprisingly, the U.S. tones work for them, even though many (among
which a professor of telecommunications at a famous university)
believe that the European standard is based on different tones.
---answering machines work generally fine, but retrieving messages
from another phone is not always possible, because it doesn't generate
the tones (public phones, for instance, don't). Battery-operated
pocket tone generators with a dial pad and a speaker are available in
the U.S. and cost between $10 and $20.
---the fax and modem protocol are almost completely standardized and
everything works. In the standard situation, however, a U.S. modem
will wait for the U.S. ready-to-dial tone before dialing, and will
never do it. For Hayes-compatible modems (the vast majority) the
dialing command must be changed from ATDT<number> to ATXDP,,,<number>.
The DP means DIAL PULSE (use Dial Tone when possible); the X means
don't wait for the dial tone; and the commas introduce a delay, to
allow for the phone to get ready after unhooking. Also, the modem
will not recognize the RING and BUSY signals.
---cordless phones work but may be illegal (because of frequency bands
allotments). Nobody seems to care. The new 900 MHz systems (they
cost more, at least $300, and claim a wider range) are almost
certainly illegal. The digital broadband systems (still rare even in
the U.S.) were illegal in 1991, as Italian regulation did not allow
any kind of broadband communication. Cellular phone sets are useless,
since the local telephone company (SIP) appears to have a monopoly on
cellular communication.
 
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