IHS Global Insight Perspective | |
Significance | The Italian regulator has repeatedly urged the operators to work together, warning that failure to do so could be costly for the country's competitiveness and economic growth. |
Implications | All of Italy's operators are seeing continued broadband growth, and expansion opportunities in the market could be damaged if no agreement can be reached. |
Outlook | The regulator has succeeded in developing healthy competition in the broadband market, but this has yet to result in any meaningful level of co-operation between the rivals. |
Italy's alternative operators Fastweb, Wind and Vodafone Italia have walked away from the Telecom Italia-led next-generation network (NGN) committee, adding to worries concerning the future of fibre-optic roll-out in the country.
The alternative operators claim the committee, which was created to set guidelines and agreements for the roll-out of fibre-optic (FTTX) networks in the country, has failed to take into consideration their contributions or represent their positions in its proposed guidelines, which they complain "almost completely" reflect Telecom Italia's requests.
The alternative operators have now pledged to express their views in a hearing with Italy's telecoms regulator AGCOM, which has been struggling to broker a co-operative deal between the country's fixed-line players to accelerate NGN rollout. Fastweb, Wind, Vodafone and Tiscali recently announced plans to jointly invest 2.5 billion euro (US$3.2 billion) over a five-year period to roll out FTTX to around 10 million households and businesses in Italy's 15 largest cities. The announcement increases pressure on the incumbent operator to reach a universal deal on the future of NGNs in the country (see Italy: 7 July 2010: Italian Regulator Heaps Pressure on Telecom Italia to Unify Fibre Roll-Out).
Outlook and Implications
- Urgent Need for NGN Co-operation: AGCOM has repeatedly urged the operators to work together to develop a co-operative NGN roll-out strategy. It has warned that failure to do so could be costly for the country's economic growth and competitiveness, as Italy continues to lag behind the rest of Europe in broadband penetration. Italy’s broadband penetration stood at 19.7% at the end of 2009, well below than the EU average of 24.8%.
Despite an invitation, Telecom Italia has dismissed calls to join its rival broadband project and said it would push ahead with its own plans to bring 100-Mbps fibre broadband access to half of Italy's population within the next eight years (see Italy: 14 June 2010: Telecom Italia Pledges to Bring 100-Mbps Broadband to Half of Population within Eight Years). It has repeatedly stated it will not give up control of its network to any of its rivals as part of a joint investment scheme.
- Operator Wrangles Continue Unchecked: Wind and Fastweb have recently complained to Italy's antitrust regulator. They accuse Telecom Italia of abusing its dominant market position by refusing or delaying the activation of services to new clients and hindering rivals' access to its network, as well as offering substantial discounts for business clients (see Italy: 25 June 2010: Antitrust Regulator Launches Investigation into Telecom Italia).
Meanwhile, Italy's telecoms regulator recently gave final approval to a watered-down increase in Telecom Italia's unbundling tariffs, which the incumbent operator charges its rivals to access its fixed-line network (see Italy: 10 September 2010: Telecom Italia's Unbundling Tariff Increase Watered Down by Regulator). The alternative operators had argued that any such increase would strengthen Telecom Italia's interest in its traditional copper network, and therefore discourage investments in NGNs—a rather shaky argument, given the incumbent's fibre spending commitments. The Italian regulator has succeeded in developing healthy competition in the broadband market, but this has yet to result in a meaningful level of co-operation between the rivals.
- Burgeoning Broadband Market: All of Italy's operators are seeing encouraging broadband growth, reflecting the continuing expansion opportunities in the market, which could be damaged if no agreement can be reached.
Swisscom, which owns some 82% of Fastweb, has recently launched a fresh bid to buy the remaining shares in the operator (see Italy: 8 September 2010: Swisscom Launches US$326-Mil. Bid for Remaining 18% of Fastweb), despite the continuing investigation into Fastweb and Telecom Italia unit Sparkle which are accused of colluding in an alleged money-laundering and tax-fraud scheme between 2003 and 2006.
Meanwhile, Tiscali recently revealed its first-half earnings fell 25% year-on-year (y/y) owing to the loss of income from the sale of its U.K. unit. However, the operator saw its total broadband customer base rise by 6% y/y (see Italy: 31 August 2010: Tiscali's H1 EBITDA Down 25% on Sale of U.K. Unit).
In the mobile sector, Telecom Italia has recently launched the second phase of LTE 4G mobile broadband trials, in order to improve its network offering and cope with the expected jump in demand for data services (see Italy: 12 August 2010: Telecom Italia Launches Phase Two of LTE Trials). The incumbent recently announced that its first-half earnings rose by 3.4% y/y, following stringent cost-cutting and key growth in its Argentine market.