Telecom Italia, FastWeb to Build Italy's Next-Generation Broadband Network

Telecom Italia and local rival FastWeb have signed an agreement to partner in the roll out of a next-generation broadband network in Italy. In a move which will likely create a template for other European countries faced with the likelihood of multiple high-speed network roll-outs, Telecom Italia and FastWeb said they will collaborate on an industrial scale to hasten network roll-out and avoid unnecessary duplication of high-speed networks across the country and rationalise costs. Under a memorandum of understanding signed by Oscar Cicchetti, head of Telecom Italia’s Domestic Market Operations division, and Stefano Parisi, chief executive of FastWeb, both companies said they will jointly plan cable laying for their respective fibre-optic networks and will also exchange rights of use of civil infrastructure. In addition, the companies said they will jointly study and test innovative infrastructure techniques, such as the latest generation of micro-tubing for laying optical fibre.

Apart from the industrial deal, both companies also confirmed that they have reconciled a number of legal and regulatory claims involving both parties. Specifically, Telecom Italia said they have resolved FastWeb's claim for alleged unfair behaviour in the business customer segment and disputes relating to the level of FastWeb's fixed-line termination prices. The Italian giant said it will also drop contesting FastWeb's adjudication of a contract to provide telephone services to public administration. However, the deal does not include matters related to FastWeb's legal action against Telecom Italia in the area of win-backs.

Outlook and Implications

• Reluctant Friendship: Today's deal between Telecom Italia and FastWeb is a victory for common sense as it brings together two strange bed-fellows to create a common platform for the roll-out of a new high-speed network in Italy. Telecom Italia and FastWeb have not always been best of buddies, and this is evident in the catalogue of disagreements between the two; a cooperation agreement would not have been easy to reach. Interestingly, the two companies have come together without any overt push from the Italian telecoms regulator, Agcom, signifying that financial expediency may have drawn them to the negotiating table. Indeed, both companies already run their separate networks and the prospects of both companies pushing ahead to deploy a new network would have led to an unnecessary duplication of efforts for what may well be a multi-billion-euro network roll-out. Problems with Telecom Italia's finances are public knowledge and in the absence of a guaranteed commitment from the Italian government, the Italian giant must be pleased that FastWeb is on hand to help in the inevitable roll out of a new high-speed network.

• A Template for Europe: Beyond doing what is good for themselves and for Italy, Telecom Italia and FastWeb have unwittingly created a template for network rollout across Europe; the example couldn't have come at a more appropriate time. In France, the regulator Arcep has laboured to prevent France Telecom, Iliad, and Neuf Cegetel rolling out multiple new high-speed networks. For other countries, the absence of a similar cooperation deal means either the government is asked to fund the rollout of a new network or the former incumbent bears the cost and decides the terms of use of the network. Deutsche Telekom in Germany seems to prefer the latter, and despite threats from the EU about granting access to the new VDSL network to rivals, the company has successfully argued its case. In contrast, the British government and Ofcom are fretting about how to fund the new network while BT vacillates on whether it wants the network or not. Accordingly, regulators across the region and the European Union (EU) will be watching closely to see how the Telecom Italia FastWeb works out in practice with a view to transposing it as a template for other countries to take.