Friday, 18 June 2021

Is a telco consortium the answer to Italy’s single network woes?

by Harry Baldock, Total Telecom
Monday 26 April 21

As the plan to create a single broadband network in Italy flounders, the government is considering the creation of an operators consortium to meet the country’s connectivity goals

According to reports, members of the Italian governments are considering alternatives to the creation of a single national broadband network through the merger of Open Fiber and TIM’s fixed line network, including creating a consortium of national telecoms operators. The debate surrounding the proposed merger between TIM and Open Fiber has been raging for years, with TIM repeatedly arguing that it would not accept anything less than a controlling stake in any joint venture…

According to reports, members of the Italian governments are considering alternatives to the creation of a single national broadband network through the merger of Open Fiber and TIM’s fixed line network, including creating a consortium of national telecoms operators.

The debate surrounding the proposed merger between TIM and Open Fiber has been raging for years, with TIM repeatedly arguing that it would not accept anything less than a controlling stake in any joint venture. In effect, this control would give TIM something of a monopoly over the nation’s fibre infrastructure, something which the government and regulators are loathe to allow. 

While progress towards a deal seemed to be being made late last year, the handover to Mario Draghi’s new government at the start of 2021 has delayed the process further, seeing the idea re-examined by ministers. These delays are costly; Italy is one of the worst performing countries in the European Union when it comes to fibre penetration and delays to rollouts over uncertainty could potentially leave many of the country’s citizens suffering with poor connectivity as they seek to bounce back from the pandemic. 

As a result, alternatives to the merger are being devised, with a less ambitious plan of merging Open Fibre with TIM’s last mile network, FiberCop, being one of the front runners. This would leave TIM in control of its primary network, meaning it would not need to have a controlling stake in the joint venture, thereby avoiding regulatory issues.

Similarly, Innovation Minister Vittorio Colao, a former Vodafone CEO, has previously suggested launching tenders for rolling out fibre in ‘grey areas’, which constitute around a third of the country where only a single fixed network operator is available to customers. Detractors of this plan suggest that it could lead to an overly complicated investment environment, leading to overbuilding.

Now, reports suggest another option being considered by the government could be the creation of a consortium of all the country’s telecoms operators. The scheme, proposed by the co-ruling centre-left Democratic Party, would seek to avoid unnecessary infrastructure duplication and “encourage joint investments financed by public grants,” according to the meeting minutes.

However, such a move would likely encounter hurdles of its own when it comes to national and European regulatory frameworks, meaning this is far from a quick fix.

Draghi’s government recently announced that it would spend almost €7 billion over the next six years using money from the European Union’s Recovery Fund, increasing the previous spending budget by over €2 billion.

 

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