Turk-internet.com : so, why incumbents are asking deregulation in exchange of investments?
Innocenzo Genna : Regulation has no negative influence in investment. What has influence over investment is open market and competition. Effective regulator make its work properly, then regulation is effective. Effective regulation create competition and investment. This is logical chain.
When incumbents say the government or the regulator “if you regulate, I will not invest” there are just playing a political argument. If there is no competition then investment decision depends on themselves. And most big incumbents prefer no investment option. They say “we already make money. Why should make investment.” In monopolitical markets, there is minimum investment. Regulation shall be make to force the investment.
In Europe, Deutsche Telecom and Telefonica say “We are not investing fibers if you regulate us. Because it is a huge investment”. But you should think actual figures. Telefonica makes 40 billion euro turnover. They announced profit 8 billion Euro. And they are planning to make 1 billion euro fiber investment. Of course, 1 billion Euro is a big amount, however it is not a big invetsment, in relative terms, if you compare with turnover and profits. In addition, it is not strange to invest for such an high amount. Installing and managing telecom networks is their main job, so this is normal.
Even British Telecom is going to invest 2 billion Euro in NGN. This is important again. However, it is an expense which is compatible and coherent for a network operator. Investing in fiber something logical because you need to replace all the network, to use new technology.
Everbody change their cars. Such kind investments are important but also logical. Why so much resistance. Incumbent companies have so much cash, even while giving low quality service. They say “we have money, but if you want me to invest you shall grant me monopoly rights”. Regulatory bodies should not accept this. Eventually such kind of dominant operator’s duty is modernization of the backbone since we paid this as tax payers while it was a state monopoly.
turk-internet.com : We are seeing in the Europe, network seperation is discussing. What is your opinion?
Innocenzo Genna : This is only for UK. There is network seperation there. Functional seperation. This is a model. Local access is separating from the retail services of BT to supply equal access. Only UK is applying, and some other countries are still thinking.
Italy absolutely not comparebly. There is discussions. Sweden and Poland also. This is a good model to make clear entrant : “buy something, pay exact price” Making retail branch, non discrimination. The result in UK is good since there is no dominant operator, BT has only 25 percent in retail market. Rest as 75% is belongs to retail market.
Turk-internet.com : You are Italian. So what is happened to Telecom Italia?
Innocenzo Genna : Problem was shareholder. They had debt but coming from the other business and transferred to Telecom Italia. Telephone company lend money from bank. So Telecom Italia made debt not from business or investments, but because of shareholders. This is a dramatic situation.
This was not industrial but financial. Telecom Italia was a cash machine like the other incumbents.
Of course, we do not like debt situation. Goverment intended to separate the network. They wanted to sell it, in order to pay the debt. They porposed a network company to invest in fibers. But currently Telefonica share holder did not want this network separation. Now goverment is waiting an analyse to take a decision.
turk-internet.com : Italian Goverment wanted to sell a national company. What is your opinion? Telecom companies should be national? What about security?
Innocenzo Genna : Network companies are based on the country. Even when bought by Arabian or Japan companies, they still remain in the country. Network cannot be transferred somewherelse. It is however necessary to have a strong regulator to supervise them. And you should link the privatisation process to serious commitments in terms of investments and openess of the network.
Security is business for goverment and regulatory body. They must enact and apply rules, it is their responsibility.
Turkish translation of this interview can be read by clicking here
