Turk Internet: Hi, Mr Genna. I will summarize the situation as I understand so please correct me if I am wrong. In Italy alternative operators came up with a plan to build a fiber infrastructure to cover the majority of Italia with fiber network, and invited Telecom Italia to join this plan. But Telecom Italia refused to join and declared that they will carry on with their own plan. Is that the source of this debate?
Innocenzo Genna: That is correct. The plan announced by the major Italian alternative operators provides to cover the 500 largest Italian towns in the next 5-10 years, with a total expenditure of 8,5 billion Euro. Telecom Italia refused to join the venture. Also Telecom Italia announced a plan, however it is not confirmed in their business plan. I suspect it is a bluff.
Turk Internet: Then AGCOM intervened the situation and advised Telecom Italia to join the talks with the trio?
Innocenzo Genna: That’s not fully correct. AGCOM is quite neutral on this, although they would be happy if Telecom Italia joins the venture. The Italian Telecommunication Ministry is also favoring this project, however Telecom Italia wants to go alone.
Turk Internet: It is reported that a commitee (NGN) was founded before to address the issues with the national broadband plan but most of the alternative operators declared that committee was making decision in favor of Telecom Italia and they will step out of the organisation.
Innocenzo Genna: The NGN Committee was found for for different reasons, it had the task to discuss the technical details of NGA regulation and to make a proposal to AGCOM. However for some reasons the committee elaborated a document that did not reflect the position of alternative operators, while it was too close to the ideas of Telecom Italia. This is why the alternative operators step down from the committee, which was a failure. A Final document will be adopted in a few days, however it will not be recognized by the alternative operators.
Turk Internet: That was the story as far as I could follow from the international press. Can you tell us what is really going on in Italy? Is there a conflict between Telecom Italia and alternative operators for building a fiber infrastructure? If that is the case, how is that affecting the national broadband plan of Italy and do you think Italy is getting behind of other European countries?
Innocenzo Genna: The problem is that neither alternative operators, nor Telecom Italia have sufficient money to roll-out an NGA network in a reasonable time. Therefore, a joint project would be a wise idea. However, Telecom Italia does not want to join the venture because for them it is much more interesting to remain alone and to keep exclusive control over a network. It is an insane idea, however they can do it and nobody can force them no to do.
They are a rich company and it could be much easier for them to fight against an NGA network built by competitors (for instance by doing predatory prices in the same areas) rather than setting up a new one for them. The alternative operators will continue on their own, however they will face more difficulties because Telecom Italia will be against them, not on the same project.
Turk Internet: Mr Genna, How do you think this issue will be addressed and what should we expect in the near future?
Innocenzo Genna: AGCOM and Ministry cannot force Telecom Italia to join the venture, they can just make some moral suasion. They could however, create the conditions for encouraging Telecom Italia to cooperate with other operators. One option would be to reduce the wholesale fees paid by the alternative operators to get access to Telecom Italia’s copper network. Currently such fees are really high and this is the main reason why Telecom Italia does not want to invest in NGA. When an operator makes lots of profits from a traditional network, then it is not incentivised to migrate to a new network, especially like the NGA one which is very expensive in terms of sunk investments. However, if such profits are reduced, then migrating to NGA will become more interesting.
Unfortunately, AGCOM did not understand this simple reasoning and instead of reducing wholesale fees, they decided to rise them. It was a mistake. Now Telecom Italia has less and less incentives to migrate to NGA.