The buzz circulating in Italy these days within the telecommunications arena is the refreshed “spin-off” project regarding the fixed line network presented by former incumbent Telecom Italia to regulators, market, press and competitors alike.
Yesterday the Antitrust Chairman, Mr. Pitruzzella, during the annual report in Parliament hailed such project as a “good way to incentivize competitionand encourage investments” in the field, envisaging further development of services and competition, employment in large scale and a possible matching with the connectivity objectives set by the Digital Agenda.
The project tricked out on the network spin-off appears to involve the access fixed segments of Telecom Italia, along with relevant servicing apparatus and transmission nodes. Most part of such segment forms part of a natural monopoly, being the copper access segment a long-term capital intensive investment very difficult to reproduce and deploy in a highly diversified geography such as the Italian. As of today, in fact, few operators have invested in alternative digital access networks in Italy, and to no surprise Italy lags far behind all general international rankings in the fixed access bottleneck segment.
Observers should yet detect that such initiative comes out when talks are underway between Telecom Italia and 3 (the Italian mobile operator of Hutchinson Whampoa), for a possible merger between such two operators, regardless the quasi-impossible opinions of advisors regarding the value recognized to both companies (EBITDA evidently appears non-mathematical anymore and evanescent).
To think evil is a sin, as they rightly say, but we may be inclined to guess that all this summertime fibrillation of Telecom Italia top management hides a well thought, hideous and quite sneaky strategy.
For incumbents, general investments in the two different types of networks (fibre/copper) are antithetical; as rightly noted by Bill Melody (Intermedia, February 2013) an investment in fibre infrastructure (most likely to be imposed in the near future by the NRA in view of matching of Digital Agenda digital inclusion objectives) would only add a small gain in revenues, whilst rendering obsolete at the same time proprietary copper networks. Telecom Italia would thus be called to depreciate assets in its balance sheet, with the pending financial burdens it holds. So no time appears more valuable than this to sit at a “fixed network operators’ table” and dismiss its investments, forgetful of the fact that such investments are sons and daughters of public funding and State aid.
The imprimatur from the Antitrust appears untimely, to say the least.