Facilitating ultraBB developmentin Italy

Davide Gallino – AGCOMd.gallino [at] agcom.it

Disclaimer: Any views or opinions presented hereby are solely those of the author and do not necessarily represent those of the institution

The “original sin” of Italian broadband

• 1973 – A Presidential Decree kills CATV in itsinfancy

• 1974 – The Supreme Court declares CATV legitimate but…

• 1976 – A sentence of the Supreme Court abolishes the monopoly on television – in a few years, more than 600 FTA broadcastersand 2000 radio pre-empt CATV infrastructure-based competition

However, generic usage is significant…

…as well as specific usage18 mln FB users = almost1/5th of the population

Ita still best in class within the “Big 5”

Source: Cullen International, Dec 2010

Also…

• Fastweb (a competitor of Telecom Italia) hasbeen the first FTTH operator in Europe

• Today, ca. 300.000 live FTTH customers

• Initial offer launched in 2001 (way ahead of allothers) with VOD over FTTC+ coaxial, thenFTTH

• Amongst the first to launch triple and thenquadruple play

NGA 2011: Fastweb live customers /TI planned () and future offer /regional-local projects

Overall, patchy but growing deployment of FTTH in Italy (2,5 mln Homes passed)

Access obligations timeline and market impact in Italy

Elements facilitating OLO’s growth

• Regulatory advantages– AGCM (antitrust) decision in 2001 to impose

access to ducts when TI entered FTA (free to air) TV market;

– Agreements with public utilities

– Civil works facilitation

– Early-on chance to serve customers with ULL/WBA over copper in addition to NGA

Key choices in NGA regulation in ItalyTODAY• Access to ducts and civil infrastructure (including last meter to the

customer’s building)• Access to Dark fibre (primary/secondary network)• Bitstream access to fiber where only TI is present• Replicability of TI’s fiber offer (retail minus) and wholesale conditions

TOMORROW (consultation pending)• Unbundling of fiber from 2013• Vertical unbundling and obligations imposed on building operator• Pricing (cost orientation + risk premium for new infrastructure)• Co-investment• Transition from copper to fibre--switch-off issue

Timeline of NGA regulation in Italy• Dec 09 – Decision 731/09 on remedies for

access markets 1, 4, 5 (WBA/ULL/WLR)

• Pending approval of EC NGA Rec, NGN Committee to produce Guidelines

• Dec 10 – Guidelines + EC NGA Rec used forproposal (Decision 498/10) currently in public consultation.

Proposed remedies (in consultation)• Jan 2011 – AGCOM launched a public

consultation on its proposed regulatory framework for NGA

• The proposed framework is mainly based on the European Commission 2010 NGA recommendation

• The consultation closes 45 days after the publication of the consultation document in the official journal (22 Jan 2011).

• Need EC’s greenlight.

Proposed remedies 2

• Telecom Italia (TI) is required to provide access to ducts and dark fibre, and WBA over its copper and fibre network (excluding access at local level where LLU is available).

• AGCOM suggests not to impose fibre unbundling at early stage of fibre deployment in Italy.

• AGCOM suggests that TI is not required to provide access to in-building cabling; however such a possibility exists in Directive 140/2010 (better regulation directive)

• Many of the remedies in markets 4 and 5/2007 referred to the voluntary undertakings made by TI in December 2008 reinforcing the incumbent operator's non-discrimination obligations in the provision of access network wholesale services where it has SMP

Proposed remedies 3

• AGCOM proposes that TI informs alternative operators five years before de-commissioning points of interconnect, unless specific circumstances allow the reduction of this period to three years.

• Taking into account both technology and market developments, fibre LLU in Italy is expected in 2013.

• Use of wavelength division multiplexing (WDM) should make the unbundling of FTTH point-to-multipoint (PON) networks more practicable.

• AGCOM proposes to use geographically differentiated access obligations.

• The fibre LLU obligation would be imposed on the SMP operator (TI) only in areas where no other NGA network is available, or expected to be available in the short term.

Proposed remedies 4

• To incentivise infrastructure competition, AGCOM would require TI to provide WBA only in areas where fibre LLU is not available.

• The same applies to access to in-building cabling, which would be a new obligation on TI.

• Following the transposition of the EU 2009 regulatory framework, AGCOM could consider imposing this obligation also on non-SMP operators, “if this is justified on the grounds that duplication of such infrastructure would be economically inefficient or physically impracticable” (article 12(3) of the revised Framework Directive).

• AGCOM’s proposals cover all NGA access technologies, including FTTB and FTTN).

Role of the Government

• The Ministry of Economic Development and the main telecom operators in Italy (BT Italia, Fastweb, H3G, TI, Tiscali, Vodafone and Wind) signed in November 2010 a memorandum of understanding (MOU) for the creation of a public-private partnership (PPP) to roll out shared passive NGA infrastructure, including ducts, dark fibre from the optical distribution frame (ODF) to end-user premises, in-house cabling, and ODF premises.

• A publicly available document provides figures and estimates

Can lowering regulatory constraints help raiseinvestment from telcos?

Source: Creditsights