Concern over ‘state subsidy’ for incumbent’s broadband network

28 Sep 2007

The Italian government is studying the possibility of using public funds to upgrade Telecom Italia’s broadband network, reports local daily Il Sole 24 Ore. The ministries of economic development and communications have been holding talks with the incumbent telco and Swiss-owned broadband operator Fastweb to modernise the incumbent’s network, it said. The government is working on a EUR3 billion (USD4.2 billion) investment package, to be carried out after the possible separation of Telecom Italia’s local network from its commercial operations, to upgrade the network, particularly in southern Italy, where the firm has been reluctant to invest. Part of the investment will be financed by the EU’s Structural Funds and a reorganisation of public funds, said the report. However, Fastweb, as well as cellco Vodafone Italia, have expressed concern that the programme will be end up being a subsidy to help Telecom Italia modernise its network. They are also wary of a situation where there would be a sole network, open to all operators but managed by Telecom Italia. One alternative would be a plan under which telcos share excavation costs and existing ducts to build their own broadband networks. In May Telecom Italia said it would start rolling out its fibre-optic next generation network (NGN) this year and would be investing EUR6.5 billion over a ten-year period.