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Thursday, 27 September 2012 09:55

Italy screwed by bad broadband

Written by Nick Farrell



More bogged down than Crassus at Carrhae


While they have given the world roads which carried commerce for a thousand years, the Italians are a bit backward when it comes to the information superhighway. Italian businesses are starting to moan that the country has an IT infrastructure that only an Ancient Roman would appreciate and was probably out of date by the time that the Borgia bunga bunga porn ring was exposed.

Italy has Europe's fourth-largest economy has an online commerce and banking structure which is similar to two bean tins held by string which we are expected to pay a fortune for the privalige of using. We pay the highest prices in Europe for speeds on a par with Estonia or Cyprus. Even pigeon post can send packets faster.  If it was not for the fact that people steal packets from the post and take weeks to deliver something, then most Italians would use snail mail.

As it is only half the population uses the Internet at least once a week and Italian firms generate 5.4 percent of sales on-line compared to 13.9 percent elsewhere in Europe. The reformist government of Prime Minister Mario Monti is planning to give the one-time monopoly Telecom Italia a good kicking.  The outfit has put off investing in its domestic network because of its huge debts while at the same time doing its best to knock off competition. Monti's government has enlisted state-backed finance body Cassa Depositi e Prestiti (CDP) to work out a plan with Telecom Italia and its rivals to create a nationwide super-fast fiber optic broadband network.

Under the deal Telecom Italia to spin off its Augustine network of copper lines into a separate company that would run Italy's fixed telephone and broadband system and sell capacity to other Internet providers on a wholesale basis. This new "access network company" could be partly state-owned and would have more incentive to invest in broadband.  The company would not have any debt or market share to defend. If it goes ahead it would be a test of whether the state can be more effective than the private sector in building national broadband infrastructure.

It is similar to the idea being tried in Australia.  In a similar situation the UK required  BT Group to create a separate subsidiary to sells wholesale access to competitors and build fibre broadband across the country. Telecom Italia owns the last meters of copper lines to homes and businesses, which it then rents out to competitors. But the copper lines that need to be replaced by fibre optic wires to boost broadband speeds to up to 100 megabits per second. It will cost 200 billion euros which the telecom operators can't afford.

But the problem is that  Telecom Italia did not want to play ball, so what the government did was invest up to 500 million euro in Metroweb, a competing fiber broadband project in Italy's north, to up the pressure. The North of Italy is where the money is so this put the fear of god into Telecom Italia so that it started to talk about the spin off idea rather quickly. Telecom Italia has also agreed to share some infrastructure with rival broadband provider Fastweb and to co-ordinate the rollouts of their respective fiber networks in a bid to cut costs - a deal that could make negotiations over a broader nationwide project easier. Fastweb is in a bit of trouble of its own, after its attempts to flog telly content on its cables went tits up and it had to offload many of its content customers onto rival Sky.

Nick Farrell

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