European Competitive Telecommunications Association

BROADBAND PENETRATION IN ITALY IS LAGGING

Brussels, 30 August 2006 - Broadband penetration in Italy is falling behind other EU15 countries, and is now only better than Ireland, Portugal, Greece and Spain. With penetration at only 12.7%, it is well below the average of 14.1% across the 25 countries of the EU, according to the findings of new ECTA European Broadband Scorecard, the full results of which will be available in September.

The European Competitive Telecommunications Association (ECTA), the pro-competition body, believes that one of the main reasons for Italy falling behind in broadband penetration is due to inefficient regulation which results in the incumbent operator Telecom Italia holding 72% (source: Cocom, 2006) market share in Italy's broadband market the largest of any one company within the EU15 countries. Innovative and competitive services have been introduced by altnets Tiscali, Fastweb and Wind, and have proved to be highly successful, indicating a strong market demand. However, further development of a wide range of new services for users is being hampered by the insufficient degree of competition established so far.

Steen Clausen, Managing Director of ECTA, said: There is no doubt that broadband penetration is lagging because of persisting barriers to competition created by the incumbent. As consumers have little choice, there is no competitive pressure on Telecom Italia to increase penetration or to innovate. Creating a competitive environment is the only way to improve the situation.
According to ECTA, the best way to ensure competition is to create a regulatory environment that guarantees that altnets have access to the market on a level playing field with that of the incumbent. Furthermore, without effective regulation, abuse of market power on broadband access may easily be extended to downstream IP services, using a strategy based on a refusal to interconnect or to interoperate, thus further restricting competition. In addition, such regulation should ensure that infrastructure investment by the altnets is not discouraged in any way by anti-competitive behaviour on the part of the incumbent.

Clausen continued: AGCOM, the Italian telecoms regulator, should focus on making local loop unbundling and wholesale broadband access more effective. Specifically what is needed is appropriate regulation, also at retail level, to prevent discriminatory behaviour that would result in a price and quality squeeze. This is particularly important as the market in Italy moves towards IPTV. Unless AGCOM acts now to prevent a walled garden strategy in the IPTV market and also to promote open standards for IPTV, we are in danger of seeing the same monopolistic behaviour by Telecom Italia as we have seen in the provision of broadband access services. Ultimately, it is businesses and consumers that will sufferâ

Steen added: It is important to point out that wholesale broadband access (market 12) and broadcast transmission (market 18) regulation by AGCOM, the latter in draft form but cleared by the Commission with comments, do not fully accomplish the above objectives.. Moreover, the timeframe for the implementation of 
remedies for wholesale broadband access is lagging behind due to delaying tactics by Telecom Italia.

ECTA wants AGCOM to intervene against such unlawful behaviour and impose sanctions upon the incumbent.

On a more positive note, ECTA is encouraged by AGCOM's recent decision with regard to termination tariffs on OLOs networks and views both the level of tariff asymmetry and the five year period to be a pragmatic and realistic approach and one that will stimulate altnets infrastructure investments and ultimately provide the consumer with more choice.

This is a view endorsed by SPC Network, a leading telecoms consultant. Its recent Network Broadband study makes it clear that intensifying competition is the best way to drive broadband up-take. All our work in this area shows that where there is intense competition between broadband suppliers, the market grows faster, but where one company dominates market growth is slow. Our most recent analysis suggests that Europe is missing 20 million broadband subscribers due to ineffective competition: four million of which are in Italy said Richard Cadman, Director of SPC Network.

-ends-

About ECTA
The European Competitive Telecommunications Association (ECTA) looks after the regulatory and commercial interests of new entrant telecoms operators, ISPs and suppliers of products and services to the communications industry. 
ECTA works for a fair regulatory environment which allows all electronic communications providers to compete on level terms in order to multiply investment and innovation throughout an effective European internal market. The association represents the telecommunications industry to key government and regulatory bodies and maintains a forum for networking and business development. 
ECTA member companies include operators, service providers and suppliers as well as National Associations of such which all contribute towards regulatory policy development and participate in our comprehensive range of networking events, conferences, seminars, briefings and executive meetings.

For further information (not for publication):
Barbara McCall or Charlie Pryor
The Wordshop
Tel: +44 (0) 20 7031 8270
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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