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Fixed telecommunications in Italy: main recent changes in the regulatory framework

07/03/2015 - 02:30 PM

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Retail prices

Effective from July 1, 2014, the prices for traffic for Business customers subscribing to the Telecom Italia Basic Offer have changed. For the main traffic routes (local, national and fixed-to-mobile) a single price of 10 euro cents (excluding VAT) is applied for the call set-up charge and 10 euro cents (excluding VAT) for each minute of conversation.
Effective from November 1, 2014, the rental prices for GTN (General Telephone Network) lines and prices for traffic for Consumer customers subscribing to the Telecom Italia Basic Offer have changed.
The amendment consists of the following changes:
    •the monthly rental for GTN lines has increased from 17.54 euro per month (including VAT) to 18.54 euro per month (including VAT). There are no changes in the monthly rental prices for ISDN lines and line rental prices for customers in the special Social Groups and holders of the Social Card issued by the Government;
    • for direct calls to the main traffic routes (local, national and fixed-to-mobile) the call set-up charge has been eliminated and a single price of 10 euro cents (including VAT) has been applied for each minute of conversationthe main traffic routes (local, national and fixed-to-mobile) a single price of 10 euro cents (excluding VAT) is applied for the call set-up charge and 10 euro cents (excluding VAT) for each minute of conversation.
Effective from November 1, 2014, the rental prices for GTN (General Telephone Network) lines and prices for traffic for Consumer customers subscribing to the Telecom Italia Basic Offer have changed.
The amendment consists of the following changes:
    • the monthly rental for GTN lines has increased from 17.54 euro per month (including VAT) to 18.54 euro per month (including VAT).
There are no changes in the monthly rental prices for ISDN lines and line rental prices for customers in the special Social Groups and holders of the Social Card issued by the Government;
    • for direct calls to the main traffic routes (local, national and fixed-to-mobile) the call set-up charge has been eliminated and a single price of 10 euro cents (including VAT) has been applied for each minute of conversation.

Universal Service

In the first half of 2014, the verification of the net cost for 2007 was initiated and concluded. In the implementing resolution (Resolution 100/14/CIR) AGCom determined that, also in 2007, the provision of the mandatory universal service did not result in a net cost and therefore the mechanism for dividing the cost cannot be applied.
Telecom Italia has appealed against this resolution before the TAR. In the meantime, Telecom Italia has also submitted its assessments of the net cost for 2008 and 2009 to the Authority. The auditor appointed by the Authority has concluded its work and we are awaiting AGCom's proposal.
On September 4, 2014, AGCom initiated an investigation to identify the criteria for designating one or more operators engaged to provide the Universal Service in electronic communications pursuant to Article 58 of the Electronic Communications Code.
Currently the only operator designated to provide the Universal Service is Telecom Italia.
During the public consultation Telecom Italia reiterated that the significant competition, and the economic and technological developments in the TLC sector to date,justify the elimination of the Universal Service obligations, as there are numerous offers on the domestic market that are comparable and equivalent to the offers marketed by Telecom Italia in terms of availability, quality and accessibility of price.
On January 23, 2015 the Administrative Court (TAR) of Lazio published two rulings that rejected Vodafone's appeal and upheld Telecom Italia's appeal against Resolution 1/08/CONS, through which the Authority, during 2008, had introduced a new calculation method for calculating the net cost for Universal Service.
This new calculation method was retroactively applied, starting from the 2004 net cost, which resulted in a significant reduction in the scope of costs attributable to the Universal Service.
Telecom Italia specifically objected to the possibility of retroactively applying any administrative order and, in this case, the new criteria introduced to calculate the net cost, which reduced its value to zero.

Telecom Italia Reference Offers for the year 2013

After having completed the approval of the 2013 technical and economic conditions for LLU and bitstream services (Resolutions 746/13/CONS and 747/13/CONS) of December 19, 2013, on September 1, 2014 the National Regulatory Authority for Communications (AGCom) published the resolutions on its website approving the Reference Offers for the year 2013 for the following wholesale services on Telecom Italia's fixed network:
    • Wholesale Line Rental (Resolution 67/14/CIR);
    • NGAN access – local installation infrastructures, ducts along the access network, primary and secondary fiber optics, terminating segments
 in fiber optics (Resolution 68/14/CIR);
    • NGA bitstream, the VULA service and related accessory services (Resolution 69/14/CIR);
    • specific capacity transmission services – terminating circuits, interconnection flows and exchange connections – (Resolution 70/14/CIR).
On September 1, 2014, the public consultation was also initiated, through Resolution No. 71/14/CIR, for the approval of the Telecom Italia Reference Offer for the year 2013 for call origination, termination and transit services over the fixed public telephone network with TDM interconnection and VoIP/IP.
Lastly, on December 23, 2014 the resolution establishing the economic conditions for the year 2013 for the end-to-end service was published (Resolution 128/14/CIR). On December 23, 2014 and January 7, 2015, the resolutions were published for the launch of the public consultations for the approval of 2014 prices for wholesale disaggregated access services, for co-leasing services and for the WLR service.
The consultations only involve the 2014 prices for the one-off contributions for these services, while the determination of the monthly rentals, based on the BU-LRIC model, has been deferred to the market analys is initiated by the Authority with Resolution 390/12/CONS dated September 4, 2012.
Lastly, on February 27, 2015, the resolution was published for the launch of the public consultation for the approval of the 2014 prices for specific capacity transmission services (terminating circuits,interconnection flows and exchange connections).

Wholesale access services

With regard to the results of the public consultation launched on September 4, 2012 (Resolution 390/12/CONS), the proceedings are still under way for the 3rd cycle of analysis of the (retail and wholesale) copper and fiber fixed-line access market for the three-year period 2014-2016, as the Authority has repeatedly deferred their conclusion. Specifically, on February 13, 2015, the Authority launched a new public consultation on wholesale access prices for the period 2014-2017. The final decision has to be notified to the European Commission, which has the power to express an opinion on it within thirty days from notification.
In detail, the Authority announced two different regulatory scenarios:
a) "Alpha Scenario", where the market is national, single and uniform; and
b) "Beta Scenario" where competition conditions in some areas of the country will be different than in other areas, which will result in regulatory obligations and prices being differentiated between "competition areas" and "non-competition areas".
The competition status of an area is determined according to whether there is a concentration of investments in NGA networks by at least two operators (B Areas), compared to areas where these conditions do not apply (A Areas). The distinction between the two types of areas depends on whether a set coverage threshold is reached by at least two ultra broadband networks.
On October 9, 2014, the Commission approved the new recommendation on relevant markets, immediately removing the Retail Access Market (one of the three markets analyzed in the above procedure, which was in fact removed from the Analysis in the text of the Consultation) and the Origination Market. In November 2014, the Consiglio di Stato partially upheld an appeal submitted by an operator regarding the approval of the Telecom Italia reference offer for bitstream services in 2009.
The Consiglio di Stato upheld the petition concerning the methods of calculating the monthly rentals for the service – established by the Authority (Resolution 71/09/CONS)based on the retail minus principle – which had noted the lack of additional verification of thecorrectness and fairness of the quantification of the "minus" component.
The Consiglio di Stato has asked the Authority to re-examine the size of the minus component and to that end a public consultation was launched on March 5, 2015 in which AGCom, after investigating the matter further, proposed a draft measure that confirms the minus value in force in 2009 (20% less than the retail rental fee).
The public consultation will last for 30 days. Lastly, with regard to the proceedings initiated by AGCom in June 2014, the Authority issued a pressrelease on February 25, 2015 – in compliance with another ruling of the Consiglio di Stato concerning copper network wholesale access rates for the three-year period 2010-2012 – announcing the final approval of the decision on the amendment to LLU rates for the period 2010-2012.
Specifically, the following changes have been made for the monthly LLU rentals: for 2012, from 9.28 euros per month to 9.05 euros per month; for 2011, from 9.02 euros per month to 8.90 euros per month; and for 2010, from 8.70 euros per month to 8.65 euros per month.
The proceedings were also intended to update the WLR and bitstream rates for the same period; however,the Authority postponed this decision to a later time, as it intends to wait for the final ruling on the execution of the Consiglio di Stato decision on the bitstream service for 2009.
Telecom Italia reflected the effects of the new rates for the period 2010-2012 in the income statement figures for the fourth quarter 2014, with a total impact, in terms of lower revenues, of 45 million euros.

New Generation Networks

With regard to measures relating to other operators' access to Telecom Italia street cabinets, on April 9,2014 the Authority published a decision setting out the conditions on obligations for locating and giving access to the cabinets (Resolution 155/14/CONS).
In particular,Telecom Italia is required to announce the installation of new cabinets (or upgrades to existing cabinets) on a quarterly basis, to enable competing operators to participate in the planning process (this notification procedure came into full effect from the start of 2015).
In addition, in order to install their own mini-DSLAMs, competing operators will be able to ask for Telecom Italia's existing cabinets to be expanded through extensions or the construction by Telecom Italia of new cabinets next to the existing ones. In the latter case, ownership of the cabinets will lie with the other licensed operators that request their construction and they will be responsible for their maintenance and related costs.
Lastly, in view of the difficulties in determining the technical and construction specifications for installing the additional extensions, the Authority has postponed all decisions until a technical feasibility study to identify the correct conditions for their supply has been conducted.