End-of-year cost-savings for about one billion euros Technology day: technological leadership enables Telecom Italia Group's growth to outstrip planned objectives

07/18/2002 - 00:00 PM

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The Telecom Italia Group will meet the national and international financial community to illustrate the technological instruments and projects used to achieve the objectives fixed in the industrial and financial plan. These objectives were announced in the course of preceding meetings held in September 2001 and February 2002. The results obtained mainly depend upon a technological lead that enables Telecom Italia Domestic Wireline and TIM to guarantee the continual innovation of their services and maintain their position as market leaders.
New technologies play a fundamental role in the industrial management of the Telecom Italia Group and thanks to their development it will be possible to achieve important objectives in terms of efficiency. In relation to the 2002-2004 three-year cost-savings target plan for 2 billion euros, announced by the President Marco Tronchetti Provera on 14 February 2002, the Group has reiterated its commitment to this objective and confirms that it is working to achieve half of the forecast objective as early as the end of the current year with cost-efficiency cutbacks for about 1 billion euros.
 
Innovative services represent TIM´s strongpoint
 
The centrality of the service offer is a marketing question against which TIM has always measured itself. This type of offer is increasingly important and as such is conditioning the mobile telephone market, in line with developments taking place outside Italy.
 “TIM – declared Marco De Benedetti, CEO of TIM - is recognised in the mobile telephony world as a technological leader and a company ever receptive to innovation. This is a value of fundamental importance not only as concerns the mobile telephone market, but also for society as a whole”.
 
TIM´s leadership role has also been recognised by the GSM Association, which in its last meeting in Cannes awarded two prizes to the Company for its work in stimulating data transmission.
“The industry – continued De Benedetti - is today guided by the service offer as well as by technology.  Whether photos can be transmitted over GPRS or UMTS, is, in practice, less important than actually being able to take and send them. This is what the market wants and this is what TIM, first in Italy and among the very first in the world, is able to give it.”   
Messaging related services such as SMS and, in the last couple of weeks, also MMS (Multimedia Messaging Services) are the main driving forces of demand.
As concerns the contents of the services offered, which are subject to market evolution and the penetration of the latest generation mobile phones, TIM has concentrated upon entertainment (games, music, cinema/TV) and information (sport, news, info-mobility) as concerns the consumer market and mobile office type applications for the corporate  market.
 
The growth of MMS as also the entire data market, which will bring added financial benefits for TIM, represents one of the most important drivers of growth as regards value-added service (VAS)  revenues.
 
On the basis of its solid position as technological leader, TIM is ready to meet the new challenges that the mobile telephony market will propose in the near future, by being able to count upon certain "cornerstones" such as economies of scale, a distribution chain with a comprehensive coverage of the Italian territory (over 5,000 resellers) and being accustomed to dealing with the public – a vast range of skills based upon a consolidated tradition in the industry.
 
As concerns TIM´s international operations, the Company works in the countries with the highest growth prospects and opportunities. At present, in Latin America it is calculated that the rate of penetration is only 20%.
 
 
Telecom Italia Domestic Wireline: leadership in product innovation
 
Leadership in technological product innovation, excellence in Customer Care and services, efficiency in costs and productive capacity: these are the foundations for the development of Telecom Italia Domestic Wireline, Telecom Italia´s fixed-line business unit.
“The mission of Telecom Italia Domestic Wireline – stressed Riccardo Ruggiero, managing director of Telecom Italia - is to build up its position as leading operator in fixed telephony among the European operators by means of product innovation, the excellence of its customer care, the maximum efficiency and effectiveness and a rapid and business-like organisation.
 
The key for achieving this strategy is constant innovation in network infrastructure that will make the progressive migration towards multimedia services possible. To meet the new needs of the market, Telecom Italia is making a rapid convergence between TLC and multimedia which will require the transformation of the telephone network from a data compatible infrastructure designed for "voice" communication into a network that is mainly designed to transport large quantities of "data and images" as well as voice communications. 
 
 In order to maintain its market share of the traffic, Telecom Italia has launched a strong retention and win-back campaign, with the creation of an innovative offer and a higher degree of effectiveness in its distributive channels. In order to reach this result, numerous commercial initiatives have been carried out and new services launched over the last few months.
 
-         Ricomincio da te: the new offer for families and companies with tariff reductions, one hour of free local telephone calls every two months for families and companies plus half an hour of free trunk calls every two months for families. Reductions have been made to the fixed rental charges of poorer families and these have been totally abolished for deaf and dumb devices.
-         Alice: the new Adsl line for the residential market as well as for small and medium-sized companies that offers a vast range of innovative proposals, from simple access to the a self-installing kit and the classic "turnkey" solution for broadband internet navigation. Major emphasis has been given to provisioning timescales (activation in only 7 days) and customer care (setting up a specialised Adsl front-end providing service 24 hours a day). The Alice offer will become a competitive range of tailor-made offers with a top domestic speed of 1.2 Mbits.
-         Teleconomy: "discounted" packages for voice traffic that provide particularly advantageous and economic solutions: as at 31/12/2001 subscribers amounted to over 4 million. Teleconomy Zero and Teleconomy Forfait represent the latest solutions devised by Telecom Italia to meet its customers´ needs;
-         Adsl Wi-Fi: the Adsl offers of Telecom Italia have been recently flanked by wireless solutions that give customers wireless access to high-speed internet and thus without the problem of requiring a phone socket close at hand. Alice Flash is the only wi-fi offer in Italy designed for families. The reference offer for companies is “Smart wireless”, while for large companies there are Interbusiness and Hyperway Wireless.
 
 
The Telecom Italia network: present size and development programmes
 
Telecom Italia Domestic Wireline expects to invest in the network development 6.7 billion euros over the next three years (2002-2004). These investments can be supported only by operators  directly connected to the customer’s request, and this allows to maintain the high qualitative level of the access service and the possibility to efficiently meet the customers’ requests

Telecom Italia manages an access network for voice communication with 22 million lines and 5.4 million Isdn lines, many of which for residential customers. The Dsl accesses are at present 500,000. Voice and Dsl are based on the traditional copper distribution network with an overall twisted pair extension of over 100 million kilometres. The voice network handles about 130 billion minutes of retail traffic every year of which 72% "voice" and 28% dial-up internet connections.
 
Broadband access is treated as a "new telephone line" for the residential and business market. The development of this infrastructure represents an extraordinary economic-growth opportunity for the country. Telecom Italia Domestic Wireline´s strategy is working in two important directions in relation to customer requirements for transmission capacity - Dsl technology dedicated to the broadband needs of families and the small/ medium companies and optical access designed for medium-to-large sized companies.
As regards Dsl access, 800 cities had been covered by end 2001, corresponding to 68% of internet users (at the end of 2000 the number of cities covered were 110 city corresponding to 45% of the internet population). At the conclusion of the industrial plan (2004) coverage will extend to 2,000 cities, corresponding to 85% of the internet population. Telecom Italia´s investment programme in the three-year period, 2002-2004, for the development of Dsl technology amounts to 800 million euros. The objective is to acquire 1.4 million residential customers and about 500,000 business customers by the end of 2004.
The optical-fibre network has an extension of 2.8 million km for data transport and about 420,000 km for access.
However, such broadband development cannot ignore the need to upgrade the backbone. For this reason, Telecom Italia is installing new cables and sophisticated optical systems in the transport network. Thanks to this access and backbone infrastructure, Telecom Italia occupies a leading role in broadband applications, whose reference point is the Internet Date Centre of Pomezia and Rozzano where there are structures occupying thousands of square metres of equipment ready for the new web hosting and web housing applications. 
 
 The new network model and the development of services
 
Telecom Italia Domestic Wireline plans to evaluate its technological assets still further and to continue pursuing the strategy already undertaken in developing, thanks to the possibility “to see” the network integrations requested by the market, new network services and applications, for both the residential and business market, by evaluating, even more, broadband “voice, video and data” services to the full with  IP (Internet Protocol) technologies.
Telecom Italia has already commenced the migration of the voice-network backbone to IP technology. This will provide higher levels of efficiency and resource optimisation.  
It is foreseen that VDSL (very high speed DSL)  will be used within 2002 for advanced video services. The VDSL is a digital transmission technology that utilises the traditional twisted pair.
 
 
Efficiency in operational management: “excellent” Customer Care
 
The evolution of Customer Services and their constant improvement have the same importance for Telecom Italia as the development of new services. The objective is to implement a customer-centred organisation focused upon the development of human resources. Domestic Wireline has therefore made Customer Care and Customer Service a top priority. Four main instruments have been adopted to achieve these objectives: the "re-qualification" of human resources vis à vis the more complex services (broadband), analysis and definition of new customer-oriented processes, new systems of operative support and the optimisation of resource management.