Telecom Italia to Fastweb: efficient network and unbundling under EU average

04/30/2010 - 06:26 PM

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Telecom Italia, in response to the declarations by the Managing Director of Fastweb and its parent company Swisscom, Carsten Schloter, with regard to the alleged inefficiencies of the Telecom Italia, network, liable to worsen due to lack of investment, and an unjustified increase in fees, has highlighted the following:

- In the 3-year period 2010-2012, Telecom Italia will invest 9.2 billion euro on the domestic market, of which approximately 7 billion euro in network infrastructures and Information Technology.

In 2009, Telecom Italia investments on the domestic market totalled 16.3% of sales, an effort significantly higher than the one made by Swisscom in Switzerland, equal to 14.4% in the same period.

- The unbundling tariff in Italia (currently 8.49 euro/month with an Agcom proposal of increase to 8.70 euro/month from 1 May 2010) is well under the European average of 10.2 euro/month for the countries that have adopted the new evaluation method based on incremental costs as required by the European Union, including France, Germany and the UK.

It is likewise surprising that accusations of excessive unbundling costs in Italy have been made from a director of Swisscom, since in Switzerland the cost of ULL is 18.4 Swiss Francs, equivalent to approximately 12.63 euro/month (49% higher than the current level in Italy).

- The percentage of KOs regarding Fastweb requests for the activation of unbundling lines, due to lack of availability of the Telecom Italia network, is 5.5% (average for the period January 2009 to March 2010), and exclusively regards Fastweb orders on so-called “non-active lines” i.e. clients for whom a new line would have to be constructed. This value takes into consideration KOs regarding orders conveyed several times for the same client.

The KO percentage due to unbundling on an existing line is virtually nil; data on network KOs is provided periodically by the Agcom, and are available to supervisory committees and bodies.

- A recent sentence by the Lazio Administrative Court, against Fastweb, has determined that the alternative operators must contribute proportionally to the development and improvement of the Telecom Italia network. According to this sentence, “The assumption that the network does not require new investment is unfounded. Not only are investments always necessary for updating to new technology, but these investments, and therefore improvements in the functioning of the networks, also benefit both the alternative operators who utilise these networks. This conclusion explains why the cost incurred by Telecom to improve infrastructures must then be proportionally shared with the other intermediate operators using these networks”.

- In recent years, the alternative operators, and especially Fastweb, have continued to benefit from a disparity in the fixed termination tariffs, unparalleled in Europe. Telecom Italia currently pays to the other operators a termination tariff approximately 90% higher with respect to what it receives from its competitors for the calls terminating on its network. According to the intentions of the Italian Communications Authority, this mechanism should have been an incentive to other operators to create their own network infrastructures. This forecast has not materialised, and no alternative operator has decided to create a network infrastructure in Italy alternative with respect to the Telecom Italia network, to which these alternative operators may gain access through the rental system using unbundling or bitstream.

 

Rome, 30 April 2010