Italy - Telecoms, IP Networks, Digital Media and Forecasts

Concerted efforts to deliver widespread FttH by 2015

BuddeComm’s quarterly publication, Italy - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of southern Europe’s largest countries. The report includes the regulator’s market data to the end of 2011, telcos’ financial and operating data to March 2012, and market developments into mid-2012.

Economic background

Italy has become one of the principal casualties of the difficult economic conditions. The country’s economy has been stagnant for years, with small businesses unable to compete with Asian imports. Government fiscal difficulties, compounded by low tax revenue, resulted in government debt reaching some €1.9 trillion. Servicing this debt became unmanageable by the end of 2011. A government at the end of the year implemented a package of austerity measures designed to cut debt and avert financial collapse. Yet by mid-2012 the country had slid deeper into recession, with GDP expected to shrink by 1.9% in the year, while economic output is forecast to be 6% below its peak in 2008.

Telecom market overview

Italy has the fourth largest telecom market in Europe. Its value has fallen steadily since 2008, though partly buttressed by the internet access and mobile data markets. Telecom Italia dominates all market sectors despite effective competition. Mobile penetration is far higher than the EU average, while the four active MNOs have made great strides in developing LTE networks to support consumer use of mobile data services, and so develop a key revenue stream for coming years.

Fibre broadband market

The fast developing fibre market is largely directed by the NGN Committee, set up in late 2010 and formed around a nucleus of industrial partners and telcos. The Committee manages collaborative projects aimed at delivering FttX to 20 million people by 2015. In addition, Telecom Italia is committed to bringing FttH/FttB to 138 cities by 2018. A separate group of telcos set up FiberCo as a vehicle company to oversee passive infrastructure, with the regulator charged with developing a framework for equal infrastructure access. These schemes should bring much needed rationality to the country’s approach towards a fibre-based NGN, so reducing costs and effectively extending the network beyond urban areas.

Key telecom parameters – 2010; 2012
Sector | 2010 | 2012

Subscribers by sector (million):

Fixed broadband subscribers | 13.2 | 14.1
Mobile broadband | 16.9 | 21.5
Mobile phone | 91.1 | 94.4
Fixed-line telephony | 22.4 | 21.5

Penetration by sector:

Fixed broadband | 21.9% | 24.8%
Mobile | 148% | 156%
Fixed-line | 30% | 28%
(Source: BuddeComm)

Market Highlights

In 2004, only 4% of mobile subscribers in Italy used 3G technology, but by mid- 2012 this had increased to about 50%, one of the highest proportions in Europe.

Revenue per active SIM card has fallen by about 15% since 2008 in the wake of competitive pressure and regulatory measures.

An auction to reallocate TV frequencies, expected in late 2012, will address efficiency in spectrum use as well as the need for the government to secure up to €1.2 billion in revenue. Licences for frequencies in the 700MHz range will be focussed on enabling broadband access from 2015.

Fibre broadband developments are quickening, with Metroweb planning a scheme worth some €4.5 billion and covering 30 major cities by 2015.

The drive towards LTE has been facilitated by operators gaining access to the 1800MHz band at the end of 2011. The 2.6GHz band will be available by the end of 2012, and the 800MHz band at the start of 2013, following analogue switch-off by broadcasters.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Italy.

It provides further information on:

Market liberalisation and regulatory issues;
The impact of the global economic crisis;
Telecoms operators – privatisation, acquisitions, new licences;
Mobile data market developments in coming years in light of spectrum auctions and new license awards;
3G developments, regulatory issues and technologies including HSPA and LTE;
Broadband migration to an FttH architecture;
Historical and current subscriber statistics and forecasts;
ARPU statistics and forecasts.

Data in this report is the latest available at the time of preparation and may not be for the current year.