The single fiber optic network would theoretically be the ideal infrastructure for a country like Italy, but today it appears increasingly as a simplistic answer to a very complex problem. The idea of resetting everything and leaving with the clear field to rebuild is very fascinating. But the telecommunications sector is not a Lego, nor is it a market that manages itself like a condominium meeting – even if the political narrative would suggest it.
- THE SCENERY
- WHY A UNIQUE NETWORK?
- ADVANTAGES AND DEFECTS OF THE COPPER FIBER NET
- THE KNOTS (NEVER LOOSE) OF THE SINGLE NETWORK PROJECT
- THE EXIT ROUTE
The entire national network that provides residential connectivity services belongs to Telecom Italia, Open Fiber (only wholesale, wholesale), a handful of large providers, a myriad of small local operators and several fixed wireless operators. According to the latest AGCOM report, the total lines are 19.47 million, of which 44.3% copper, 41.8% copper-fiber (FTTC, fiber-to-the-cabinet), 6.9% fiber (FTTH, fiber-to-the-home) and 7.1% fixed wireless.
Regardless of technology, 12.2 million lines refer to the TIM network, therefore 6-7 million refer to competing infrastructures. The latter are mostly from Vodafone, Fastweb, Wind Tre, Linkem, Eolo and Tiscali. Oper Fiber is the main wholesale supplier of FTTH and has entered into agreements with everyone, with the exception of TIM, which makes melina. In summary, in most cases, regardless of whether a contract with a provider or another is signed, for the copper and copper-fiber networks the main reference network is that of TIM, for those on fiber it is that of Open Fiber.
That said, the most extensive and widespread fiber network is that of Telecom Italia, however it mainly reaches the cabinets and not directly the homes. Proof of this is that Fastweb holds 34.5% of the FTTH market, Vodafone 25.7%, Wind Tre 20.6% and TIM only 12.6%.
A further detail is that all operators, except TIM, can freely establish their own wholesale tariffs. Discrimination? No, simply the former monopolist is subject to the assessments of the Communications Guarantor. And this happens a bit all over the world, or in any case where regulations exist to encourage competition.
A single fiber network would allow investments to be concentrated and competition to be challenged in the delivery of services to the end customer. In practice, a single wholesale operator with strong state participation that ideally has as its objective the development of the infrastructure and therefore also reach the areas most snubbed by operators. Many argue that it was a mistake to privatize Telecom Italia in 1997, but we should evaluate the context of the time and above all that at the time in many sectors managed by the state the weakest chapter was precisely that of efficiency. Just the attribute that today we would like to obtain with a state network.
All professionals agree that the infrastructural uniqueness would be perfect for solving a large part of the digital divide, but they divide on the real feasibility and any side effects. The only certainty is that the nerve center is Telecom Italia. A large and important company that has a human and technological capital of European reference, but that for years has had a financial situation that does not allow it to express itself to the best of its potential.
This explains the (partial) reason why he favored the enhancement of the FTCT, contributing in the last two years to the increase in the performance of millions of subscribers. AGCOM in fact estimates VDSL2 coverage (> 100 Mbps) for around 55.8% of families. Going head down on the FTTH would have been more expensive and this explains the co-development project with Fastweb (which holds 20%) called Flash Fiber – 29 wired cities by 2020. Remember that Open Fiber is preparing for the end of 2020 to reach the threshold of 200 municipalities, thanks to its private project.
The problem with the Italian situation is that the copper-fiber network is not "future-proof". You can squeeze it as much as you want with increasingly advanced technologies to obtain better performance – with G.Fast we speak of 500 Mbps – but the unknowns of the distance from the cabinet and that of the decay of copper remain.
If in the city a cabinet is on average positioned 250/300 meters from the house, in suburban areas or with less housing density the threshold abundantly exceeds 500 meters and the speeds start to decrease. In summary, as regards the maximum nominal thresholds – leaving aside the issue of interference between different technologies – VDSL should allow 100 Mbps up to 450 meters, VDSL2 about 200 Mbps up to 450 meters and G.Fast at least 500 Mbps up to 250 meters.
In principle between 30 and 100 Mbps real a common subscriber can make the most of all the digital services available on the market today. Even Netflix enables 4K Ultra HD video with a 25 Mbps threshold, therefore the pragmatic approach based on current needs (but not future ones) would confirm that FTTC is a valid technology. The main problem is that the telecommunications world is legitimately asked to be design and look to the future, simply because the development of infrastructures requires a lot of time and investments. And as terminals and services are renewed faster and faster, you can't have a physical world that is too late.
Fiber (FTTH) in this sense is the most sensible answer because once installed, it is sufficient to intervene upstream and downstream – regardless of distances – with equipment capable of increasing performance. There would also be the fiber-coaxial hybrid of cable TV (DOCSIS), but in Italy there is not; abroad this solution allows millions of families to have ultra broadband services without bringing the FTTH into play.
So here is that a single fiber network appears as the definitive solution to every problem. Putting the TIM network and the Open Fiber network as a common factor would hypothetically lead to cutting-edge wholesale services, but to turn dreams into reality, you have to deal with some not insignificant details
TIM takes on the role of both the main national wholesale operator and consumer service provider. In fact, it holds 46% of the access market, for example against 15.6% of Vodafone, 13.7% of Fastweb, 13.6% of Wind Tre and 3.4% of Linkem. We are not in a monopoly regime precisely because the regulations and supervision of the Guarantor of Communications (AGCOM) and the Guarantor of the Market (AGCM) allow us to preserve competition, but without mobile poles it would be the far west.
TIM recently decided to push on development by creating a new company called "FiberCop" which thanks to the participation of the American Fund Kkr should manage its entire copper-fiber secondary network and gradually convert it into FTTH, further develop and combine in some cases the fixed wireless. In practice, we are talking about an entity with all the current network in its belly that goes from the cabinets to the apartments and therefore mostly copper and little fiber, without even a central unit. The overall goal is to have a secondary network in the black (competitive) and gray areas (a single operator with <30 Mbps services) capable of serving 1,600 municipalities. By 2026, therefore, reaching 13.5 million buildings, approximately 55% of those present throughout the country.
In a second step, the merger between FiberCop, 80% of Flash Fiber, and Open Fiber should allow the creation of a single network. Politicians and managers have been debating on the topic for months, but most overlook over substantial elements. The first is that TIM should renounce control of the new wholesale mega-company because the Antitrust Authority, both the Italian and the European one, has repeatedly confirmed that in such a scenario it takes an operator specialized in wholesale only, therefore not vertically integrated. . TIM has obviously always made it clear that it does not want to give up the command. And this according to Aiip, the Italian Internet Provider Association, would lead "once again to an inappropriate monopolistic, antihistoric situation, with enormous damage for all competing operators who with courage and Italian capital have invested in the last ten years in this sector and damage to the same consumer – both private and corporate. "
Furthermore, it must be remembered that Open Fiber has won three EU-funded calls (BUL project) dedicated to areas where in many cases an operator is present. With a change of skin it would risk being involved in administrative justice disputes and above all stimulating Brussels to an antitrust and "state aid" investigation.
Some point out that the State, with Cassa Depositi e Prestiti, would be the guarantor of any balance, but few believe it because governments change and also the weight of influences. In fact, CDP should go from the current 50% of Open Fiber to 100% by taking over the share of Enel, and then acquire an important FiberCop package. And here comes the economic evaluation of the latter. Many have escaped the fact that the entire operation actually foresees that the State will buy back (via CDP) a piece of ex-national network, substantially composed of kilometers of cable ducts with copper wires, and all that Open Fiber FTTH. Not to mention that the two companies involved employ different architectures and conceptually development methods at the antipodes.
"Even if they were under the same ownership, the two infrastructures would be destined to remain separate because they are both complete, from the backbone forward, but built with different types and architecture. Therefore they cannot be integrated: the lines that reach the houses start from different access points", Franco Bernabè, former CEO of Tim and today president of Cellnex, reiterated to Sole 24 Ore." It should be borne in mind that in all countries, except in Italy, there are at least two networks with national coverage: the TLC network and the cable TV network which also provides broadband ".
Aiip, who represented the medium and small independent operators, reiterated the same opinion "the need for a plurality of competing networks for ultra-broadband access and the country's digital development". The president, Giuliano Claudio Peritore, declared that"Different networks can guarantee greater innovation, diversification of services, resilience even in the face of crises such as the one we are experiencing and finally freedom of choice for users".
The ideal solution for Bernabè would be that "Cassa Depositi e Prestiti sold its stake in Open Fiber and with the proceeds promoted the recapitalization of Telecom, which urgently needs it to support investments. Otherwise, Telecom will hardly be able to guarantee the transition from copper to fiber in the times and ways suitable to satisfy Kkr. Both Telecom and Open Fiber would hold their own network, but could create a common company to cover the gray areas".
So how does it come out? Targeted agreements in gray areas and in market failure areas would suffice. Aiip's proposal is in fact to encourage "co-investment and collaboration agreements between national and local operators, in order to avoid duplication and enhancing the investment capacity of each with the presence and knowledge of the territory by the other".
TIM insists on not completing them, even if its comparison with Open Fiber has continued for months. The reason is simple: allowing Open Fiber to continue growing would constantly erode its customer base and even contract its wholesale business. The only solution seems to be the one undertaken in the last year, namely to aim for a sort of acquisition / merger or a strategy aimed at completely redesigning the wholesale market.
No less important is the fact that FTHH has become a very powerful marketing tool that can only be contrasted with the weight of 5G. But even this latest mobile revolution needs upstream fiber infrastructure.
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