The debate on the Single Net continues as a South American soap opera rather than a gripping TV series by screenwriter Aaron Sorkin – that of West Wing and The Newsroom, so to speak. Every day we add a new chapter, characters, potential spinoffs, rumors, etc. The only certainty is that the issue seems less and less technical, and more political and financial. Some might argue that the priority is not to wire the digital divide areas in fiber, but to re-establish a new equilibrium in the telecommunications market with the development collateral.
As is well known, the parties involved are Telecom Italia, investment funds and banks, Cassa Depositi e Prestiti (CDP), Enel and the stone guest Open Fiber (50% Enel, 50% CDP). The government is ideally in favor of a single independent network. "The single network will be an open and inclusive infrastructure: we want everyone to participate in a project that I want to take place in three to four years. In the Italian Recovery plan it is very important to pursue the concrete goal of ultra-broadband as soon as possible. Tim is listed but found the government plan compelling", declared the Prime Minister Giuseppe Conte last Saturday.
- IT'S CALLED FIBERCOP, BUT THERE IS A LOT OF COPPER
- ACCESSCO, THE SINGLE NETWORK COMPANY
- THE ANTITRUST KNOT
- BEYOND THE GASPARRI LAW
Diplomatically, the CEO of TIM Luigi Gubitosi, also last Saturday, underlined: "We do not want to keep control, I hope we will have the majority because we will bring the largest part of the network but the control will be shared, we accept being in the minority in the council". The reference was to the AccessCo project, that is the hypothetical future single network composed of the Fibercop and Open Fiber infrastructures. Fibercop is nothing more than the container that starting from the first quarter of 2021 will have TIM's secondary network (from cabinets to apartments) and Flash Fiber; TIM will hold 58%, KKR Infrastructure 37.5%, Fastweb 4.5%. Its goal is to complete the fiber coverage plans in the black and gray areas , with a hypothetical FTTH coverage of 76% of the real estate unit by 2025.
The crudest synthesis is that Fibercop has to offer territorial capillarity, ducts and mostly copper networks; that in fiber is proportionally minimal. As we have already mentioned in the past TIM holds only 12.6% of the FTTH market. Open Fiber, on the other hand, has an entire FTTH network in constant growth, but for now Enel keeps a low profile. "Italy is lagging behind in the use of the internet. We are interested in wiring, not everything else", declared CEO Francesco Starace during the recent Ambrosetti Forum in Cernobbio. And little has changed over time on this front. Enel has never gone out of the way and Open Fiber itself, which has dealt with TIM several times, has always hinted at synergies and possible commercial agreements.
Yes, because, net of all the fascinating debate on the single network, simple agreements between telcos could have contributed to the development of coverage and the reduction of implementation costs. The reality is that this is not enough for some actors.
On 30 August TIM and CDP approved a memorandum of understanding to create the company for the AccessCo single network. The ball is now up to the advisors who will have to establish the values of the activities that will be conferred on it. "We have traced the path that, after approval by the regulatory and supervisory authorities, will allow us to create a latest generation TLC network necessary for the country's competitiveness and crucial for the relaunch of the economy", said the CEO of CDP Fabrizio Palermo. In theory, therefore, there would be no agreement with Enel to allow CDP to have the majority and therefore start the sale of the remaining 50% of Open Fiber – hypothetically to a Fund.
AccessCo will then be held at least 50.1% by TIM. "The project provides that the single network company is jointly controlled by Cdp Equity and Tim, is open to co-investment with other operators and characterized by the absence of vertical integration links with respect to network access services", underlined CDP. After the merger between FiberCop and Open Fiber, CDP should therefore increase its stake in AccessCo to restore the balance of power.
The creation of a single network, obviously considering TIM's needs and the other known variables of the equation, has probably the biggest obstacle in the Antitrust. Because if on the one hand the Italian one has already expressed itself clearly on the issue with a report (S3904, 8 July 2020) sent to the Government and Parliament, it is not clear what is expected from the even more rigid European. There is always talk of wholesalers who are not vertically integrated, yet the Italian project seems to want to play the role of exception. Not to mention the oddity of a monopoly regime, first gradually unhinged and then restored again.
Several observers argue that the issue of TIM's control could be fundamentally resolved in two ways. By structurally and totally separating the TIM network from services, or by ensuring total control of the new entity in Cassa Depositi e Prestiti, limiting TIM's stake to below 30%. In both cases, however, the ex-monopolist would not in fact benefit greatly and in the medium term could suffer negative side effects on his ability to act.
The last issue can only concern the recent Mediaset case. TIM has always maintained that everyone can potentially sit at the table of the single network, but as soon as the name of Mediaset has appeared, Gubitosi declared: "While the interest of a TLC operator in participating is clear to me, the interest of a content user such as Mediaset is not clear to me".
The reason is due to the latest ruling of the European Court of Justice which recognized the illegitimacy of the stakes of the Gasparri law on the intersection of shareholdings of companies, and therefore accepted Vivendi's appeal. The latter has always been prevented from acquiring a higher stake in Mediaset, compared to the current 10%, since it owns 23.9% of TIM.
The Court stressed that EU law, in relation to electronic communications services,
establishes a clear distinction between the production of content and its transmission. Therefore, companies operating in the electronic communications sector, which exercise control over the transmission of content, do not necessarily exercise control over the production of such content. Well, the provision in question does not refer to the links between the production and the transmission of the contents and it is not even formulated in such a way as to apply specifically in relation to these links..
In short, a lair free all which, however, caught TIM off guard. "We have always thought about the participation of TLC, Fastweb and Tiscali have made agreements. Netflix and Disney, for example, use our network but are not necessarily shareholders of the company. I therefore do not believe that (Mediaset) will touch the project, at least in the short term", emphasized Gubitosi.
But Conte, when asked about a single network with Mediaset, also said on Saturday: "Why not…?"."We read the ruling of the European Court carefully. He will reasonably require us to intervene on the Gasparri law, we'll see".
Credits opening image: Pixabay