While this approval is good news for TIM, the concerns raised about competition could be further bad news for Italy’s single broadband network
The co-investment venture can now begin: Amid the financial difficulties it is facing, Telecom Italia (TIM) can breathe a sigh of relief after getting the regulatory approval for its co-investment venture. FiberCop is a spin-off of TIM’s passive ‘secondary’ network, including the cabinet-to-home segment (ducts, sockets, etc. but excluding the cabinets). It was created in August 2020 with the participation of KKR, which holds a 37.5% share, and of Fastweb, which has a 4.5% share. TIM retains the remaining 58%. Other smaller operators, such as Tiscali and more recently Iliad, signed co-investment agreements with FIberCop but didn’t acquire a stake in the venture.
The competition authority had serious concerns: Getting here has not been easy. The AGCM, Italy’s competition authority, took more than a year to approve the co-investment initiative (the inquiry began in December 2020 and was only completed on 24 February). It had concerns about reduced competition at the wholesale level, since the agreements between operators included conditions such as preferential clauses and the minimum number of lines that must be purchased. There were worries these agreements could make demand at the wholesale level less contestable, while also reducing the incentive of alternative operators to invest in their own infrastructure. Alternative operators could have become merely resellers of TIM’s services without any real differentiation. To address these concerns, all companies involved made commitments to the AGCM. Fastweb committed to invest in its own network until 2026, so that it can access FiberCop’s services as an independent operator. Tiscali changed some agreements that would not have entailed any investment in its own infrastructure, and reduced the minimum number of lines it had to purchase from FiberCop. The AGCM is also satisfied that TIM has presented a clear investment plan for the coming years, and that it will offer dark fibre access in its primary network to facilitate network investment of the other operators.
Good news for TIM, bad news for the national broadband network? The approval is good news for TIM, which can monetise its network assets and share future investments with other partners. However, it further confirms that the road to a single national broadband network is paved with obstacles. The AGCM clearly stated that competition between infrastructures is an “essential element” of the telecommunications market, and that it results in better services and benefits for consumers. This suggests that the authority will have serious concerns with the creation of a near-monopoly. For that project to go ahead, TIM will need to bring the AGCM and the European Commission on side. It’s hard to see how this will be achieved without removing vertical integration with TIM and creating a heavily regulated company.
Source: https://www.agcm.it/media/comunicati-stampa/2022/2/I850-I850B
