Discussion at this roundtable event got underway with the observation that the development and spread of broadband internet access services have played and will continue to play a key role in the growth of the Italian economy. Indeed, the potential of broadband services to contribute to the simplification of business and administrative processes and the introduction of more efficient business models constitutes an essential prerequisite for improving the international competitiveness of the country’s economy. An analysis of the major studies published internationally over the past two years on the impact of the development of broadband services on the economy shows that each one percentage point increase in the ratio of broadband connections to the total population accounts for no less than 0.1% growth in GDP.
The quality of broadband services offered in Italy, in terms of geographic penetration, the spread of new technologies and attainable performance levels, is certainly comparable to that of other major European countries. The Italian network covers over 90% of landlines. Owing to the use of the latest technology and to the quality of the copper access network (with the length of Italy’s copper duplex cable being lower on average than that of its European counterparts), more than half of the connections in areas covered by the broadband network are capable of providing bandwidth of up to 20 Mbps. The fiber-optic network, which enables data transmission speeds of up to 100 Mbps, is still relatively undeveloped, with a coverage of less than 10% of landlines. Broadband data transmission is also made possible via a third-generation (or 3G) mobile network, which enables a transfer rate of up to 28 Mbps, covering over 90% of the population.
However, it was noted that there has been a certain lag in the adoption of digital technologies by individuals and businesses in Italy. Indeed, the technological take-up of Italian households has been rather limited. Just 53% of households have a PC, 33% have a PC laptop, 30% have a broadband connection and around 20% subscribe to satellite pay TV. In contrast, there is a high level of usage of UMTS devices (74%), 13% of which are equipped with a mobile broadband connection. In the World Economic Forum ranking for 2008-2009, Italy lagged far behind on the “Innovation”, “Infrastructure” and “Technological Readiness” indicators. This is not due to a lack of telecommunications infrastructure, but rather appears to be mainly attributable to a widespread cultural conservatism towards new technologies, an ageing population and limited investment in ICT and innovation by businesses.
In all economically advanced countries, the development of broadband is an industrial policy priority. In this regard, it was felt that the State should play a twofold role by financing investment in market failure areas and encouraging the use of internet services. In relation to infrastructure, it was noted that the Anti-Digital Divide Plan sets a target of bringing broadband internet access services up to speeds of between 2 and 20 Mbps for the whole of the Italian population. In terms of usage, the recent strategy for the digitalization of Italy’s public administration lays the foundations for the latter to fully perform its role as a generator of digital content and processes which, in turn, represent an ideal driver for the widespread, full-scale and systemic adoption by businesses and individuals of online solutions and processes.
The transition towards the use of increasingly sophisticated and “bandwidth hungry” services necessitates the development of so-called NGA (or Next-Generation Access), namely, new-generation access networks that require the replacement of copper duplex cables with fiber optics that are capable of transferring data at speeds of up to 100 Mbps and of ensuring high and differentiated quality levels for new services. The participants acknowledged that this would be a gradual process, but highlighted the necessity of planning ahead both for migration to ultra-broadband as well as for the measures needed to prevent the emergence of a second-generation Digital Divide.
However, investment in next-generation access networks requires considerable investment and involves a high degree of uncertainty in terms of expected returns. This leads operators in the sector to share “passive” infrastructure (mainly cable ducts and radio towers). In Italy, there are already examples of this in relation to the fiber-optic network and mobile network sites. This is also strategically significant at an economic level, as it avoids duplication of expenditure on basic infrastructure and fosters competition in terms of service innovation.
In order to encourage investment in new-generation networks, the participants felt that the State should act on two fronts, namely: by overhauling the regulatory framework in order to make the rules less onerous and restrictive for potential investors, and by introducing varying levels of financial incentives aimed at reducing investment risk.
From a regulatory perspective, the key goal is to reconcile two distinct objectives. These are, firstly, to maintain current competitive conditions, and secondly, to ensure adequate incentives for new investment.
Attention was drawn to the fact that the corporate and ownership structure of any company that takes on the responsibility of developing next-generation networks in a uniform, consistent and coordinated manner, is one of the possible factors that could facilitate and speed up the progress of the NGA project whilst safeguarding the development of a competitive market. However, other factors will be equally important, such as an appropriate regulatory framework that takes into account competition protection obligations, as well as encouragement of the use of new services and of a wider adoption of digital culture.
The participants concluded that the importance of the NGA project for the Italian economy is such that it would seem essential to evaluate all options which might endow the project with the necessary substance, credibility, consensus and sufficiently fair and balanced spread of risk, thereby attracting ample resources to trigger the nationwide development of this new and vital infrastructure.