FACTBOX-Italy's superfast broadband roll-out: the issues

MILAN, May 6 (Reuters) - Italy wants to speed up the roll-out of all-fibre ultrafast broadband coverage to boost productivity and close a gap with major European rivals.

Italy’s new government under Prime Minister Mario Draghi has put digitisation at the centre of its agenda. It plans to spend more than 8 billion euros ($9.6 billion) of EU funds on broadband, 5G and satellite technologies and wants superfast connections of 1 gigabyte available for all Italians by 2026.

Rome has yet to decide if it plans to pursue a long-standing project of a single broadband network or find alternative ways to boost connectivity, with several ministers holding different positions on the issue.


Italy is the European Union’s third-largest economy, but comes second to last among 27 EU members in Internet usage, latest EU data show. Almost a fifth (17%) of Italians have never used the web and only 13% of households subscribe to superfast broadband connections of at least 100 megabytes.

Coverage with connections of at least 30 megabytes has increased significantly in recent years, with Italy now in line with the EU average. But it is 22nd among 27 EU states for the roll-out of superfast broadband.


* Telecom Italia (TIM): Italy’s biggest phone group owns almost all of Italy’s wholesale market. Until recently, the former state phone monopoly was reluctant to upgrade its copper lines to fibre, saying demand did not justify investments.

It recently created FiberCop to upgrade its ‘last mile’ grid, mainly made of copper, connecting street cabinets to homes. U.S. infrastructure fund KKR owns 37.5% of FiberCop, while Swisscom’s Fastweb holds 4.5%.

* Open Fiber (OF): The wholesale-only broadband operator, jointly owned by state lender Cassa Depositi e Prestiti (CDP) and utility Enel, was set up in 2016 to speed up fibre rollout across Italy. CDP recently agreed to raise its stake to 60% to take control, while infrastructure fund Macquarie struck an accord to buy out Enel’s remaining 40%.

* CDP has also become TIM’s second-largest shareholder to oversee Rome’s interest in a sector seen as strategic.


In 2020, CDP and TIM signed a preliminary agreement to merge TIM’s fixed assets with those of Open Fiber, to create a unified network operator, AccessCo, with near-monopoly for broadband rollout but open to other players. Economy Minister Daniele Franco backs the single network plan but is urging a unified government position, sources said.

Governance remains the biggest hurdle to getting AccessCo off the ground, with TIM - backed by top shareholder Vivendi - wanting more than 50% of any company created from a combination with OF.

European regulators, who say any project receiving EU funds should guarantee competition, favour Italy developing a fibre network based on a wholesale and co-investment model and not one controlled by vertically-integrated players such as TIM.


Industry Minister Giancarlo Giorgetti is ready to back a less ambitious plan to merge OF with FiberCop, which includes only TIM’s secondary network. TIM would keep its primary network - connecting switching centres to main street cabinets - and would not have a majority stake.


Italy’s ruling parties are also discussing a plan to agglomerate all the country’s telecom operators in a consortium to accelerate fibre rollout, a document seen by Reuters showed


TIM and OF could continue developing networks in parallel, especially as competition eases regulatory concerns, but there are worries around duplication of infrastructure and spending.

Former Vodafone CEO Vittorio Colao, picked by Draghi to speed up coverage rollout, says competition has a role to play and favours speedy rollout using the best technologies available, including Fixed Wireless Access (FWA) systems that combine fibre with mobile technologies. ($1 = 0.8301 euros) (Reporting by Agnieszka Flak, Elvira Pollina, Giuseppe Fonte and Stephen Jewkes Editing by Keith Wei)