Telecom Italia (TIM) has been beaten up for its monopoly broadband practices this week by Italian market competition agency AGCM (L’Autorità Garante della Concorrenza e del Mercato). While this is merely finger pointing until proven guilty, it is not exactly a secret that TIM has neglected its obligation to upgrade broadband, instead focusing on cheaper wireless investments.
The investigation applies to the roll out of superfast broadband in rural areas, where the Italian operator is accused of abusing its dominant position by attempting to stall deployments, for example by juggling investment plans. In addition, the agency alleges that TIM has snapped up areas of opportunity for competing operators with the allure of preemptive, low-price broadband contracts.
The Italian government itself has accused TIM of dawdling and ended up contracting manufacturing firm Enel to help meet demand, after its subsidiary Enel Open Fiber (EOF) snatched the first tenders.
Specifically, the AGCM is investigating TIM for allegedly hindering the execution of Infratel Italia’s FTTH network procedures in areas of land with no infrastructure plans (white areas) in order to preserve its monopoly position in these territories. In addition, the build out of government infrastructure in rural areas has allegedly been deliberately halted by TIM to block the potential entrance of local competitors.
TIM, which is 25% owned by Vivendi, has of course pleaded its innocence: “TIM, as already proven in the past, is certain to have acted in compliance with the rules and will demonstrate it in the appropriate venues. TIM is confident that, already when the case is under investigation, the rightness of the company’s operations will emerge.”
TIM has an average download speed of 16.2 Mbps, topped out by Vodafone Italia’s 18.3 Mbps average speed on its DSL network, followed by Fastweb with 13.9 Mbps. Its monopoly position is blatant. holding around a 50% share of fiber lines and 60% of both fiber and copper networks – with a total of 11.2 million fixed connections and 7.3 million retail broadband accesses. However many European incumbents boast similar figures.
TIM is also accused of locking subscribers in rural areas into long-term contracts with prices which competitors cannot realistically replicate – on the promise that superfast broadband will arrive in due course. These consumers are naturally none the wiser to the reality that TIM’s practices have in fact delayed the deployment of superfast broadband in rural regions.
Additionally, with regard to commercial offers of ultra-wideband telecommunications services, the AGCM will assess whether the technical and economic conditions carried out by TIM have bound consumers to contracts for a long period, and offered prices which cannot be matched by alternative operators. It deems that such behavior might be likely to unduly restrict the space for competing operators, at a time when competition is “desirable”.
The agency says this allowed TIM to achieve the dual purpose of making its dominant position seem “less controversial” by migrating subscribers to ultra-wide band offers; and on the wholesale market, discouraging investments in upgrading networks, thereby making them less profitable.
The investigation doesn’t point out TIM’s internal MVNO venture, Kena Mobile, directly, but there are plenty more chapters to be written in the mobile saga, as Vodafone Italia plans to launch a low cost MVNO service this year, which looks like a defensive move against the imminent entry of Iliad as a fourth MNO and new market disruptor.
In mobile, TIM has a market share of 32.4%, Vodafone Italia covers 26.4%, and the newly merged 3 Italia/Wind holds 33.7% of Italy’s mobile subscribers.
The merger of 3 Italia and Wind is another example of new entrants emerging following consolidation in Europe, and TIM has therefore stepped up to the challenge and initiated a price war before Iliad could get there first, launching plans via Kena Mobile starting as low as €3.99 a month at the end of March. Vodafone says it has not made final decisions about the launch, but local sources believe the MVNO will launch in September.
But we think that zero rated video being added to one or other of these options is the next step and when Iliad launches, this tactic could emerge.
Iliad is likely to launch its services in Italy in November or December and has hinted that it will use similar tactics to those Free Mobile deployed in France, with aggressive pricing. It will not, however, be able to use its Free Mobile brand, as that is already registered in Italy.