Italy's Net at the Crossroads of Optical Fiber and Copper Wire
The development of wideband infrastructure in Italy is at the heart of current government policy, with the approval of the Italian strategy for ultra-broadband networks in March 2015, followed by the allocation of the first €2.2 billion in public funds to this end six months later. In the coming months, the first competitions to lay down cables in remote areas are to be called by the government. The infrastructure will be directly funded by the state, when it's not financially viable for private actors to do so. On their part, private operators, with Telecom Italia, Fastweb and Vodafone at the forefront, have accelerated development plans for new digital networks over the last two years, starting with the areas where growing demand for digital services justifies additional private investment.
Italy is lagging seriously behind most EU countries in the development of wideband networks, but in terms of the coverage of 4G mobile networks the country is in line with the European average. This gap is due to several reasons: the absence of a cable network to deliver TV channels, on which new digital services piggyback in countries that have one; low national demand for Internet services, itself due to low digital literacy of Italian households and the aging demographic structure of the country; excessive prudence by private investors which only belatedly have jumpstarted investment.
There are several technological solutions to ensure a rate of 100 Mbit/s for 85% of the population, and 30 Mbit/s for the remainder (the Italian government's targets). As far as fixed networks are concerned, old local networks of copper wire must be replaced, in part or completely, by fiber networks. The peculiar conformation of telecommunication networks in Italy, characterized by local networks averaging 200-300 meters in length, also allows the attainment of high navigation speeds by adopting intermediate solutions, where the optical cable arrives at the street cabinet, while copper is used for the last stretch to the home. This has been the solution preferred by private operators in recent years. Mobile networks conversely rely on LTE technology to provide high-speed traffic to users.
The government has divided the country in three areas, based on the current state of the networks and their planned development, thereby distinguishing between those where private operators plan to develop connections to 100 Mbit /s by 2018 without government help, territorial clusters where coverage of 100 Mbit/s or 30 Mbit/s can only take place with the support of public incentives, and areas of market failure, where private operators do not intend to develop new networks. Depending on the type of cluster, several policy tools have been foreseen, from capital grants to public/private partnerships. to the direct intervention of the state in areas where the market fails. The government's strategy has become clearer by interacting with European Commission, and by meeting the constraints it sets on state aid. For instance, there is now an explicit choice in favor of Net neutrality, result of the interaction with Brussels, in order to ensure that users can navigate at connection speeds defined in government objectives. This choice also ensures the scalability of solutions, in which the optical fiber reaches first the cabinet (fiber-to-the-cabinet), and thereafter is carried to apartments (fiber-to-the-home) as a function of the growth in demand.
The complementary role of public bodies such Metroweb and the Ministry has also been clarified: the state intervenes directly only when there is market failure, while providing incentives in intermediate areas, and instead leaving the field completely open to private companies in areas that are more digitally developed. This territorial breakdown for laying down fiber cables should be complemented by an articulated set of network regulations and prices of access, which are key ingredients in determining private returns on investment in network infrastructure.