Telecommunications competition in Italy has historically been plagued by the absence of an independent regulatory authority specific to the sector, but that could change in the near future. Italian parliamentarians are currently discussing legislation that would create just such a regulator, while the public operator this week is sponsoring a Communications Summit in Naples. More […]
Telecommunications competition in Italy has historically been plagued by the absence of an independent regulatory authority specific to the sector, but that could change in the near future. Italian parliamentarians are currently discussing legislation that would create just such a regulator, while the public operator this week is sponsoring a Communications Summit in Naples. More or less, everyone is in agreement that if we do not have an organism to bring some order to the situation, it will be disastrous, says Lucrezia Dezio, mobile communications analyst for Milan-based Reseau, although she acknowledged that the exact form of the authority is not defined. Nobody wants to duplicate the television situation, where the absence of a regulator effectively allowed [former Prime Minister Silvio] Berlusconi to become a second monopoly after the government.
Indeed, there are signs that much of the industrial-political establishment is coming to terms with the idea. The stakes are certainly high, particularly in the area of mobile communications, where Italy is expected to top 3m subscribers by end of the year. In April, for instance, the Italian government accepted the 1990 European Commission directive on telecommunications, making it a national law and officially accepting as deregulated the services defined by the Commission, including mobile communications and value-added network services. It was a month later that Telecom Italia SpA and Omnitel Pronto Italia SpA concluded their agreement on interconnect and other issues, paving the way for that competition to get under way. Even Telecom Italia has declared publicly its desire for, and what it sees as essential requirements for, a regulator. At a Reseau-sponsored conference last month in Venice, the operator’s president Vito Gamberale said We see – rather, we hope that – Italy’s regulator will be strong, that is, independent of any external pressures. Authoritative, that is, highly capable technically. Non-partisan with respect to the various interests in play. And with competence distinct from that of the Ministry [of Post & Telecommunications] and from the Anti-trust Authority. Gamberale went on to say that the company is in favour of a European-level telecommunications regulator. It is not surprising that the operator wants an Italian regulator to have responsibilities that are independent of the Anti-trust Authority, which is run by former prime minister Giuliano Amato. Charged with evaluating and punishing abuse of market dominance, the agency has been ruling against Telecom Italia on at least two occasions in the last 18 months. In the absence of such an authority, the Autorita Garante della Concorrenza e del Mercato, as it is known, has been in fact the only recourse for would-be competitors to Telecom Italia. In principle, the authority is authorised to rule only in sectors already open to competition. But that did not keep it from ruling against the operator on issues of virtual private networks service and off-line telecommunication-related services in the early weeks of this year, before the directive became law.
By Marsha Johnston
The authority also played an integral role in negotiating a peace between Telecom Italia and Omnitel for the conditions for the second operator’s service launch, and continues to investigate complaints in the sector. Its decisions are not executable as law, and Telecom Italia typically refuses them, but they make it easier for a would-be competitor to get a court order that the operator must accept. Arturo Artom, chief executive for Milan-based Telsystems SpA, a tiny virtual private network supplier, knows from experience. At the end of his rope because Telecom Italia refused to provide connections between Telsystems lines and its clients’ PABXs and even sent bullying letters to his potential clients, Arturo denounced Telecom Italia to the authority in March 1994. While recognising that it was not charged specifically with telecommunication competition, Arturo went to Amato’s grou
p because it was a clear abuse of a superior market position. Amato’s organisation investigated the complaint until January 1995, when it declared itself in agreement with Telsystems. Telecom Italia did not accept the authority’s judgement, so Telsystems went to the Tribunale Amministrativo del Lazio, and the court supported the authority’s decision in March. Only since then has the operator supplied Telsystems the connections it needed. Now our clients can call from Rome to Milan without having to dial the area code, just an internal extension number, Artom says. Telsystems has three nodes, in Milan, Rome and Turin which it uses to serve about 15 clients, mostly professionals such as lawyers and consultants. Says Reseau’s Dezio, Telecom Italia has sustained its position with the recognition that Italy does not immediately implement directives. The Telsystems complaint showed publicly that it had the right to compete. We’re in a situation in Italy where, not having any official regulatory authority to watch over these questions, if Telecom Italia refuses an operator that ‘last mile’ connection, it will be obliged to jump through the legal hoops we had to, Artom says. Although the authority has upheld the competitive right for Sign Sarl, a small company that wants to market telephones equipped with CD-ROM readers and CD-ROM directories, chief executive Luciano Pirozzi expects he will also have to get a court order to force Telecom Italia to supply the necessary directory information.
Killed the deal
Ironically, his company had already concluded an agreement with SEAT, the part of the Stet SpA group that publishes directories, at the end of 1992 when Telecom Italia killed the deal. SEAT was, in fact, already producing a CD-ROM and when we said we were interested in 30,000 to 40,000, they were excited. We had settled on price and had even presented them our products! he says. Omnitel Pronto Italia has never had to prove publicly its right to compete; the government tacitly recognised it in granting the company the second Groupe Speciale Mobile service franchise in April 1994. Nevertheless, it was to Amato’s Authority that Omnitel turned with a complaint about the conditions for network interconnection, a trial service period and sales initiatives that Telecom Italia was attempting to impose. The combined forces of the authority and the Ministry of Post & Telecommunications brought Omnitel and Telecom Italia to an agreement in May. Currently, Omnitel expects to have concluded its test runs and network installation over the summer, with commercial launch scheduled for the autumn. Chief executive Francesco Caio says the company is averaging 110 to 120 contracts per month for new network sites and counts on having a network of 2,000 points of sale. Omnitel will certainly have a lot of ground to make up. Gamberale reported that Telecom Italia saw its subscriber base grow 50%, or 370,000 in the first four months of 1995 compared with the same 1994 period.