Italian single network could delay closure of connectivity gap

There was good news for thousands of Italian schoolchildren at the end of January, after the European Commission (EC) approved Rome’s €325 million plan to connect some 12,000 schools to ultra-high-speed internet. The decision was not a surprising one, given how slow much of Italy’s internet is, but will still come as a relief at a time when the coronavirus pandemic has made better connectivity a matter of educational urgency.

It is surprising, however, that even as the Italian government is embarking upon this badly needed initiative, it’s making other moves in parallel that are likely to slow down the much-anticipated rollout of high-speed internet that Italians have been waiting on for years. Specifically, the outgoing Conte administration’s crusade to return to a single broadband network prompted alarm from policymakers, consumer watchdogs and industry insiders alike, who fear that curtailing competition could further delay investment in Italy’s internet infrastructure—and even played a role in the recent collapse of Conte’s second administration. With former ECB chief Mario Draghi now tapped to head a government of national unity, Italy has a chance to step away from the statism which has threatened to exacerbate its digital divide.

Lagging behind

The Italian government’s decision to funnel €325 million of state aid into equipping rural schools with sufficient internet infrastructure is a timely one, given the country’s troubling track record on connectivity. Despite its prime location in Western Europe – home to eight of the world’s ten fastest average internet speeds – Italy recorded the third slowest connections in the region in 2020, behind only the isolated Faroe Islands and the Vatican.

This has, unsurprisingly, proved a particular problem over the last 12 months, after the outbreak of coronavirus saw a sharp rise in the use of internet services. Messages sent across Facebook-owned platforms (including via Instagram, Messenger and WhatsApp) increased by 50% during the first months of lockdown in Italy, while group calls skyrocketed by more than 1000%. Indeed, such were the demands placed upon telecommunications companies that streaming sites like Netflix, YouTube and Prime Video were asked to reduce the quality of their streams to ensure that networks could cope with the surge.

With schools closed across Italy in the first weeks after the outbreak and remaining that way for much of the year, nearly 12 million pupils were forced to conduct their studies online. Unfortunately, 10% of schools did not even have the necessary equipment to access the digital register allowing teachers to assign tasks, send notes home to parents electronically, and input class assignments. A 2019 report, meanwhile, showed that 5% of teachers had never engaged with digital tools prior to the pandemic, while only 47% of teachers used them on a regular basis. One of the most serious challenges for Italy’s abrupt shift to remote learning, however, was the quality of its internet service—many students’ home connection, particularly in rural areas, was simply insufficient for the amount of streaming and downloading they were suddenly being asked to do.

Merger moving in wrong direction

Given these stumbling blocks that have complicated Italy’s experiment with pandemic-era remote learning, the €325 million investment in connecting 12,000 of Italy’s most underserved schools to high-speed networks can’t come soon enough. But even as the outgoing Conte government made this encouraging stride towards getting citizens the broadband access they need, it also doggedly pursued a counterproductive policy of consolidation with regard to its telecommunications infrastructure. For decades, Italy fell far behind its European peers in terms of connectivity as it relied on a single broadband provider, Telecom Italia (TIM). Determined to spark competition and rustle up some investment, Rome introduced a wholesale rival to TIM, Open Fiber, five years ago.

The arrival of the new kid on the block, as predicted, helped the rollout of ultrafast broadband gather steam and even spurred other countries, including the UK and Germany, to follow suit by inaugurating alternative providers. In a peculiar move, however, the Italian government has spent much of the past year wrangling to merge Open Fiber with TIM in what is being viewed as a return to a quasi-monopoly. The reasons behind the deal are believed to be purely financial; Italian state lender CDP has a stake in both companies and wishes to avoid the expense of rolling out duplicate infrastructure. However, there’s every reason to believe that the merger would be detrimental to the Italian population, since TIM would once again be in a commanding position with little incentive to offer value to its customers.

Indeed, the proposals have drawn criticism from almost all quarters, including consumer groups, the Italian communication watchdog AGCOM and even the head of Open Fiber Elisabetta Ripa herself. As well as hampering competition and relapsing into a monopoly, there are also concerns that TIM’s potential position as both controller and operator of the network would create problems, while external parties are anxious that the merger could set a retrogressive precedent for the rest of Europe if it is to be given the green light by the EC authorities.

Long term competitiveness over short term savings

Pressing ahead with the merger in the face of mounting opposition would send the message that Rome is prioritizing the purse strings over the national interests of its constituents. Not only would a merger entail further delays to long-awaited infrastructural improvements, but a single network is likely to result in higher prices accompanied by a deterioration in the quality of services being offered. As such, it could represent a double whammy for the Italian everyman.

Instead, a more forward-thinking strategy, and one which Draghi will hopefully put at the heart of his government if he manages to form a coalition, would be to place the immediate rollout of high-speed internet to all parts of the country front and centre of its telecommunications policy. As the market disruptor and the catalyst for improvement in recent years, Open Fiber should become a major beneficiary of government investment, rather than being absorbed by its largest rival or sold piecemeal to foreign interests. With piecemeal initiatives like linking underserved schools to high-speed networks, Italy has made some encouraging progress in its journey towards empowering its population with fast internet, but the road ahead remains a lengthy one. A single network will only make it even more arduous and protracted to navigate.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes