Telecom Italia and FastWeb Forget Old Squabbles and Agree to Share Fibre NGN
| June 25, 2008 | Business Telecom Services - Europe | Competitive Intelligence Report
| Analysts: Joel Stradling, Ben Tudor
Current Perspective: Positive
Vendor Importance: High
Market Impact: High
Event Summary
June 23, 2008 – Telecom Italia and FastWeb enter an agreement for NGN infrastructure deployment in Italy. The agreement spans three areas including: joint-planning activities for civil engineering projects (e.g., laying roadside fibre ducts) to avoid doubled-up cost and efforts; shared access to each others’ civil infrastructure under equal terms; and collaboration in research and innovation in civil engineering.
Analytical Summary
• Current Perspective: Positive on Telecom Italia and Fastweb’s new agreement for sharing fibre-based NGN infrastructure and cooperating on building projects, because the arrangement will allow both parties to pursue fibre-laying activities without the hassle of ongoing conflicts. The move will also preempt duplicated infrastructure to lower overall investment costs for a national NGN (similar to cable player franchise maps). Finally, collaboration in research and development will contribute to more efficient investment and wiser technology choices based on the expertise within each company.
• Vendor Importance: High to Telecom Italia and FastWeb, because setting aside old legal disputes and putting in place a new logical collaborative framework agreement for ongoing construction projects is essential to prevent further stalling in the deployment of fibre infrastructure while easing the cost and investment burden on both parties.
• Market Impact: High on the Italian broadband market, including residential and business segments, and wholesale carrier services (e.g., LLU), because Telecom Italia and FastWeb are Italy’s largest and most powerful fixed-line operators. Competitors will be driven to sourcing fibre access and white-label NGN services (such as IPTV and carrier Ethernet) from both service providers under wholesale terms. Finally, for the Italian end-users (consumer and enterprise) this is good news as it should shorten the timetable for the delivery of a suite of compelling next-generation packet-based services.
Recommended Competitor Actions
• Competitors, such as Vodafone Italy, BT Italy, Tiscali and Wind, can consider similar joint NGN infrastructure, network or service rollouts to avoid duplication, achieve buying synergies and to take advantage of expertise. Small regional players can look to enter into agreements with local town councils to deploy city and town specific fibre MANs and access infrastructure. Progress here will enable a competitive response to the new. NGN infrastructure sharing agreement on a geography-specific basis against Telecom Italia/FastWeb.
• ‘If you can’t beat them, join them,’ is a suitable proverb in this case. In other words alternative providers and mobile operators should seek support from the local market regulator to gain access to any new NGN assets jointly rolled out by Telecom Italia and FastWeb.
• None of the local operators competing against Telecom Italia and FastWeb have the national scale and financial clout to compete head-to-head with similar NGN investment. It is therefore far more pragmatic for a company such as COLT Italy to concentrate on sales and marketing to win market share and viewing Telecom Italia/FastWeb as third party vendors for capacity and access.
Recommended End User / Customer Actions
• On the whole there is little immediate reason for enterprise customers to make a vendor choice based on this current announcement. NGN deployments will take considerable time to get under way and it will take yet more time for the new networks to be leveraged for deploying new services. However, it can be said that the new NGN-build collaboration pact offers a future-proof roadmap with Telecom Italia or FastWeb for a suite of modern services.
CLIENTS ONLY
Current Perspective
Competitive Positives and Concerns
Recommended Vendor Actions
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