Italy’s trying to go back to the future to get universal broadband. We don’t think it’ll work
One broadband operatore to rule them all? Rome’s attempt to build a national broadband service in a day. Reports on possible Italian state intervention raises less than comfortable memories of Blunders down Under and under-priced manifesto offers.
Last month, reports emerged that planners in the Italian state investment bank Cassa Depositi e Prestiti (CDP) still want to create just one player to set up and run a single, unified national broadband network for the country.
The planned vector for realising that ambition: a merger between two entities it holds stakes in—national operator, TIM, and smaller competitor Open Fiber, and there might also be some folding of Telecom Italia landline grid assets, suggests Reuters. 2019-20 discussions to do exactly that that seemed to be going nowhere, but have now been revived, and a change in Roman political temperature may push them along a little more this time.
What should we make of an attempt by the Italian state to create a full-fibre national network? There are some seemingly sound drivers: stopping needless infrastructure wheel reinvention and duplication, speeding-up of fibre rollout, greater access to connectivity in hard-to-reach rural areas and hopefully reduced cost for consumers. Who wouldn’t think all that a great idea on paper?
Would we vote for £20bn broadband communism now? Probably
The problem with great ideas on paper is that they often work less well in reality (e.g., Communism, Brexit and the mankini). On a completely objective basis, and party politics very much out of it, the UK’s Labour Party went into the 2019 election with a similar offer to citizens: free full-fibre broadband to 29 million UK homes by 2030.
This was to be achieved by taking back into public ownership Openreach, the infrastructure part of BT, the former state PPT. But as with so many of the, shall we say, ‘idealistic’ policies of the Jeremy Corbyn Opposition, the devil was in the funding detail. Even on Labour’s own figures, the bill would have been at least £20bn, somehow to be raised by a new ‘Green Transformation Fund’ and ongoing taxes on those wicked capitalist ‘Internet Giants’.
We’re sure political science departments and psephologists could tell you to what extent the British public liked or disliked the promise of free high-speed connectivity. In any case, the idea got lost in the wash in Labour’s drubbing at the polls that year. But the idea of a unified national broadband utility remains an attractive one—to policy makers, if no-one else: even at the time, commentators drew the comparison with Australia’s NBN (National Broadband Network). That people these days openly joke about NBN (‘the Blunder Down Under’--ouch) didn’t make it a great parallel.
But free, or vastly subsidised universal fast connectivity delivered by a large state-influenced body is also an idea that keeps coming up. Perhaps if it were offered to the voter now, she might see it a lot differently; if UK society baulked at spending £20bn on ‘broadband communism’, the insane sums it had to spend to cope with lockdown, and then trying to teach millions of school kids somehow being ‘taught at home’ in a country where 880,000 of its children living in a household with only wobbly mobile Web connection off Dad’s phone rather revived discussion of the idea.
After all, we’re still not anywhere near the kind of universal high-speed access in many advanced economies politicians have been promising for quite some time now. If Magic Grandpa's wasn’t the right answer, at least he was asking the right question. Investment from somewhere is clearly required to deliver 100% connectivity; government action must be a part of this.
Let a thousand state connectivity intervention flowers bloom?
The problem is getting the balance right. Many countries are struggling to achieve that, and no-one seems happy with what they’ve got. Our work with clients has exposed us to many. One example that’s a prime example of trying to do the right thing is the ‘Red Compartida’ (literally, ‘Shared Network’) network in Mexico, set up to provide better connectivity for schools, hospitals and areas falling behind digitally and which now covers 73 million people.
Here, the twist is that the government is just trying to set up a basic network that literally wasn’t there before and create a telecommunications market for service providers to offer services, buying wholesale from RC and then dealing with end-user customers. And it’s getting somewhere: the Shared Network now provides coverage to more than 70.67% of the Mexican population, offering 4.5G (as it is styled) to 80,000 schools and more than 5,000 hospitals.
Malaysia has something similar in the shape of its single wholesale network, DNB, where a single network has been deployed comprising end-to-end 5G, the complete core, radio access (RAN) and transport, operations, and business support systems (OSS/BSS) and managed services to get the foundation for a national 5G network that other players can then work in.
It’s too early to say if these endeavours will work out, though we wish them all the best. For our part, we believe that direct government intervention has the biggest impact in creating, not markets as such (in First World countries at least), but for creating infrastructure in hard-to-reach areas that can provide the basis for later, open markets.
On that basis, it makes sense for the taxpayer to help (one could almost say ‘level up’…) coverage in regions that are too expensive for conventional builds in less urban areas, in the UK, But by the same logic also France, rural Poland--and of course, Italy’s South?
We’d also say that we ended national telco champion provider dominance to enable markets to open up. That didn’t always end happily, and another day we could discuss the very imperfect situation we have in the UK on the broadband piping front, which is almost a state monopoly by any other name.
So, for these reasons, we say buona fortuna! to our friends in Italy, but that going back to the future may not be the best play here.