Paolo Vigevano. Head of the Broadband Task Force. Minister for Innovation and Technologies. The Role Of Government in Broadband Deployment in Italy
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1 Paolo Vigevano Head of the Broadband Task Force Minister for Innovation and Technologies The Role Of Government in Broadband Deployment in Italy Broadband: Infrastructure, Applications and Use Joint WP TISP/IE Workshop OECD, Paris 5 December
2 The definition of broadband relates to different components: infrastructure, contents, services and applications, a context which is in constant evolution. Broadband can be defined as the technological environment which permits the use of digital technologies right up to the highest levels of interactivity. Technological environment Digital technologies Interactivity Applications Technological environment Contents Services Applications Infrastructures Contents Services Infrastructures The evolution Digital of technologies digital technologies is determined by the request for bandwidth for applications and innovative services. Up until now, bandwidth requirements have been limited to hundreds of Kbps. Bandwidth in terms of Mbps will be required in the short to medium term. Businesses and public administration are already at the point where their bandwidth needs to run to Mbps, a capacity that will have to increase in the future. Real bidirectionality Interactivity The possibility of the user (private, firms and PA) creating and publishing services Real bi-directionalness and applications. The possibility of the user (private, firms and PA) creating and publishing services and applications. 2
3 Forecasts for the worldwide evolution of broadband services up until 2010 underscore the interrelation between available capacity, applications diffused and market conditions Bandwidth 128 kbs 384 kbs 2 Mbs 10 Mbs 30 + Mbs Applications Phase 1 Low quality video conferencing (< 35 frames per second) Phase 2 Audio streaming Data streaming Basic video Streaming and video conferencing (<384 kbs) Phase 3 High quality video streaming Basic desktop video conferencing Complex graphics and animation Phase 4 Broadcast and multicast streamed media (audio, video and data) High quality desktop video conferencing High definition TVquality video conferencing Phase 5 Virtual conferencing (holographic) Virtual reality Total immersion video Market Limited use of digital media due to speed and cost restrictions Audio-video applications increasingly employed for simple data delivery Media driven interaction Wide adoption of high-quality audiovideo applications for corporate communications: real time media Evolution of digital media in the direction of virtual reality interaction. 3
4 Broadband deployment becomes possible through an evenly paced growth of services and infrastructures Present Situation Services, contents and applications Services, contents and applications are developing more slowly than predicted. Current procrastination risks creating a vicious circle. In such a situation, services are not developed until there is demand and yet demand waits to latch on to available services in order to take off. Infrastructures The infrastructure market slows down development through the uncertainty of demand for services and applications Trying to keep a step ahead in creating infrastructure does not necessarily guarantee an immediate return on investment. Evolution Services and infrastructures must develop at an even pace. Demand for services and infrastructures is both the main input in the service/infrastructure system and a factor that has to be sustained by the system. Bandwidth requirement resulting from this development will sustain the evolution of infrastructures. The deployment of infrastructures and the development of services, contents and applications should progress at an equal rate, thus creating a virtuous circle. 4
5 The task force definition sums up the problems and potential of broadband take up, providing pointers for government policy BROADBAND Services Infrastructure System Citizens/ Consumers Services, Contents and Applications Business Sector policies and indirect interventions Definition Background: Digital Literacy Interventions in the form of regulation and monitoring Public Administration Infrastructures Backbone Citizen Distribution Network Sector policies and indirect interventions Access Network Sector policies and direct interventions 5
6 Unbundling today First phase sites situation up until 15 November 2001 Clients 9 million 7.8 million 7.2 million Contestable Clients sites ,2 million thousand 32 sites requested made available by TI delivered to OLO fitted out by OLO with ULL orders Telecom Italia sphere of activity OLO sphere of activity 86% of sites requested in the first phase have been made available and 80% have been delivered. They are already in a position to be fitted out and client orders can now be sought. Source: TELECOM Italia 6
7 Access network: the unbundling is a priority which greatly influences broadband diffusion Technologies Players Urgency Backbone network Fibre optic (primarily) Copper (residual) Telecom Italia Interoute Edisontel E-Via Albacom Wind Infostrada Others Not a short-term necessity Excess infrastructure capacity New operator networks more advanced and efficient. Citizen distribution network Fibre optic Copper Telecom Italia e-biscom Edisontel Albacom Wind Atlanet Others Not a short-term necessity Fibre optic needed for mediumterm use Excess capacity and duplication Access network Copper x DSL (all Telecom Italia network) Fibre optic Other technologies* Telecom Italia (copper) e-biscom (fibre) Other operators (copper through local loop unbundling) Telecom Italia s copper is of a good quality. However maintenance costs are very high. A real competition on the market for copper is not yet developed. xdsl performance for very high speed has not been fully tested. Optic development is required in the medium to long-term. Key infrastructure problems * Satellite or Wireless Local Loop can offer an alternative on the access network, reaching areas not covered by copper and fibre optic 7
8 Policy in a general framework of indirect government intervention can be pursued along five lines. GOVERNMENT POLICY LINES Development of infrastructures and technologies Boosting broadband demand and supply The diffusion of digital services Regulation Monitoring OBJECTIVES OBJECTIVES OBJECTIVES OBJECTIVES OBJECTIVES Ensure the availability of broadband access, and promote the development of better technical conditions for users on a national level at an affordable price. Financial incentives for those willing to invest in broadband Aggregate public demand (e-procurement) Create band demand among firms and citizens through the development of digital services Raise awareness concerning the benefits on offer from broadband Bridge the technological literacy gap and reduce skills shortage Reduce the different kinds of the digital divide Boost competition Stop possible monopolies which may damage the market Monitoring activities are essential to assess the development of broadband and the actual benefits of the interventions 8
9 Policy lines: sustain broadband demand and supply Tax relief and investment Demand aggregation Development of digital services Incentivi Fiscal incentives fiscali su for lavori civil civili, works, hardware, software, training, formazione, integrazione integration of tecnologie/contenuti technologies/contents sotto in the forma of: di: Posticipo Deferred VAT pagamento payment IVA Detassazione Detaxation (Tremonti utili (Tremonti Act II) bis) Agevolazione Tax relief brought su riporto forward a nuovo from delle previous perdite losses pregresse Soppressione Elimination of concession contributo ex fee canone (2,5%) concessione (2,5%) Bonus Tax bonus fiscale for all utente the final user finale Sviluppo Development e aggregazione and aggregation domanda of di band banda demand espressa from: da: Scuole Schools Ospedali Hospitals Uffici Post offices Postale Università Universities Legal Uffici Giudiziari offices Etc. Ecc. Use of the e-procurement model e-learning / distance education e-health telelavoro e-work e-security 9
10 The Government role for sector specific programmes Interventions to raise awareness Interventions for training Interventions for diffusion Bridge the dual digital divide by providing information on the benefits of broadband. Training centres (computer driving licence) Create kiosks in public offices as well as private places with simplified guidance to broadband technologies Digital literacy for educators Multimedia incentives e-governance Support of public and private education and life long learning through the adoption of broadband technology Offer incentives for private and public collaboration to create pilot projects which will stimulate broadband contents production Form a closer relationship between citizens and institutions by taking advantage of the interactive and multimedia aspects of broadband 10
11 Policy lines: regulatory interventions. The authority must examine certain crucial features of broadband diffusion in Italy Problem of possible market dominance by one incumbent for international access: raised prices with a block on competition Competition Authority Foster competition to avoid essential facility or bottle neck monopoly Increased transparency to keep the calculation of incumbent costs in check, and make sure charges for Local Loop Unbundling are calculated on the basis of costs Communication Authority Revision the regulations for rights of way, zoning and building codes by local authorities. Local restrictions discourage entrants to roll out advanced broadband services on a timely basis. 11
12 Policy lines: Tools for monitoring Suitable monitoring instruments are required to check and assess the effectiveness of interventions Data regarding the quantity and quality of development and forecasts of the diffusion of broadband infrastructure should be examined: - on a territorial basis - for the type of technology used Monitoring will also have to comprise quantity and quality data on the type, consistency and diffusion of the supply and demand of contents and services. Mainly private operators are to be involved in the creation of such instruments 12
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