Labriola: “Outdated Tlc Vertical Integration”

Vertical integration of telecommunications has become obsolete. This is the main point of interventionTim CEO, Pietro LabriolaOn the occasion of the annual report of the supervisory body Tim.

“The services sector is characterized by competitive dynamics that do not correspond to long periods of infrastructure investment payback,” Labriola explained. from our network.

“On the contrary, to date we have had to take into account the retail market but also the needs of the wholesale market, without ascertaining the return on investments due to high regulatory pressure – he noted – the reorganization of the group should lead to a better balance between the specific costs and benefits of the two activities : Greater retail business flexibility (ServCo) and greater predictability and stability of wholesale revenue (NetCo).

class project

The CEO noted that the separation project is based on industry considerations and aims to create independent entities, more efficient and competitive than they are, while continuing to merge into one company. “We are inseparable from the search for ‘regulatory return’ as many projects have stalled in the past – he said – however, the new coordinated analysis of access markets, launched by Agcom in 2020, is the order of things., should take into account Tim’s new vertical separation model and its consequences in terms of simplifying existing retail and wholesale rules”.

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For Labriola, the new regulatory cycle of the authority will have to ensure a system of market rules and operators that allow them to achieve the goals set by the European strategy “Digital Compass 2030: the European way of the digital contract” and through the PNRR that anticipates 2026 the goals of the “Italia 1 Giga” and “Italia” plans 5G”, “Sanità Connessa” and “Connected Schools”).

The role of OCTs and the sustainability of the Tlc sector

The CEO noted that without the huge investments of TIM and other operators, it would not have been possible to sustain the exponential growth of data traffic recorded in recent years on fixed (+100%) and mobile (+200%) networks. “Ironically, as is well known, these investments contribute to Oman’s revenue and cash flow growth in the face of stagnation in the same KPIs for telecom operators – and he stressed – it is time to find tangible solutions to the need for OTT to also help offset the network modernization costs that Thanks to her, they realized their profitable business model. ”

price war

The sustainability of this sector is further jeopardized by the market context in which Tlc (fixed + mobile) prices in Italy have suffered the largest peer-to-peer cuts (- 18% in the past 5 years; – 32% in the past 10 years). The situation is made worse by the current international situation “which has led to a significant and unexpected increase in inflation and the costs of raw materials (mainly energy materials of which TLC operators are among the main users without benefiting from the concessions designated for it- called energy-intensive companies)”, he said.

“It should therefore come as no surprise, as has already happened in many European countries, if upward adjustments and indexing price inflation to TLC retail and wholesale offerings can be envisaged – explained Labriola – that the sector’s priorities must be reviewed compared to the past. The industrial model, abandoning the price war. and the logic of value destruction, aiming instead at distinct value strategies versus volume-positioning strategies.”

future challenges

Thus, the challenge for the future is not only to define a new framework of rules, but to understand how to ensure the economic sustainability of this sector and to understand what its future will be.

“The open table with Mise is an important step which is the awareness that something has to be done right away. It no longer makes sense to limit ourselves to talking only about fixed, we need to define the boundaries between fixed/mobile services and OTT services,” he said on the consumer protection front. , the issue to be addressed is who bears the costs given that blaming telecom companies is outdated.

“It is ironic that we are no longer asking for rules for all but for a simpler regulatory framework,” he noted. “In analyzing the definition of costs or activities, not evaluating the medium and long-term economic sustainability of operators in the new potential framework is outdated. We are now in the context of its evolution much faster than in the past and our decisions and decision-making processes must adapt None of us expected the inflationary rush that hit us, but it’s there and it affects our companies’ income statement and Tim. We can’t ignore this and imagine adjusting wholesale prices.”

“It is time to have the courage to make the right decisions for the industry, the team, and our country,” he concluded.

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