Digital inclusion

[G4-EC7], [G4-EC8] In order to deal with the digital divide that has arisen in the so-called marginal areas of Italy, which would otherwise remain excluded from the mainstream plans of telecommunications operators, owing to the low profitability of investments, between 2005 and 2016, TIM implemented a programme of extraordinary investments allowing ADSL coverage (gross coverage¹> 70%) to be provided for approximately 7.7000 municipalities in total (4.350 more municipalities than December 2005).

In December 2016, TIM activated around. 9.670 exchanges, including 8.425 optical fibre ones. Alongside its plan to extend coverage, TIM has launched an additional plan to expand the active network², where necessary, to guarantee full usability of the service by customers and the development of digital inclusion.

The following table shows the percentages of coverage as of December of the past three years

In order to promote digital inclusion and the consequent coverage of the remaining geographical areas of “market failure”, TIM cannot avoid engaging in joint “public-private” initiatives.

Two types of action have been taken so far, both fully in line with European competition rules:

• the first is a “central” approach involving collaboration with Infratel Italia S.p.A. (Infrastructure and Telecommunications for Italy)³, the public entity that builds the passive broadband (optic fibre cable), organic and integrated infrastructure throughout the country, with the aim of increasing digital inclusion in lower income areas of the country;
• the second is a “local” approach, based on collaboration with regions that promote projects aimed at increasing the digital inclusion, e.g. through forms of financing centred on public tenders using the so-called claw-back model, which provides for contributions to be paid to offset the lack of return on investments.

Using the above forms of intervention, in some cases simultaneously, TIM has in recent years signed cooperation agreements with several local entities, (such as: Memorandum of Understanding with the Emilia-Romagna region and Lepida¹, with the Autonomous Province of Bolzano), some of which are still under development in 2016). Amongst others, we note the award of a tender in 2012 by the Marche region to complete digital inclusion (through state- of-the-art broadband services with speeds of up to 20 Mbit/s) in the region’s market failure areas. The project was completed during the last quarter of 2015.
As from the second half of 2013 and through to September 2015, as part of the National Broadband plan, the Ministry of Economic Development (MISE) issued eleven regional tenders through Infratel Italia S.p.A., identified as the implementing organisation and assignee of the funds provided.

The funds allocated for projects to extend broadband technology to digital inclusion areas amount to 353 million euros, including 225 million euros to be allocated to the “claw-back” model: the contribution for each region can correspond to a maximum of 70% of the cost of the project to widen digital inclusion. The tenders issued relate to the following twelve regions: Abruzzo, Calabria, Campania, Emilia-Romagna, Lazio, Liguria, Marche, Molise, Sicily, Tuscany, Umbria and Veneto.
No calls for tenders were issued in the last five regions: Basilicata, Lombardy, Piedmont, Apulia and Sardinia.

For the remaining three regions (Friuli Venezia-Giulia, Trentino Alto-Adige and Valle d’Aosta) no actions is planned on the part of MISE as these regions have their own independent plans. TIM has participated in all the tenders issued to date, except for the Liguria region: it was awarded the tenders called for the regions of Calabria, Campania, Lazio, Veneto, Tuscany and Sicily (with total contributions assigned in the amount of around 63 million euros), whilst those relating to Abruzzo, Emilia-Romagna, Marche, Umbria and Liguria were awarded to NGI S.p.A.

For Molise, a first call for tenders was cancelled and a second saw no one bid.

¹Official TIM Coverage data refers to the technical coverage of the telephone population (in terms of 64 kbit/s equivalent lines) gross of areas that cannot technically be served, due to the characteristics of the copper access network (presence of digital devices such as, for example, MPX, UCR or MD48, excessive distance from the exchange, etc.).

²The plan consists of actions to ensure full enjoyment of the service by customers by expanding the capacity of equipment used, in terms of both user ports and bandwidth available on the Internet. The technical term for this is desaturation of DSLAM equipment, performed either in advance or once specific broadband quality and availability thresholds are exceed.

³The company was set up on the initiative of the Communication Department of the Ministry of Economic Develop- ment and Invitalia, the national inward investment and business development agency, and is the entity implementing the Broadband Programme.

⁴ Lepida SpA is the operating tool promoted by the Emilia-Romagna region for the unified and standardised planning, development and management of the telecommunication infrastructure of entities connected to the network. The company also promotes interventions in favour of digital inclusion in rural or mountain areas.