The biggest price reductions since 1997
Major boost to broadband development
Reductions of up to 20% in the range of service kits for interconnection to Telecom Italia’s network, average reduction of 6% for the last mile. Charges for telephony have dropped by an average of 10% over the 2001 interconnection price list. The shared access offer, specific to broadband, has come down by over 40%.
Telecom Italia today published its 2002 reference offer complete with technical and pricing information on using the network. It regards both switched transport (interconnection) and access to the last mile (unbundling of the local loop). The reference offer was drawn up in keeping with the rules and time frames contained in Ruling 4/02/CIR issued in March by the Italian Telecommunications Authority.
Compared with last year there are some major differences in the 2002 offer. In particular there is an overall reduction in charges for services provided to Interconnected Operators. For the Carrier Selection service (enables a user to make a phone call through another operator by inputting a code) and Preselection (no need to input a code to make a phone call via another operator) price reductions on the most widely used services (origination and termination at the level of the NMS – network main station) are in the region of 6% during peak time and 10% during off peak periods. The costs involved in unbundling of the local loop, which Operators can now offer to a potential market of about 11 million telephone lines, have been reduced by approximately 6% and those regarding shared access to Telecom Italia’s local network, conceived and used expressly for the development and diffusion of broadband, by over 40%.
The 2002 interconnection offer
The many improvements in this new offer are further confirmation that fixed telephony, in general, and broadband, in particular, are being opened up to the market and free competition. The offer contains the biggest price reductions since 1997. A further marked improvement in the efficiency of the Telecom Italia network has helped to bring down the reference prices for interconnection by an average 10% compared with the previous telephony price list. Current costs are now used in calculating charges and no longer European best practice, which the European Commission ruled should be abandoned as of 2000.
The new average telephony charges are as follows: for NMS (network main station), 0.65 euros at peak time and 0.46 euros at off peak; for NTS (network transit station) 1.05 euros at peak time and 0.75 euros at off peak, for double NTS, 1.65 euros at peak time and 1.18 euros at off peak.
New “unbundling” charges
With regard to “unbundled” access to the copper wire network (unbundling of the local loop), the reference price for 2002 is 10.79 euros (-6%) per month for the copper pair used for telephony, and is more or less unchanged at 12.60 (+0.4%) for ADSL.
The offer for shared access to the local network has, however, been cut by over 40%. It has been designed exclusively for ADSL and should therefore make the biggest contribution to developing the broadband market.
With such low prices and the addition of new services, the 2002 reference offer marks a new departure for the Italian telecommunications market. Accessibility to competitively priced intermediate services creates a level playing field for all markets and opens up the way towards less rigid regulation of final prices.
Capping the network
The reductions were calculated not only on the basis of the steady increase in company efficiency, but also took into consideration other factors specific to 2001, regarding investment policy and depreciation, that are not uniform every year . Since the current basis on which intermediate services are calculated is linked to the costs for a specific reference year, although on one hand it is directly related to Telecom Italia’s performance, variations from one year to the next makes it difficult for both the market and interconnected operators to assess what their future costs will be. The adoption of a network cap based on certified costs is in the interest of all companies and the system.
Riccardo Ruggiero, head of Telecom Italia Domestic Wireline reckons that “With this offer the Italian copper wire access network, in addition to being the most suitable for broadband solutions is once again one of the cheapest in Europe”. He added that “The unbundled access offer does in fact enable other operators to set up their own DSL services and no longer have to restrict themselves to buying and selling the service offered by Telecom Italia.”