Not just Starlink, all the troubles of Open Fiber
What's happening to Open Fiber? Facts, numbers and insights
Not just Tim, Starlink also risks putting Open Fiber (even more) in difficulty.
The satellite internet division of SpaceX, Elon Musk's aerospace company, claims that the introduction of fast internet in Italy is being hindered by the country's largest telephone operator with possible repercussions for services in southern Europe and northern Africa.
Bloomberg reported this at the beginning of the week, citing a complaint presented by Starlink to the Ministry of Business and Made in Italy (Mimit) headed by Adolfo Urso, in which Musk's company states that Telecom Italia for months did not comply with the regulations requiring share spectrum data to avoid frequency interference. SpaceX also filed a similar complaint with Agcom, the state telecommunications regulatory authority, Bloomberg notes.
As reported by Startmag , in December Il Sole 24 Ore reported on Musk's approach to bring the Starlink satellite service to Italy and include it in ultra-broadband projects, to integrate the coverage of Tim and Open Fiber. In fact, the latter is the State's concessionaire for ultrabroadband coverage of the white areas, i.e. those considered to be market failure, and is one of the two companies (the other is Tim) winners of the two tenders as part of the "Italy 1 Plan Giga”. The project is part of the public intervention plans of the Italian Strategy for Ultra-Broadband, financed and promoted by the Department for Digital Transformation of the Presidency of the Council thanks to Pnrr funds, and implemented by the state company Infratel Italia.
The Starlink satellite Internet service would therefore aim to integrate the projects for the diffusion of optical fiber and mixed FWA (Fixed wireless access) technology in remote areas of the Peninsula.
But will it be good for Open Fiber? The company led by Giuseppe Gola , already behind on the implementation of fiber in the white areas, is also looking for new funds to ensure business continuity…
All the details.
THE TUBE BETWEEN TIM AND STARLINK
In a complaint filed late last week with Agcom and Mimit, Starlink claims that Tim for months did not comply with the rules requiring it to share spectrum data to avoid frequency interference with its equipment, Bloomberg reports.
The lack of data access was severely slowing the rollout of Starlink's new proprietary gateway equipment. Unlike other operators, Telecom Italia "clearly informed Starlink that it did not want to coordinate" and did not share the necessary data, the document states. According to the report, this could also cause service disruptions in parts of southern Europe and North Africa that are partially powered by equipment located in Italy.
WHAT STATE IS THE STARLINK SATELLITE NETWORK?
To date, SpaceX has more than 5,500 Starlink satellites in orbit, which manage to bring ultra-broadband at very low latency practically everywhere. These satellites guarantee global internet access regardless of terrestrial connections. To connect, people need a specific Starlink terminal, a sort of router that receives data sent by satellites, different from traditional signals from ground stations.
“What is certain is that the fact that Starlink is owned by Elon Musk (the Tesla boss is CEO of SpaceX which is in fact the parent company of Starlink) cannot be a detail” observes Il Sole 24 Ore today adding: “Because it is precisely Musk's ambition that transforms into Starlink's ambition: to connect the world to the Internet through satellites. An unrealistic project, in terms of costs and technology. Because at the moment optical fiber seems to provide better performance."
The service already has around 2.6 million customers and the company recently launched a new economical Starlink subscription in Italy , at a price of 29 euros per month, in addition to the standard one of 40 euros per month. A move to win over more users… and more. “With 40 it offers connection speeds that are almost competitive with Tim's fiber optics”, underlined Repubblica .
A direct challenge to the main Italian telecommunications operator?
THE ROLE OF OPEN FIBER
Actually not only that. Repubblica also reports that "the arrival of Starlink, among other things, risks definitively putting Open Fiber out of business, which is laboriously trying to bring broadband to the most remote areas of the country. But if it is enough to install a satellite dish at home, all the effort of digging and laying the optical fiber at exorbitant prices is lost, and so is the investment that the Cassa Depositi e Prestiti and the Australian fund Macquarie have borne up to now. It is therefore better to talk to Musk and try to find an agreement before it is too late."
ALREADY PINCHED BY THE COURT OF AUDITORS ON WHITE AREAS
On the other hand, Open Fiber itself is struggling to bring broadband to the white areas, i.e. those defined as "market failure" due to the absence of private investment.
Just a month ago the concurrent control board of the Court of Auditors noted a "significant delay recorded in the creation of the digital infrastructures linked to the Ultra-wide Band Plan – White Areas for the connectivity of approximately 8.4 million homes in Italy, with an expansion of the average times of the procedural phases and a forward movement of the concrete implementation compared to the original deadlines".
“According to the data as of 31 December 2023, i.e. less than a year from the expected completion date of the Plan (September 2024), all the planning steps have not yet been completed, neither definitive nor executive” complained the accounting judiciary.
So much so that "the implementation of the Plan by September 2024 will require the use of significant workforces", urged the Court of Auditors.
ALSO LATE ON THE GRAY AREAS
But the Open Fiber construction sites are also late as part of the "Italy 1 Giga Plan" , a project promoted by Pnrr funds and implemented by Infratel for the gray areas. Without forgetting that in case of failure to cover by June 2026, Italy risks losing 1.8 billion in European funds intended for society.
The fiber optic network company raised the alarm about delays in street address coverage at the beginning of the year. Confirming what has already been highlighted by the undersecretary of Palazzo Chigi with responsibility for Innovation, Alessio Butti, critical of the possibility for the company to achieve its objectives.
Open Fiber therefore needs funds to continue the work and complete the construction of the network in the gray areas by 2026, the deadline to avoid losing the Pnnr funds.
THE AMENDMENT THE EXECUTIVE IS WORKING ON
Precisely for this reason the executive is preparing an amendment to the Pnrr decree relating to gray areas which could see the light as early as April. The provision will allow Open Fiber and Tim (the other successful bidder of the “Italy 1 Giga Plan”) to cover the adjacent house numbers, not included in the tenders, in exchange for real estate units in the lots won which are more difficult to reach due to the gray areas. “If this amendment were not there, Oper Fiber would have to lay 20 thousand kilometers more of fiber with extra costs of 800 million and an additional year of work, thus risking losing the Pnrr funds” highlights Verità&Affari.
MEETING WITH BANKS AND MEMBERS
In the meantime, a first meeting took place last week between the top management of Open Fiber, Cdp Equity (shareholder with 60%), the representatives of the Macquarie fund (shareholder with 40%) and the representatives of the 14 financing banks of the company, aimed at finding a solution to secure the company led by Giuseppe Gola which in the next few years is destined to merge into Netco sold to Kkr, Radiocor reported.
The path we intend to take is to request an exemption from the banks to use approximately one billion of the old financing; a figure that had already been allocated but then suspended. Furthermore, the meeting would also have discussed the renegotiation of the 7.2 billion financing to cover the new industrial plan which will require approximately two additional billion, partly through equity and partly through bank financing.
THE EU LIGHTHOUSE AND INFRATEL'S INTERVENTION
As regards the extra costs requested from Infratel (the in-house company of the Mimit technical interface of the Plan) for the white areas, "Infratel will be able to pay the contribution of 780 million to Open Fiber (OF) for the rebalancing of the accounts in relation to a greater length of the network, at a higher cost of materials and inflation, not before October and this unexpected delay, by opening a further cash hole, complicates the safety of the company, especially since the EU Comp DG has a spotlight has been lit on the Open Fiber saving rule contained in the amendment to the Pnrr which will allow OF to connect house numbers located near those to be pooled with the money from the National Recovery and Resilience Plan", Il Messaggero reports today.
“Due to the delay, a bridge intervention for the same amount as Infratel would be necessary in order to ensure liquidity while waiting for the Invitalia subsidiary to write the check. But beyond these 780 million, Open Fiber is seeking from the banks the unfreezing of the 880 million committed line, which cannot be disbursed at the moment because the conditions precedents which are the accounting parameters present in the loan have been violated.
PRESSURE ON THE BANKS (AND ON THE MEMBERS)
Finally, the Roman newspaper notes that "the institutions (Intesa Sanpaolo, Unicredit, Bpm, Santander, Bnp Paribas, Credit Agricole, Ing, Soc-Gen) have asked for a Sace guarantee on part of the loan while the hypothesis has ended up on the table that OF's shareholders (Cdp with 60% and Macquarie with 40%) would take on an equity contribution of 375 million. The further need to find a bridge loan for seven months on Infratel's money calls everything into question. The banks are cold in taking on the sum and there are those who are pushing for the shareholders to put their hands into the wallet and in any case for a tranche paid by the institutions they are calling for a new shield from Sace".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/non-solo-starlink-tutti-i-guai-di-open-fiber/ on Wed, 03 Apr 2024 10:31:22 +0000.