This is why the Antitrust Authority will scrutinize Tim and Fastweb on FiberCop
What emerges from the launch of an Agcm investigation on FiberCop, Tim's company into which the secondary network of Telecom Italia will converge. Focus also on the role of Fastweb
The Antitrust investigates FiberCop to verify if Tim and Fastweb's project on the broadband network increases or decreases competition in the sector. Here are all the details.
The Competition and Market Authority wants to understand if with the birth of FiberCop competition problems may arise in the market of fiber telecommunications networks whose development is a “crucial objective for the country”. For this reason it has decided to initiate an investigation against the companies Telecom Italia, Fastweb, Teemo Bidco, FiberCop, Tiscali and KKR regarding the contracts that govern the establishment and operation of the company and the supply agreements with Fastweb and Tiscali.
WHAT IS FIBERCOP
FiberCop SpA is a company established last November whose share capital is currently 100% owned by Tim, which will bring its secondary network into it. The project, born to create secondary fiber optic networks, provides that Teemo and Fastweb (already joined with Tim in the Flash Fiber alliance) at a later time enter the share capital of the company which aims to become operational in the first quarter of next year. In September, the European Commission ruled on FiberCop: the transaction – which consists precisely in the transfer to the spa of Tim's secondary network and the simultaneous entry of the American fund Kkr (37.5%) and Fastweb (4.5% ) – it is not a concentration pursuant to Regulation (EC) no. 139/2004 of the Council of 20 January 2004, relating to the control of concentrations between companies. The transaction was announced on August 31, 2020 by Tim and is made up of a series of reciprocal contracts between Tim, FiberCop, Teemo and Fastweb.
THE MARKET
Entering the market numbers, it must be said that in June 2020, 42.2% of broadband and ultra-broadband retail accesses are held by Tim and 15.1% by Fastweb. Vodafone, the second largest operator, has a 16.6% share. As for the so-called wholesale broadband or ultra-broadband central access services, once again Tim represents the operator that provides the majority of access services. In particular, with reference to local access, its share was greater than 90% of the lines in 2018 while the remaining 10% was the prerogative of other operators such as Open Fiber and Fastweb. Finally, in the wholesale central access services market, Tim held – again in 2018 – a volume share of approximately 50% while Fastweb and respectively approximately 11% and 2% shares of wholesale central access.
THE POSSIBLE CRITICALITIES OF FIBERCOP
In the provision to initiate the investigation, Piazza Verdi recalls that "according to Tim's statement, FiberCop intends to stimulate investments for the modernization of the fixed telecommunications network in order to facilitate the transition to high-capacity fiber telecommunications networks". An objective “highly appreciated” by the Authority in the past. For this reason, he points out, we want to analyze some critical elements of the agreements between the companies “which appear to have an opposite effect to the development and co-investment objectives, producing a reduction in infrastructural competition which is an important promoter of investments in optical fiber”. In particular, according to the Authority, "since a shared development project of fiber optic network infrastructures appears to be a tool capable of determining various efficiencies, it is necessary – precisely with a view to promoting dynamic competition – to eliminate restrictions on competition not necessary to obtain these benefits, as well as restrictions that could hinder the country's own infrastructure, such as those that mitigate infrastructure competition or that tend to favor the use of the copper network ". On an initial examination of the agreements, the provision still states, the restrictive effects of competition are found in wholesale access services to the fixed broadband and ultra-broadband network and in retail telecommunications services on fixed broadband networks. and ultra-wide.
THE FASTWEB CASE IN FIBERCOP
In the first case, they report from Piazza Verdi, and with particular reference to Fastweb, "which has established itself over the years as an important competitor in the offer of wholesale access services to the fixed broadband and ultra-broadband networks, it is noted that the set of agreements could discourage the offer of such services, reducing competition in the wholesale market, both with reference to the incentives to compete and with regard to coordination effects between TIM and Fastweb ". The price structure practiced by FiberCop, they warn, involves a disincentive to invest in the primary network and, therefore, to increase the number of lines on which Fastweb can sell wholesale access services.
In the market of retail telecommunications services on fixed broadband and ultra-broadband, however, the contract between Tim-FiberCop and Fastweb "could reduce the latter's incentives to acquire new customers, by virtue of the same price structure access to FiberCop which appears to be variable and which implies a worsening beyond a certain threshold of active lines ". This is a clause, which differs from what is usually found in wholesale contracts, “appears capable of discouraging competition for the acquisition of customers, given that it discourages their acquisition beyond a certain number of lines activated”. Without forgetting, continues the Authority chaired by Roberto Rustichelli, that “the incentive effects for the use of active lines could determine competitive criticalities in terms of differentiating the quality of services and providing innovative services”.
WHAT THE ANTITRUST WRITES ON FIBERCOP
In short, according to the Guarantor of Competition and the Market, some clauses of the contracts "appear, contrary to the declared objectives of the FiberCop project, to reduce competition in the markets for wholesale and retail broadband and ultra-broadband telecommunications services, generating it also has a distorting effect on investments, resulting in fact discriminatory – favoring the provision of certain active services over passive access services, or certain technological solutions over others – and discouraging competition based on investments, as well as increasing barriers to entry for some types of operators, such as operators presenting commercial offers converging between broadband and ultra-broadband services and audiovisual media services ”.
TIM AND FASTWEB: GOOD START COMPARISON WITH ANTITRUST ON FIBERCOP
In a note that arrived shortly, Tim and Fastweb say they are satisfied with the intervention of the Antitrust. "The start of the discussion, which follows a request from TIM and Fastweb, in the spirit of collaboration that has always characterized the relationship of the two operators with the sector Authorities, represents an important step after the European Commission, last 26 November, announced that FiberCop will not be subject to any obligation of communication and approval by the Community Antitrust ". In the press release, the two groups recall that FiberCop "aims at the rapid development of optical fiber (FTTH), and in particular the coverage of 76% of the black and gray areas" and that "it will develop on the model of open co-investment, so as foreseen by the new European Code of Communications, thanks to which all interested operators will be able to take part in the project according to different participation methods and with a view to guaranteeing maximum competition ".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/ecco-perche-lantitrust-scrutera-tim-e-fastweb-su-fibercop/ on Tue, 22 Dec 2020 09:01:36 +0000.