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BROADBAND POLICIES

FOCUS ON THE ITALIAN GOVERNMENT ACTION PLAN

Daniela Battisti Member of the Executive Committee for Broadband Action Plan

Ministry for Innovation and Technology (Italy)

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Agenda

- Do we Need/Have a Broadband Definition?

- e-Europe2005 and the Sevilla Summit

- The Italian BB Action Plan

- Focus on Public Demand

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One day, the elephant said to the bird: “I wish I had wings” –

And the bird: “No problem. Just get them!”

The elephant asked again: “But, how do I get them?”

“I do not know! I just do policies.” The bird exclaimed.

TO BEGIN WITH…

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Broadband communications refers to the

technological enviroment that permits the use of

digital technologies at maximum levels of interactivity

(Source: Italian Broadband Report, Feb 2002)

DO WE NEED/HAVE A BROADBAND DEFINITION ?

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SHALL GOVERNMENT ENACT POLICIES TO PROMOTE BROADBAND ?

E-EUROPE 2005 ACTION PLAN (SEVILLA 21 JUNE 2002)

ALMOST ALL EUROPEAN GOVERNMENTS ARE

ADOPTING POLICIES TO PROMOTE BB BUT FEW HAVE

AN ACTION PLAN

THE ITALIAN BB ACTION PLAN (PHASE 1,2, 3)

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Accordingly, the development of broadband in Italy is considered an economic policy objective priority.

In such an environment, the Government must intervene to ensure that the development of broadband is as homogeneous and rapid as possible nationwide.

BB APPROACH IN ITALY

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• Government has included the Broadband Plan in the Economic and Financial Planning Document for the period 2002-2006.

• Plan will: 1) assess, 2) identify the key importance of broadband, 3) formulate measures 4) ensure implementation

• Interministerial Broadband Task Force, (1st phase executed), has reaffirmed that BB is a prerequisite for the economic development of the country.

• Objective of 2nd (current phase) is to formulate a plan.

• 3rd phase will consist of the implementation of the plan itself.

The Principles for Action (Italy)

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Vision

3 Main Macro-phases

Owner Executive Committee for the definition of a Broadband Plan for Italy

(to be defined))

Time horizon

Deliverables Broadband PlanMedium-term operational projects and rapid actions (pilot projects)

1

Planning

2

Implementation

3

Macrophase

Broadband Task Force

Broadband Report

......June

2002March 2002

September 2001

Final phase

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What Actions can ensure BB Development by 2005

The objective of the plan is the development of the market within the established time frame (2005)

Snapshot of situation hitherto

Current situation(planned)

Additional actions

INFRASTRUCTURE

PRIVATE SECTOR DEMAND

PUBLIC SECTOR DEMAND

Evaluation of the impact on productivity and the national income

INFRASTRUCTURE

PRIVATE SECTOR DEMAND

PUBLIC SECTOR DEMAND

PLANNING OF ACTIVITIES

MECHANSISMS FOR IMPLEMENTATION

MECHANISMS FOR CONTROL

Objectives

Levels of interactivity & evolution over time

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The achievement of objectives requires public intervention to enhance infrastructure and generate public and private demand

Lines of intervention

Purpose of interventionsPurpose of action

• generate incremental investment by private-sector operators over and above that invisaged in current declared business plans

• generate an incremental market which will create a substantial and permanent increase in tax revenues

Infrastructure Private Demand Public DemandA B C

Scopo degli interventiCoverage objectives

• 85-90% of government buildings• 65% of businesses• 35% of households

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The special nature of the Italian infrastructure situation makes enabling and stimulus action essential

• Lack of alternatives to copper-based connections for access networks and, particularly, the absence of cable modems

• Copper-based network delivers better performance than the European average (better quality, lower average distances in the local loop)

• Development of fibre optics could be fostered using existing conduits owned by the incumbent

• The building of extensive enabling infrastructure for the development of WiFi

• The development of experimental telecommunication services that are delivered through the electricity grid

Special nature of Italian

infrastructure

technological

competitive • A sufficient level of competition has not been reached in the market,

Necessary actions

Regulatory measures

Enabling and preliminary actions

Stimulus activities

Administrative simplification

A Infrastructure

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Actions to boost private demand are aimed at both consumers and businesses producing content, services and applications

 • Public support for the production of content, services and applications

• Support the expansion of demand for services with a high degree of interactivity

• Incentives to content, service and application producers using measures similar to those introduced by the “Tremonti bis” law

Objectives

Actions

Supply-side fiscal measures

Demand-side fiscal measures

Funding

• Fiscal incentives to consumers in the form of tax endowments

• Use of Community financing (participation in eEurope projects)

B Private Demand

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Public demand is essential for the development of Broadband

• Public demand:

- Brings about an expansion in direct demand from government offices as well as indirect demand from the users of the applications

- Demonstrates the utility of new technologies and improves the likelihood of them being taken up

- Creates a critical mass, including in those areas where the market is least developed, which fosters the supply of connectivity, services and applications, and reduces prices

Role

• The potential of public demand can be tapped by using demand aggregation methods

• Public demand should be able to make use of structural funds and other available sources of European financing (Ten Telecom, IDA, IST, etc.)

• The objective is to take some of the funds set aside for the development of the information society and channel them into projects that will bring broadband to the most disadvantaged areas

• The Department for Innovation and Technologies must act as a coordinating body to avoid duplication,, encourage cooperation, capitalise on the intersectoral features of the projects of other government departments and maximise synergies.

Actions

C Public Demand

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To act as a stimulus, public-sector demand must expand from current broadband coverage of 20% to more than 80% by 2005

Increase by 2005 of broadband coverage of government from current level of 20% to ’87%, with at least 15% of connections at speeds over 2 Mbit/s

C Public Demand

Schools3

NHS buildings4

Total

Local govt 2

Central govt 1

Current situation

10,000 6,300 (63%)

13,000 7,900 (61%)

42,000 34,500 (82%)

20,000 18,600 (93%)

85,000 67,300 (79%)

3,700 (37%)

4,300 (33%)

7,500 (18%)

1,400 (7%)

16,900 (20%)

500 (5%)

1,000 (8%)

6,500 (15%)

3,000 (15%)

11,000 (13%)

9,500 (95%)

12,000 (92%)

35,500 (85%)

17,000 (85%)

74,000 (87%)

Number of buildings Narrowband Broadband Narrowband Broadband

Objectives

1) Source: CT RUPA and individual departments2) Source : individual regions3) Inclusive of central and local governments. Source: Ministry of Universities, Education & Research (targets set on basis of eEurope 2005

plan)4) Source: Ministry of Health (targets set with reference to strategic goals of National Health Plan and eEurope 2005)Figures compiled by Roland Berger Strategy Consultants

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The actions will have an impact around the country, especially in areas with the lowest development potential

Low High

Distribution and impact of actions

A Areas with high development potential

B Areas with medium development potential

C Areas with low development potential

Tax relief (Tremonti bis)

Subsidised infrastructure loans

State contributions to structural funds

Public-sector demand

Incentives for private demand

Infrastructure contributions -

-

Preliminary

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The Government will provide €1,200 million in funds for public demand and €600 million for infrastructure building and private demand

Cost of Incentive Plan*

Infrastructure

Public demand

Privatedemand

• Total investment of €500 million to leverage private resources worth €2,500 million

• Total investment €100 million (minimum value)

500

100

1,200 • Public demand entails total costs of €1,000 – 1,200 million, with reference to the savings achieved through demand aggregation

Incremental spending 2003-2005 (millions €)

Central govt 150

State budget

Local govt

Schools 550

Hospitals

Total 700

Local gov budget

150

100

250

500

Total

150

650

250

1,000 – 1,200

150

• Economies achieved by demand aggregation

* The resources activated make it possible eventually to achieve tax revenues sufficient to ensure full coverage of the costs incurred

200

1000

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Public sector demand is one of the main levers for the development of the BB market, calling for models of demand aggregation

Public sector demand

ALL ACTIVITIES

1. Mapping public sector demand for connectivity (Unified Government Network (RUPA)-Regional networks- e-government in local authorities), and digital services, and mapping the related implementation plans (drafted by the Department for Innovation and Technologies, other branches of central government, the regions and e-government in local authorities)

2. Processing of information received and identification of current and projected public sector demand in terms of advanced interactivity

3. Selecting models for actions (demand aggregation)

4. Incidence of public sector demand on the economic situation of operators (business plan) and the planning of actions

Mapping central and local government departments

ACTIVITIES UNDERTAKEN TO DATE

Demand aggregation

Public sector demand / and broadband

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Regions/Local Government were Requested to Provide Detailed Information

MAPPING SPACE

• Regions

• Provinces

• Municipalities

• Schools

• Hospitals

INFORMATION REQUESTED

• Logistics of offices

• Connectivity

• Digital services

8,100 municipalities have been addressed + all the Regions

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Mapping Public Administration is a Key Step…

INFORMATION REQUIRED

• Logistics of offices

• Connectivity

• Digital services

Main peripheral offices of ministries, local non-economic government bodies and other agencies

Mapping of Unified Government Network (RUPA)

All offices of ministries, local non-economic government bodies and other agencies

Geographically referenced database

• Ministry of Education,

Universities and Research• Ministry of Justice• Ministry of Health• Ministry for the Economy

Ministries

Direct involvement in Public Demand

Committee

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… While Contributing to the Acceleration of BB

Greater efficiency in government procurement and consequent economies of scale

Greater penetration of broadband in the public sector at low operating costs

Impact on the market for broadband services of combining public with private-sector demand

Possibility of defining minimum bandwidth standards for the entire public administration Benefits of

aggregating public sector demand for broadband services

1

2

3

4

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Increase in demand for broadband fromwithin the public sector

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This ‘telephone’ has too many shortcomings to be seriously considered as a means of communications. The device is inherently of no value to us

-- Western Union 1876

Broadband: In the absence of substantial demand

does it matter?

We believe it does