The telecommunications market in Italy is characterized by intense competition featuring four major operators (each with foreign shareholder ownership) and various MVNOs who have largely been focused on customer acquisition through aggressive pricing and increasingly through generous data packages. This is the trend that we have been seeing for several years now, and which has led to a significant drop in price and ‘data generosity’ which is unequaled in Europe.
by Jeffrey Hedberg, CEO Wind Tre
In fact, between 2001 and 2017 the price of mobile telecoms services in Italy has decreased by as much as 42.9%1, with greater voice and data traffic. The erosion of both price and revenues has been accompanied by a constant increase in data traffic in both the fixed and mobile sectors, driven by ultra-broadband networks and advanced services2. For the consumer, this was mainly due to video streaming, which already accounts for 56% of monthly mobile traffic globally and which is destined to exceed 70% in 2023 (source: Ericsson).
The consumer is “always on” and wants to be connected at all the times and to watch video content both at home and on the move. And this brings us to the innovation that fiber to the home FTTH has introduced, revitalizing the market with almost 1,000,000 new customers per year. Video streaming, both live and on-demand, is growing at an incredible rate, while Instagram has become one of the major consumers of bandwidth. This is a trend that instills optimism for the future and reinforces the need to continue investing in infrastructure to provide the customer with higher speeds and capabilities.
In contrast, the growth in traffic in the enterprise sector has been driven through the digital transformation of production processes, and through smart ecosystems and technologies such as the Internet of Things, all of which necessitates the support of network infrastructure that is both high-speed and reliable. These are new solutions that are already enabling Italian companies to be more efficient and competitive.
There is therefore no doubt that the transition towards 5G networks and ecosystems represents one of the key ingredients in Italy’s development and growth. This new digital infrastructure will be the necessary technological enabler but will require significant investment in addition to the investments already made in 3G and 4G networks.
Indeed, over the past 10 years in Italy, investment in telecoms infrastructure has been around €70Bn. For instance, in 2016 alone the figure is €6.5Bn (source: Asstel), with an impact on revenues of 20%. This value is similar to the one seen in the French market and is greater than that of the UK, Germany, Spain and the USA which average 15%. The recent competition for the awarding of 5G licenses saw significant investment, which was the highest so far in Europe.
5G networks and ecosystems are fundamental to Italy’s innovation processes both in the enterprise sector and for public institutions and private citizens. Indeed, the new 5G standard represents more than just faster navigation speeds: above all, it represents the fundamental basis for the development of innovative solutions. It is a new step in digitalization that will, for example, give a strong boost to the Internet of Things applications that the new services of Smart Cities are based on. And it is precisely this growth in 5G services that puts Italy among the leading countries in Europe, thanks also to the experimentation of tests that have been launched in 5 cities using frequencies made available by MISE (the Ministry of Economic Development).
Wind Tre is testing 5G-enabled use cases in Prato and L’Aquila, focusing on smart mobility, augmented reality, e-health and utility management using a capillary network of sensors. But there are also more specific applications, such as those in L’Aquila which make it possible to monitor the stability of buildings, representing a highly-significant innovation given the context and the recent history of the city.
These are projects that require the collaboration of technology providers, start-ups, public institutions, universities and research centers. That is to say, the involvement of players with different experience and from different backgrounds who work together in partnership, each adding value with their own know-how and giving life to an extraordinary ecosystem of innovation. Public-private partnerships represent the new model that enables us to work in the best way possible to develop the services and networks of the future, in the interests of the digitalization in Italy.
The creation of the Italian Digital Agenda, through ultra-broadband networks and state-of-the-art applications, represents a tremendous opportunity for Wind Tre to innovate for our customers and to enable new sources of revenue growth. This commitment is also confirmed in the work being carried out in the process of consolidating Wind Tre’s single network, the objective of which is to create a modern capillary network, with 21,000 sites available, using latest-generation cloud and fiber architecture. With this architecture we will be able to support 5G services, support innovation and continue to offer products and solutions that meet the requirements of all segments of the market. Thanks to our background, the resources we have – including our wide frequency availability, and the support of a major international group such as our shareholder CK Hutchison, we are working hard to establish ourselves as leader and to be a leading player in the 5G era.
1: Agcom data
2: based on mobile network increase at a rate of 50% per year, while fixed telecoms grew by over 250% between 2013 and 2017 (Agcom data)