Proposals Made to Revamp Italy's Notoriously Slow Internet Connectivity

September 26, 2012
By: Tracey E. Schelmetic

It hasn’t much fun to be a business in Italy when it comes to the Internet. While Italy is Europe's fourth-largest economy, its Internet connectivity is notoriously slow. This hasn’t done anything good for the Italian economy: it has prevented the growth of both e-commerce and things other Western nations take for granted, like online banking and financial services. 

It’s also expensive. Italians pay dearly for the Internet connectivity, particularly if they want to try and boost speeds to the same clip that other Europeans take for granted. As a result, only half the population uses the Internet at least once a week and Italian firms generate 5.4 percent of sales on-line compared to 13.9 percent elsewhere in Europe. 

Image via Shutterstock

While operating in Europe under a stagnant and troubled economy is hard enough, doing it without the tools other nations can easily wield is madness. Luckily, the country’s new reformist prime minister, Mario Monti, seems to understand this. Monti has identified better broadband as a national priority for Italy in order to spur growth and reduce Italy's 11 percent unemployment and high deficits.

"The statistics on e-commerce are chilling ... The broadband gap constrains growth by reducing the competitiveness of export-oriented companies," said Paolo Gentiloni, former communications minister and member of a group of deputies that has made proposals to support online commerce and government services.

So what’s the first step toward improvement? Tackling Telecom Italia (News - Alert), the nation’s largest telecom provider, according to some industry watchers. The company has been accused of thwarting competition and putting off investing in its domestic network because of its huge debts. Monti's government has reportedly enlisted state-backed finance body Cassa Depositi e Prestiti (CDP) to work out a plan with Telecom Italia and its rivals to create a nationwide super-fast fiber optic broadband network.

Among the plans on the table is a proposition to separate the nation’s legacy copper-based telephone system business from its more modern future, creating a spin-off that would manage the nation’s fixed telephone and broadband system and sell capacity to other Internet providers on a wholesale basis. The new "access network company" could be partly state-owned and would have more incentive to invest in broadband, say advocates, because it would have neither debt to pay nor market share to defend. The model, if it works, could be used in other European nations in an attempt to spur investment and badly needed growth.

Edited by Brooke Neuman