Angel Dobardziev
Telecom Italia in an FMC regulatory battle
AFX reported last week that the Italian regulator AGCOM has blocked the launch of Unico, Telecom Italia's fixed-mobile convergent (FMC) service, on the grounds that rival companies are unable to replicate the service. Telecom Italia's chairman, Marco Tronchetti Provera, reportedly told AFX: "It is normal that the regulator intervenes. Each time we make an innovative offer we have to wait for the competitors to adapt." Comment: Taking into account that at least another two dozen former incumbents are preparing to launch services similar to Unico, this development will raise eyebrows in many places. However, we expected and warned of regulatory issues around FMC services, and the only surprise is that they haven't been anticipated more widely.Many incumbents have put FMC services at the centre of their future strategy, particularly those based on dual-mode WiFi/cellular phones such as Unico. They hope that these will help them, not only to defend against fixed-to-mobile substitution, but even reverse it, by bringing in-premise cellular traffic back onto the fixed network, and retaining the valuable revenues from fixed/broadband access. If regulators start blocking and/or delaying such services, this may significantly dilute their efforts, which have already been hampered by standards, technology and device issues.Although it has been difficult to reach both AGCOM and Telecom Italia on this issue, there are suggestions that the situation is not quite as black and white as Provera has been reported to have put it. We understand that AGCOM raised concerns about the ability of competitors to replicate a similar service, and has requested that Telecom Italia provide an explanation as to how it plans to address this issue before launching the service.The current EU regulatory framework is too outdated to deal with the issue of FMC. Regulators and competitive authorities in general have a tricky task at hand in relation to FMC services. They must strike a balance between allowing innovation on one hand, and preventing anti-competitive behaviour by dominant players on the other. Considering that Unico effectively brings together Telecom Italia's broadband and mobile services into one, and that it has 69% and 40% market share in the respective markets, we believe AGCOM is within its rights to be concerned about possible abuse of dominance. The issue over the best ways to ensure 'equivalence of access' and 'replicability' will be the key bone of contention in the forthcoming regulatory tussle. This is a complex issue, which is set to raise renewed arguments about LLU and MVNO access among other issues. One thing is clear: in light of the huge weight behind the many planned FMC service launches for the second half of 2006, the summer holidays of the EU telecoms regulatory professionals may be slightly shorter this year.
