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The total value of the integrated communications system (SIC) amounts to 17.1 billion euro, representing 1.05% of national GDP. As light fall of operators' revenues has been registered compared to previous years (2015), equal to - 8.2% overall. Fixed network services recorded the highest decrease in terms of general revenue and the downturn has been more contained for Free TV (approx..-19.4%), while Pay TV has experienced a slight revenues’ decrease of 2.4%.
Related to Internet audience and in terms of market shares, Google remains the leader in the active research market,with almost 95.5% of market share. Regarding the fixed line services, data presented by Agcom (ItalianNRA) indicates that total access lines have decreased by 280 thousand units over the last twelvemonths, whilst broadband lines have increased by about 580 thousand units YoY.
Broadband lines faster than 10 Mps have increased by more than 1.5 thousand units YoY due also to State incentives (and possible aid?)and account for 31.5% of total broadband lines. Broadband lines faster than 30 Mps have increased by 620 thousand units YoY and account for 8,2% of total broadband lines.
The media sector isthus very active and dynamic. It is overviewed and regulated by Agcom, which is required, pursuant to article no.43 of "Audiovisual Media and Radio Services Consolidation Act" (TUSMAR), also to verify the lack of dominant positions in the Integrated Communications System (ICS) or in the relative markets. In particular, the Regulator may intervene and check that the antitrust cumulative TMT market share thresholds are not exceeded.
In fact, convergence and bundling in the offering of services as well as mergers and takeovers recently under scrutiny between operators active in different TMT fields represent a crucial element of current market development.
On April 18, 2017, with resolution no. 178/17/Cons, Agcom has interjected a takeover attempt made by French media group Vivendi on Telecom Italia (former incumbent). Agcom has stated that such takeover appears in violation of Article no. 43, par.11 of TUSMAR, since it may determine a dominant position in the integrated communication system (ICS), due to the controlling stakes both in broadcaster Mediaset as well as in Telecom Italia. Such deal would determine, according to Agcom, Vivendi’s cumulative revenues in the electronic communication market higher than the consented 40% share and ICS revenues exceeding the threshold of 10% set by law.
Aside requesting Vivendi to reduce its stake in either operator within 12 months and notify compliance, Vivendi has been given 60 days to submit sale and reduction plan of its shares to Agcom, in order to comply with the Audiovisual Media and Radio Services Consolidation Act. In case of violation, Vivendi may be sanctioned under Article 1, par.31 of Law 249/97 with fines in the range of 2% and 5% of revenues.
Technological evolution proceeds at such a pace in Italy that sector specific regulation appears on the rope on many instances. Fundamental services still appear in search of sector specific regulation (M2M and IoT in particular, where Italy retains a head start with respect to other EU Members, given a particularly capillary intelligent electrical grid).
The Italian Development Ministry recently announced the launch of a new tender for mobile LTE frequency allocation (4G). This represents a major opportunity for traditional players, as well as OTTs alike. Italy is a first player in the mobile segment, and no. 1 in mobile penetration in Europe. Mobile e-commerce, Internet advertising, search engine optimisation and geo-localization services are destined to converge and develop rapidly, as well as gaming and mobile online advertising. With the performances of handsets doubling every 10 to 14 months, the deployment of new mobile services will foster consumer generated services, linked with the geo-localisation capabilities of modern handsets, due to consumer profiling and related tailored promotional contents.
The Integrated Communication System (ICS) concerns all media and TMT markets, such as daily and periodic press; digital publishing, on line contents; audiovisual (and radio) and media services; cinema, advertising and other form of commercial communication. Operators must ensure pluralism in the information and media system, also in light of the principle of the freedom of active and passive information set out in article 21 of the Constitution.
Aside it antitrust overview, Agcom is also responsible for the adoption of protective measures for individual and collective rights. In this regard, recently the Administrative Court of Lazio confirmed the legitimacy of Agcom Regulation on the protection of copyright on electronic communications networks and implementation procedures, which establishes the authority of Agcom to carry out the activities for the development and protection of the legal offer of digital works aimed at promoting greater awareness in the use of digital works and spreading the principles of legitimacy in the use of IP protected works, heavily damaged by piracy.
Lately Agcom and the Financial Police have shut down more than 40 local web sites broadcasting protected audiovisual contents, also of major sports events. Official figures report pending 740 complaints before Agcom for alleged copyright breaches, still to be decided by the Regulator (specifically 734 regarding Internet sites and 6 audiovisual media content providers).
Following a successful Fastweb/Sky quadruple play combined offering, much is now expected from the new merged mobile operator deriving from the second and third mobile communications operators (Wind and 3). Quite exceptionally under EU Commission principles (sacked operations of O2/Three UK or Telenor/Telisonerain Denmark are easy reference), the proposed merger was approved given the “industrial profile” of the deal as also represented previously to the Italian Government, such to ensure the development of local mobile technologies, confirm the involved labor headcounts and avoid a shift of operations outside the nation.
The new combined operator will now proceed ensuring compliance to the conditions set by the Commission, aimed at securing the entrance of a fourth new operator in the mobile segment (Iliad, the French mobile low-costoperator). The new entrant will be required to acquire assets and frequencies from Wind and 3 Italia jointly in order to rebalance available resources and be granted access to transitional spectrum agreements in view of developing proprietary networks.
For the EU Commission, in fact, the transfer of the spectrum blocks and mobile base station sites represents a crucial element for new comers to develop and roll out services providing retail mobile services to consumers and offering whole sale access services to virtual network operators. Wind/3 will thus need to: 1) divest a certain amount of the joint venture’s mobile radio spectrum from different frequency bands (900 MHz, 1800 MHz, 2100 MHz and 2600 MHz); 2) provide transfer/colocation (i.e. sharing) to the new mobile network operator of several thousand mobile base station sites; and 3) ensure a transitional agreement (for access to 2G, 3G and 4G, and new technologies), allowing the new mobile network operator to use the joint venture's network to offer customers nationwide mobile services until the new mobile network operator has developed its own infrastructure.
Media Market Overview
Cugia Cuomo & Associati
Fabrizio Cugia di Sant’Orsola
Recent aggregate figures in the offering of electronic communication services in Italy show that the largest share of the integrated market is held by the Group 21 Century Fox with 15.4% (Sky Italy 15.1%, Fox Network Group Italy 0.3%), followed by Fininvest, 14.9% (of which Mediaset 13.3%, publisher Arnoldo Mondadori 1.4%); RAI - Italian Radio and Television, 13.7%; Gruppo Editoriale L'Espresso, 3.3%; Google, 3.2%; RCS Media Group, 3%; Seat Pagine Gialle, 1.4%; Facebook, Gruppo 24 Ore and Cairo Communication. 1.3%.
Fabrizio Cugia di Sant'Orsola, awarded Lawyer of the Year 2017 in TMT-Technology (Top Legal) is senior partner of Cugia Cuomo & Associati. The Firm is particularly active in media, broadcasting and TMT services and advises operators in regulatory, corporate, administrative and commercial law. The Firm is recommended in all major international guides and directives and has been awarded 2016 IT Law Firm of the Year (Top Legal and Corporate International). The Firm assists broadcasting and Internet companies in the adoption and drafting of regulatory measures in the processing of personal data and is particularly active in the regulatory review of framework policies on information systems used for the purposes of consumer credit, handset and individual identity authentication. Partners of the Firm have acted as counsels to institutions such as the Italian Parliament, American Bar Association, World Bank, EU Commission and IFC in internationally funded regulatory reform projects. The area of privacy, data retention and data security is a core activity of Cugia Cuomo & Associati and the Firm regularly advises operators in the regulatory and legal implications and duties concerning adoption of minimum security measures and requirements, suitable preventative security measures, disaster recovery, privacy compliance and safety rules and in general adoption of organizational and regulatory measures and policies in the control and secured processing of data (whether electronic or traditionally stored), unauthorised access and safety and security compliance. Fabrizio is admitted to the Italian Supreme Courts and is author of publications, aside having served as Co-Chair of the International Bar Association Communications Law Committe.