Wind Tre and Fastweb have been attempting to take network sharing in Italy to a new level in recent months, but once again, Iliad has its objections.
While there will always be objections to network sharing agreements from some corners of the telecoms industry, Iliad is making a habit of it. As the only telco without a partnership to share communications infrastructure, the Italian disruptor is seemingly attempting to make sure it isn’t left on its lonesome.
According to Reuters, Iliad has submitted documents to an Italian court seemingly in an attempt to obstruct the partnership between Wind Tre and Fastweb. A first hearing will take place on February 12 to access whether Iliad should have access to the deed, though this follows objections made by to Italian courts for a similar deal between Vodafone and Telcom Italia.
The agreement between Wind Tre and Fastweb was originally signed in June 2019. The pair would deploy a shared 5G radio access and back-hauling network across Italy, and also Wind Tre and Fastweb macro and small cells, connected through dark fibre from Fastweb. The aim is to cover 90% of the Italian population with 5G connectivity by 2026.
Wind Tre will also provide Fastweb roaming services on its existing mobile network, while Fastweb will provide Wind Tre wholesale access to its FTTH and FTTC network. It is a very complementary deal for the pair, with the opportunity to realise genuine cost savings when looking forward at 5G.
However, Iliad seems to want to put a stopper on the partnership before it gets going in earnest. This is not the first time it has rejected the network sharing momentum in the country either.
The European Commission is also investigating whether plans to merge Telecom Italia and Vodafone Italia tower assets into a single operating company violate antitrust laws. Iliad has reportedly complained about this deal to regulators also. A decision on this dispute is set to be given on February 21.
The tie-up between Telecom Italia and Vodafone Italia is built along similar lines to the Wind Tre and Fastweb partnership. Firstly, the tower assets of both companies would be merged within telco neutral infrastructure company INWIT, with each telco taking a 37.5% stake. The next stage would be sharing active infrastructure, testing first on the existing 4G network with the intentions of realising efficiencies on 5G deployment plans.
But perhaps the most interesting aspect of both these partnerships is the validation of network slicing. While other agreements have focused on the passive infrastructure, this extends the sharing model to active equipment. Both of these parties would effectively be running virtualised networks over the shared infrastructure, a major validation of network slicing if it works.
This is the sort of partnership which telcos will be very keen to see work, while network infrastructure vendors will pray to see fail. Validation of network slicing could revolutionise the way in which rural networks are deployed and managed, allowing consolidation of CAPEX between national telcos through a single point for both passive and active infrastructure. It could drastically reduce overbuild and save the industry billions.
“Completion of this transaction is key for the country’s infrastructure and technological development and will enable us to further accelerate the deployment of 5G, with Italy already among the countries taking a lead in trials of this new technology,” TIM CEO Luigi Gubitosi said at the time.
Despite the clear benefits of network sharing agreements, there are still concerns in the industry. Regulators are worried over the impact of competition, most notably as to whether non-participants in the sharing trusts will be squeezed out of the market. One means to counter this would be to have an independent or nationalised wholesale party, with all mobile service providers effectively becoming MVNOs, but it is highly unlikely telcos would want to move in this direction, effectively diluting their influence on the industry.
That said, the industry is gradually heading that direction as telcos search for funds to fuel the 5G expansion.
Infrastructure companies such as Cellnex are hoovering up passive infrastructure assets across the European continent, while infrastructure investment funds are also seeking out deals. In both of these instances, the acquirers recognise the telcos need money desperately; there are good value acquisitions to be made for those who have a long-term view on ROI in the passive infrastructure game.
The next step is network slicing, which will be taken forward during with 3GPP’s Release 16. Should network slicing be validated, it will only be a matter of time before owners of passive infrastructure start to put their own active infrastructure on the assets and sell slices to the mobile service providers. It certainly won’t happen overnight, but it is a very feasible outcome.
The telecoms industry is at somewhat of a crossroads. 5G is on the horizon, and the realities of funding this expansion are hitting home. The telcos have seen revenues eroded over the last decade but are now being asked to underwrite the most expensive infrastructure project to date. The equation is not balanced, so new ideas are needed.
Italy is a country which is perhaps under more pressure than most. Aside from the drastic reduction in pricing thanks to the introduction of the disruptive Iliad, few spectrum auctions have pushed the financial capabilities of telcos as much as the Italian’s. This is a market which is under pressure.
Network sharing agreements, both passive and active infrastructure, are interesting ways to generate more with less, though it does appear Iliad will attempt to derail progress. As the mobile player in the country without a deal, it does appear the firm fears being squeezed out of the market.
Interestingly enough, the question remains whether authorities will care? If Fastweb is to introduce its own mobile products, Italy would have four mobile service providers fuelled by the efficiencies of network sharing agreements. This might be deemed sufficient competition in the market, therefore the needs of Iliad might be sacrificed in pursuit of benefits for the greater good.