Enel Open Fiber has been awarded the government tenders to bring fiber optics to Italy, in disadvantaged areas, with its wholesale only model. Meanwhile, 5G is calling for an opening to fixed wireless even before mobile. How is Italy moving towards the future of the Network and what challenges need to be addressed?

FTTH, acronym for Fiber to the Home, represents the fastest Internet connection available. Composed of fiber cables (replacing the now obsolete copper) throughout the entire path, from the backbone to the cabinet and from there into the user's home, it allows for download and upload speeds never before experienced.

Some operators associated with Assoprovider have long been committed to covering certain areas of the national territory with this technology, where they are commercially more present also with wireless connections.

The company that currently appears to be the most committed to spreading FTTH in the country is Open Fiber, a company participated by Enel and Cassa Depositi e Prestiti, already awarded government incentives to promote infrastructure development even in underdeveloped areas and align Italy with European objectives.

The chosen model for commercializing the FTTH infrastructure is the "wholesale only model," favored by new European regulations on telecommunications and competition. In simple terms, Open Fiber does not directly offer its services to end users but provides its infrastructure only on a wholesale basis to providers holding a general authorization.

The wholesale only model removes the operator from downstream market competition, and this technically reduces (but does not completely eliminate) the risk of cross-subsidization., and in general, of abuses of dominant position.

It is entirely clear that if tomorrow, the operator that received public subsidies because it chose this model were to later change its nature and enter the retail market, the same longstanding issues would reemerge. For example, those that concerned Telecom Italia as a vertically integrated operator, present both as a wholesale reseller to operators and as a direct seller to end users.

Ultrafast connections with FTTH technology become even more important because "the fiber game" is played simultaneously with that of 5G., the new communication standard that promises to be between 100 and 1000 times faster than 4 LTE. In fact, 5G requires fiber to ensure the right speed for innovative services, such as those of IOT, telemedicine, and connected cars. While it is true that behind every antenna there must be fiber optics, it is also true that to fully enjoy the benefits of 5G, we must wait for a more complete development of the optical network in Italy.

Open Fiber today

Open Fiber's objectives were set in March of this year: the national project aims to cover over 270 cities by 2022 with 1Gps services. Meanwhile, in the so-called white areas (market failure), the goal is to reach 100 or 30 Mbps in downstream, thanks to the funds provided by Infratel and Mise.

The Open Fiber Network, as stated on the official website, is already available in Bari, Bologna, Cagliari, Catania, Genoa, Naples, Milan, Padua, Palermo, Perugia, Turin, and Venice.

Overall, the OF project aims to wire a total of 20 million buildings. Of these, 9.5 million will belong to market success areas, while 10 million will be in "digital divide" areas.

Today, the operators that have chosen to use Open Fiber's 100% fiber optic network are Connesi, Go Internet, Tecnoadsl, Tiscali, Vodafone, and Wind Tre.

The site also includes the procedure to follow for those ISPs who want to become partners of the project: here you can fill out the application to apply.

The wholesale only model, under scrutiny

The goal has already been set for 2025 by the European Union: achieving the so-called Gigabit Society, which only the widespread deployment of Fiber Networks can ensure.

A milestone that required reflection on development models. According to many analysts, the new market needs are demonstrating the limitations of the vertical integration model of networks and services: the one in which the owner of a network infrastructure also offers services to end consumers. A delicate "node" that has been the nightmare of regulators and antitrust authorities for years.

The same analysts, however, highlight the advantages of the wholesale only model, which offers some clear benefits.:

• Providers can purchase services and ensure a more innovative offering to their users
• The risks of unnecessary infrastructure duplication are overcome. As previously mentioned, the infrastructure holder is one and rents it to other operators who wish to enter the market.
• Conflicts between network operators and service providers, which are typical of markets dominated by vertically integrated incumbents, are reduced.

Wholesale-only is growing throughout Europe. In addition to Open Fiber, it is adopted by Stokab in Sweden, Siro in Ireland, and also in France, the UK, and Austria, some municipalities are considering adopting it.

All the described advantages could collapse if this model were first adopted and then abandoned. There may indeed be cases where an operator, after receiving subsidies, positions itself in the market, capturing public and private funding to create the infrastructure. And then at a later stage, decides to shift to direct resale of the infrastructure to the public.

As Assoprovider, we expect the role of the regulatory authorities, AGCOM and AGCM, to remain significant in order to ensure that even smaller competitors can be guaranteed, but very present on the national territory, to be able to carry out valid and equally recognized infrastructural projects, with better access to credit even for SMEs.

The 5G match

The fiber node is being developed simultaneously with that of 5G, the new communication standard that is still in an embryonic phase. To achieve such high speeds (between 100 and 1000 times faster than 4G LTE), 5G will need to exploit millimeter waves.

The frequencies necessary for 5G in Europe are the 700 MHz, currently used by terrestrial digital television. In Italy, freeing up these frequencies involves additional problems compared to other European countries: to do so, the number of multiplex (from the current 19 to 14). To this is added an entirely Italian issue, that of the frequency allocation framework occupied by TV and the great abundance of local networks.

The 700Mhz band will not be the only one that needs to be freed, at least partially. 5G also requires frequencies in the 3.4-3.8 Ghz range (the 3.4-3.6 part currently assigned to Defense and partially to operators like Tim, Tiscali, and Linkem, until 2022). Meanwhile, time is running out: the auction for the allocation of frequencies for 5G is expected to take place starting from September 2018.

The issue of frequencies is not the only matter on the table: 5G requires fiber to ensure speed and latency for IoT and other services. In such a context, wholesale-only could speed up the process and better adapt to the evolution of 5G.. According to some analysts, the model with a single operator meeting the needs of each individual vertical operation would be more suitable to support the "sliced structure," the structure most suitable for the new standard.

It is it is important that 5G does not remain the prerogative of mobile operators, and for this reason, Assoprovider requests attention to the use of this technology to cover areas of the territory with Fixed Wireless Broadband, as many Assoprovider members are already doing, leveraging the vast experience accumulated in spreading the internet using simply free frequencies.