2. The communications sector in Italy 2. The communications sector in Italy 2.1. Telecommunications In a picture of progressive deterioration of the macroeconomic situation, the trend of contraction of the telecommunications market, on both fixed and mobile network, already observed for some years, was confirmed in 2011. In this context, the elements which best qualify the Italian telecommunications market, show no substantial change in 2011 compared to the last two years. These elements can be summed up as follows: i) the expenditure of families and companies in telecommunications services continues to fall, with a slight acceleration compared to 2010; ii) the reduction in the prices of telecommunications services to both private and business customers, on both fixed and mobile networks, is constant; iii) the contraction in voice calls on dial-up network continues, with a reduction of 11.7% in the number of minutes consumed, while voice traffic from the mobile network has increased by another 10% in the last year; iv) the spread of broadband services on fixed and mobile network has produced further growth in income deriving from data services; v) there is still growth, but with indications of the saturation of the relative market, in the virtual mobile telephony compartment; vi) with regard to the competitive situation, the erosion of Telecom Italia's total market share continues; vii) in last autumn, an auction was held for the assigning of the usage rights of the frequencies in the 800, 1,800, 2,000 and 2,600 MHz bands, which led to a total commitment of the mobile operators for € 3.9 billion; viii) on the other hand, the reduction in investments in infrastructures is confirmed;9 ix) The gross profit of the sector is substantially stable, also thanks to the continuous restructuring and cost containment actions carried out by the telecommunications companies. These trends are constantly monitored by the Authorities which, since last October, provides another tool for knowledge of the sector by the publication, on its own website, of the “Quarterly telecommunications observatory”, with the aim of giving the stakeholders a succinct view of the economic situation of the telecommunications markets. The Observatory traces the trend of the main indicators (subscriptions, revenues, market shares, etc.) which feature the fixed and mobile networks, including the broadband services, on the basis of the data supplied directly by the telecommunications companies, in order to contribute to greater understanding of the market and competitive dynamics in progress in the Italian telecommunications sector. The data processed in the Observatory, for that matter, contribute to the representation 9 The data presented below do not take into account the resources engaged by mobile operators for the purchase of the frequencies in the 800, 1,800, 2,000 and 2,600 MHz band at the auction held last September. 65 Annual report on the activity carried out and on the work programmes 2012 of the evolution of the sector recorded over the last twelve months, presented below. The telecommunications sector in the macroeconomic context The trend of the Italian economy in 2011 has been stagnant, in real terms, as regards both the GDP (+0.5%) and family consumptions (+0.4%), corresponding to a slight increase in the main macroeconomic indices, expressed at current values. Compared to what is recorded for 2010, while the growth trend for family consumptions is on the whole stable, the variation rates, on the contrary, tend to decrease for the GDP and above all for investments (Table 2.1).10 Table 2.1. The Italian economy in 2010-2011 € billion, current Change % values 2010 2011 2010 2011 Gross Domestic Product 1,553 1,580 2.2 1.7 Family expenditure 935 963 2.7 2.9 Investments (*) 148 150 10.7 1.4 (*) - Net of transport means and constructions Source: Processed by the Authority on Istat data In this situation, with regard to the telecommunications trend in Italy, the decreases already observed in the preceding two years have been confirmed in 2011, and consequently a slight fall in the weight of the sector compared to the main macroeconomic values has been recorded (Table 2.2). Table 2.2. Incidence of telecommunications on the economy (2010-2011, in %) 2010 2011 Revenues (All TLC services /GDP) 2.71 2.57 Investments(TLC/Total investments) 4.16 3.98 Family expenditure (TLC/Total expenditure) 2.31 2.21 Source: processed by the Authority on company and Istat data Also in 2011, the structural trend of the reduction in service and terminal prices has been confirmed, in general11 and in fixed and mobile telecommunications in particular (-0.9%), resulting in further expansion of the gap in respect of the general trend of goods and service prices (Figure 2.1). 10 Source: Istat, “Conti economici trimestrali” (Quarterly economic accounts), ed. 12 March 2012, database available at http://www.istat.it/it/archivio/56329. The percentage variations relative to the year 2010 indicated in the table have been calculated in the same terms as the new historic series published by the Istat (the Italian National Statistics Institute), which explains relative to the year 2010 - the discrepancies compared to the corresponding values published in table 2.2 of the last Report to Parliament. 11 The data refer to the sub-classes of the "Code 08" services (communications) included under consumer prices defined by Istat for 2011, i.e. by postal services (6% of the total), by fixed and mobile network terminals (18%) and by fixed and mobile telephony services (76%). 66 2. The communications sector in Italy Figure 2.1. Communications and consumer prices: comparison of dynamics (2005=100) 120 118 110 113 100 93 90 Comunicazioni 84 Servizi postali 80 Apparecchi telefonici 70 Servizi telefonici Prezzi al consumo 60 55 50 40 2005 2006 2007 2008 2009 2010 2011 Source: processed by the Authorities on Istat data As illustrated in the 2011 Annual Report, apart from the influence in families, the effects of the reduction in telecommunications services prices on fixed and mobile networks also reflect on the trend of the specific index of production prices, where between the first quarter of 2006 and the fourth quarter of 2011 there is an average reduction of 25%, with a fall for fixed network services of more than 17% and for mobile network services of around 44% (Figure 2.2).12 12 Source: Istat, “Gli indici dei prezzi alla produzione dei servizi postali e di telecomunicazione” (Indices of production prices of postal and telecommunications services), 29 March 2012. The disclosure “…gives the information used for calculating the relative index of the output prices, which measures the evolution of prices of business services sold by operators which supply telecommunications services to companies of other services and to the Public Administration”. 67 Annual report on the activity carried out and on the work programmes 2012 Figure 2.2. Index of production prices of telecommunications services (2006 average=100) 110,0 100,0 90,0 83,0 80,0 Media F+M 74,9 70,0 Rete Fissa Rete Mobile 60,0 56,6 50,0 2Q06 3Q06 4Q06 3Q07 4Q07 1Q08 2Q08 1Q09 2Q09 3Q09 2Q10 3Q10 4Q10 1Q11 4Q11 1Q07 2Q07 3Q08 4Q08 4Q09 1Q10 2Q11 3Q11 1Q06 Source: processed by the Authorities on Istat data The technological evolution and the progressive deregulation of the market have guaranteed over time a continuous and constant fall in prices in the telecommunications compartment, a compartment, for that matter, less influenced than others by the economic trend of external factors such as, for example, energy products. The telecommunications sector is therefore confirmed as the only sector, of the main regulated services markets, that has registered a reduction in prices compared to 2005 (Figure 2.3). Figure 2.3. Dynamics of main public tariffs (2005=100) 150 145 142 140 135 Servizi telefonici 130 Fornitura acqua 125 Raccolta rifiuti 120 121 Energia elettrica 113 Gas 110 Trasporti ferroviari Canone TV 100 93 90 2005 2006 2007 2008 2009 2010 2011 Source: processed by the Authorities on Istat data 68 2. The communications sector in Italy Positive indications also come from the comparison both with Europe as a whole and with the main EU member states (Figure 2.4).13 Between 2005 and 2011, the fall registered in Italy (-7.2%) is greater than the European average (-5.6%), and it is substantially in line with that registered in France. Among the countries considered, Germany (-11.4%) has obtained better results, while in Spain and above all in the United Kingdom there has been a slight increase in prices. Figure 2.4. Telecommunications price dynamics in Europe (2005=100) 104,0 103,9 102,0 100,0 100,3 98,0 Europa (27) 96,0 Germania 94,4 94,0 Spagna 92,8 92,0 Francia 92,4 90,0 Italia 88,6 88,0 Regno Unito 2005 2007 2008 2009 2010 2011 2006 Source: Eurostat Sector dynamics In 2011 the contraction of gross revenues14 of telecommunications operators continued (-3.7% compared to -3.4% in 2010), with the fixed network showing a greater contraction than that recorded for the mobile network (Table 2.3).15 13 The data contained in the Figure 2.4 have been taken from the Eurostat site at http://appsso.eurostat.ec.europa.eu/nui/setupModifyTableLayout.do and refer to the services category COICOP-CPO083 (“Telephone and telefax services”). The data relative to the United Kingdom refer to the entire “Communications” compartment (COICOP-CP08). 14 Gross revenues are the sum of the final expenditure of private and business clientèle and the revenues from intermediate services supplied to other operators.