1. The communications market in Italy
76
77
2.1. Sector trends
In the last year, the communications sector has not escaped the difficulties being faced in the Italian economy between 2011 and 2012. In a The value of the context of substantial deterioration of the macroeconomic framework, with communications sector decreased purchasing power of households and investments penalised by the difficulties in obtaining credit for companies, the sector operators have had to face a situation of economic crisis, consumption stagnation in real terms and uncertainty of growth prospects in the short and medium term. In this framework, the value of the macro sector of communications (including the media, telecommunications and postal service sectors) for 2012 is estimated at Euro 61.4 billion, which corresponds to a total loss of Euro 4.4 billion in terms of sales compared to 2011.
Figure 1.1. The communications sector – Revenues (2012, billions of Euro)
Source: processed by the Authority using company data
78
Compared to the total value of the sector, telecommunications account for and its single about 62%, while media services account for 26% and postal services 12%. The components. different relative weight of the three sectors is reflected not only on the total value of the communications system, but also on the contribution of each sector to the overall decline in the revenues recorded. Before providing a more accurate analysis in the following paragraphs, it is worth mentioning in advance that, in absolute terms, the most marked decrease occurred in the telecommunications market, which recorded Euro 2.6 billion less than in 2011, confirming the downward trend in total revenues already registered in the two previous years (see par. 2.2). The largest fall in relative terms was recorded in the media sector, however (radio and television, publishing and the Internet), for which the rate of decline was 8%. The loss of turnover in the last year is estimated at Euro 1.4 billion. Moreover, the figure marks a change in the trend of the period 2010-2011, when the total value of the sector was nominally increased (respectively by 4.8% and 0.5%). The postal sector also showed a decline compared to the previous year: in fact, 2012 ended with a contraction of more than 2%.
Table 1.1. Breakdown of revenues in the communications sector (Euro mln) 2011 2012 Free TV 5,513 4,855 Pay TV 3,491 3,369 Radio 715 678 Internet 1,408 1,553 Daily newspapers 2,900 2,595 Magazines 3,281 2,712 TOT. MEDIA 17,308 15,762 Universal postal service (including exclusive services) 4,110 3,802 Express courier 3,810 3,909 TOT. POSTAL SERVICES 7,920 7,711 Fixed network 19,570 18,450 Mobile network 21,030 19,530 TOT. TELECOMMUNICATIONS 40,600 37,980 TOTAL 65,828 61,453 Source: processed and estimated by the Authority using company data
The trend in revenues, however, shows differences also within individual Trends in the sectors. In the telecommunications sector, the mobile network services - in telecommunication contrast with 2011 - recorded the highest decrease in terms of revenues. This s market seems confirmed by increasing competitive pressure suffered by mobile operators which last year had a particularly significant contraction in the supply of intermediate services (-26%) and a more contained contraction at the retail level (-2%). Also considering this particular fact, the overall trend of the telecommunications market confirms the trends highlighted last year, including a reduction in the prices of telecommunications services to the benefit of consumers and the reduction in the volume of voice traffic on the fixed dial-up network. In this context, the profitability of the sector nevertheless remains stable, mainly due to internal reorganisation processes by major telecommunications operators of fixed and mobile networks. The result of the investments in the networks remains substantially stable in the Italian market, thanks to the increase in the mobile segment which offset the marked reduction in the fixed-network segment. The media sector, on the other hand, although less affected by the negative macroeconomic situation which had a negative impact on the reduction and in the media
79
of household spending, seems to be suffering from the negative trend in the advertising market. In fact, advertising revenues are tending to move towards the new aggregators of online audiovisual content, with less inclination to invest in advertising on the part of the advertisers, mainly due to a decrease in household and business consumption in recent years. In fact, although there is substantial stability on the part of the pay-TV segment, free TV is suffering the greatest losses due to a contraction in revenues from advertising. In terms of audiences, a growing trend for non-generalist TV is confirmed, relative to which the public has become more numerous in all time slots. At the same time, however, the revenues of providers of online audiovisual services and providers of content via the Internet in general have increased, in line with a trend already reported by the Authority and subject to continuous monitoring in recent years, as evidenced by the surveys on the advertising industry in general and online advertising in particular (see par. 1.6). In the media sector, the Internet represents the largest element of change as regards technology and the market, where advertising shows an annual sales growth rate of 40%. What makes advertising on the Internet particularly attractive is, however, a greater ability to "target" users and a greater availability of advertisements regardless of the user's browsing equipment (desktop computer, laptop, tablet, smartphone, etc.), the mode (fixed, mobile, nomadic) and other navigation features. In Italy, the first sector that had to face the challenges of the digital revolution was the printed press, including both newspapers and magazines. In recent years, the advent of the Internet has subtracted a significant proportion of revenues from the publishing industry, exacerbating a largely structural crisis in the segment. Also abroad, in the face of this trend, the major publishing groups have diversified their offer by expanding their own digital information portfolio (websites, digital versions of hardcopy newspapers, etc.) to cope with the different ways of using information in the Internet age. In Italy, it is estimated that the average time spent by an Internet user on Facebook is fourteen times greater than the average time spent on the leading online newspaper. This has led to a decrease in the frequency of newspaper purchasing as well as in the number of readers, without however eroding the strength of the editorial brand name which resists because of the particular features of the product. The latter having its own identity, which is not limited to a mere collection of articles. For that matter, the publishers have also begun to use the new medium, the Internet, where advertising revenues are greater than income from the purchase of copies or subscriptions. While abroad even magazines like Newsweek have permanently abandoned their hardcopy version (in January 2013, the famous magazine published its first digital-only issue), in Italy the digitalisation process has taken place mainly according to the double-track model: printed and online versions for both newspapers and magazines, partly due to legislation which contemplated financial support for publishing which, until the entry into force of Legislative Decree no. 63 of 2012, penalised the abandonment of the hardcopy version. It is to be noted, however, that, at the present stage of Internet development, a mixed composition of revenues in the publishing industry (advertising and subscription for access to premium content) is beginning to gain a foothold in Italy too.1 and in the postal The impact of the Internet does not even seem to have excluded the services. postal services sector, affected by a certain degree of development in the
1 See Annex A to Resolution no. 551/12/CONS, regarding the results of the survey on advertising revenues, which highlights the claim of "premium models, i.e. paid for, at least in part, through forms of direct payment, in some cases driven by a free-content part".
80
express delivery market, where there is the highest level of competition between operators. In this segment, revenues between 2011 and 2012 showed an increase of approximately 2.5%, amounting to around Euro 4 billion. It cannot be ruled out that this figure affects, to a certain extent, the development of e- commerce platforms, as reported by the OECD in a recent report which also takes into consideration the Italian market.2 In contrast, the market for traditional services, in particular those of the universal service and those entrusted exclusively to Poste Italiane, shows a downward trend due to a decrease in volumes in Italy, as in the rest of Europe, thanks the development of e-mail and certified e-mail services. Ultimately, the entire evolution of the communications industry in Italy is marked by recession which affects the economic system and which involves, now more than ever, the Internet, the development of which affects the performance of the traditional sectors. The growth of the markets for Internet services and platforms, and for online media in particular, has inevitable repercussions on other means of communication: traffic volumes and pricing systems for telecommunications services, and the quotas allocated to other communication means for the media sector. For the above reasons, the estimates of the economic impact of the Internet suggest that this media will make a significant contribution to GDP, due to savings in public spending associated with the use of ICT services and technologies in the provision of public services and public administration functions, as well as the development of new markets. What is now seen as a factor of economic crisis for the traditional media and telecommunications could represent, with the help of adequate regulation acting as an incentive, the real driving force for development in the entire sector. This raises the need for Italy - and for national economic operators - to be able to exploit the potential offered by the technological and market innovation processes while resisting the elements impeding the development of the digital economy and promoting the creation of next-generation networks, both fixed and mobile.
2 OECD (2013), “Empowering and Protecting Consumers in the Internet Economy”, OECD Digital Economy Papers, No. 216, OECD Publishing.
81
2.2. Telecommunication services
During 2012, the progressive deterioration of the macroeconomic framework contributed to the further decline of the overall resources in the telecommunications sector, a trend already in progress in 2007. In this context, the elements that have characterised the performance of the market during the past year have not undergone significant changes compared to 2011, and can be summarised as follows: i. slight acceleration compared to 2011, in the reduction in spending on telecommunications services by businesses and households; ii. further decline, for both the fixed and mobile networks, in unit revenues; iii. constant tendency towards the gradual reduction in the consumption of traditional services related to the dial-up network; iv. substantive maturity of the diffusion of broadband on fixed networks, while growth continues on the mobile network; v. no change in investments in infrastructure for which, as a whole, last year's levels are confirmed; vi. slight reduction in market concentration, with Telecom Italia continuing to register decreases in its market shares; vii. start of the first trials of LTE services by mobile operators, following the assignment of the relative usage rights in autumn 2011.
The telecommunications sector in the macroeconomic context In 2012, the Italian economy underwent contraction, also at current prices, in the main macroeconomic indicators (Table 1.2) with, in particular, household spending and investments reduced, respectively, by 1.6% and 9.2%.3
Table 1.2. The Italian economy in 2011-2012 (€ billions) % 2011 2012 change Gross Domestic Product 1,579 1,566 -0.8 Household expenditure 966 950 -1.6 Investments* 119 108 -9.2 * Net of transport means and constructions Source: processed by the Authority using Istat data
The telecommunications market, in line with a trend which has now The TLC and the persisted for several years, continues to decline, which has led to a further Italian economy: reduction of its own weight compared to both national income and total consumptions of Italian households. With regard to investments, maintaining the - sector levels of previous years has allowed, in 2012, for an increase in relative terms of weighting on GDP the concentration at the macroeconomic level (Table 1.3). decreasing;
3 Source: Istat, cit. The percentage changes compared to the year 2011 indicated in table 2.2 have been calculated in the same terms as the new historical series published by Istat (the Italian National Statistics Institute), which explains - relative to the year 2011 - the slight discrepancies compared to the corresponding values (cf. page 74) given in the last Report to Parliament.
82
Table 1.3. Telecommunications in the economy (2011-2012 in %) 2011 2012 Revenues (All TLC services/GDP) 2.57 2.42 Household expenditure (TLC/Total expenditure) 2.20 2.18 Investments (TLC/Total investments) 5.04 5.52 Source: processed and estimated by the Authority using company and Istat data
Also in 2012, the structural trend of the reduction in communications - prices continue service and terminal prices has been confirmed in general4 and in fixed and to fall. mobile telecommunications in particular, resulting in further expansion of the gap in respect of the general trend in goods and service prices (Figure 1.2). As in the first quarter of 2013, telecommunications services decreased by 5.2% on average, and in particular mobile prices have decreased by more than 8%.
Figure 1.2. Communications and consumer prices: comparison of dynamics (2005=100)
140,0 123,3 120,0 116,8
100,0 89,2 80,0 78,7 60,0 Comunicazioni 40,0 Servizi postali 39,7 Apparecchi telefonici 20,0 Servizi telefonici Prezzi al consumo 0,0 dic. dic. dic. dic. dic. dic. dic. dic. mar. 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: processed by the Authority using Istat data
The reduction in telecommunications services is even greater, as already registered for some years, in the case of fixed and mobile networks, for the specific price index at the production level, where in the entire period considered (1st quarter 2006 - 4th quarter 2012) there is an average fall of about 33%, with a decrease of more than 24% for fixed-network services and of almost 52% for mobile network services (Figure 1.3).5
4 The data refer to the sub-classes of the "Code 08" services (communications) included in the basket of consumer prices defined by Istat for 2013, i.e. by postal services (3.8% of the total), by fixed and mobile network terminals (20.1%) and by fixed and mobile telephony services (76.1%). 5 Source: Istat, “Prices at service production level”, 28 March 2013. The price index at the production of the telecommunications services measures "...the trend in the prices of business services sold by operators which provide telecommunications services to companies from other sectors and to the Public Administration".
83
Figure 1.3. Index of production prices of telecommunications services (2006 average=100)
105,0
95,0
85,0
77,8 75,0
Media F+M 68,7 65,0 Rete Fissa Rete Mobile
55,0 49,4
45,0
1Q06 3Q06 4Q06 3Q07 4Q07 2Q08 3Q08 4Q08 2Q09 3Q09 2Q10 3Q10 2Q11 3Q11 1Q12 2Q12 3Q12 1Q07 2Q07 1Q08 1Q09 4Q09 1Q10 4Q10 1Q11 4Q11 4Q12 2Q06 Source: processed by the Authority using Istat data
Of all the service sectors of general economic interest, that of telecommunications is confirmed as the only one which continues to show a decreasing price trend, dictated, inter alia, by technological reasons and by the lower sensitivity of telephone and Internet access consumption to the economic conditions(Figure 1.4).
Figure 1.4. Main public tariff trends (2005=100)
145,0 141,1 Servizi telefonici 140,7 Fornitura acqua 137,0 135,0 Raccolta rifiuti 136,7 Energia elettrica 128,1 125,0 Gas Trasporti urbani 118,7 Canone TV 115,0
105,0
95,0
89,2 85,0 dic. 2005 dic. 2006 dic. 2007 dic. 2008 dic. 2009 dic. 2010 dic. 2011 dic. 2012 mar. 2013 Source: processed by the Authority using Istat data
84
The indications above are confirmed also if the range of the services is enlarged (Figure 1.5): in particular, those regulated on a national basis have considerably more contained dynamics than those that are not regulated and, above all, compared to local public services.6
Figure 1.5. Service price trends (2005=100)
Source: processed by the Authority using Istat data
Positive indications also come from the comparison both with Europe as a whole and with the main EU Member States (Figure 1.6).7 From the end of 2005 until March this year, the fall registered in Italy is among the largest of the countries considered (-23.3%), second only to France (-26.8%), but considerably above the European average (-11.2%).
6 Locally regulated services include: personal data certificates, solid urban waste collection tariffs, secondary education, museums, multi-mode urban transport (single and season tickets), taxis, suburban buses and regional railway transport. Nationally regulated services include: forecasting assistance, motorway tolls, national railway tariffs, navigation services, sea transport of cars, TV licences, fixed telephony services, public telephony services, postal services, motor vehicle ownership transfer tax. 7 The data indicated in the figure have been extracted from the Eurostat site at http://appsso.eurostat.ec.europa.eu/nui/setupModifyTableLayout.do and refer to the COICOP-CPO082-83 category of services (“Telephone and telefax equipment and services”). The aggregate considered is not the same as that used in last year's annual report and therefore the data cannot be directly compared. The United Kingdom figure is relative to February.
85
Figure 1.6. Telecommunications price trends in Europe (2005=100)
110,0 107,7 105,0
100,0
95,0 91,8 90,0 87,5 85,0 85,2
80,0 Europa (27) Germania 75,0 Spagna Francia 75,5 Italia Regno Unito 70,0 70,7 Dic. 05 Dic. 06 Dic. 07 Dic. 08 Dic. 09 Dic. 10 Dic. 11 Dic. 12 Mar. 13
Source: Eurostat
Sector dynamics In 2012, the overall contraction in the revenues of the Revenues telecommunications operators continued (-6.4% against -3.7% in 2011).8 For that matter, unlike last year, the providers of mobile network services sustained a decrease in income greater than that registered for fixed-network services (Table 1.4).9
8 Gross revenues are the sum of the final expenditure of private and business clientele and the revenues from intermediate services supplied to other operators. The economic information in the tables and figures in this paragraph, unless otherwise indicated, also include the data relative to the virtual mobile operators. 9 The data relative to fixed and mobile network telecommunications, unless otherwise indicated, include the information provided by the following companies: Brennercom, BT Italia, Cable & Wireless, CloudItalia, Colt, Fastweb, H3G, Infracom Italia, OkCom, Orange Business Italy, Retelit, Telecom Italia, Tiscali, Verizon Italia, Vodafone NV, Welcome Italia and Wind, as well as the "pure" MVNOs: A-Mobile, Bip Mobile, Carrefour Italia Mobile, Coop Italia, Daily Telecom, ErgMobile, Green ICN, Noverca, Poste Mobile. Furthermore, for a more complete representation of the market, also on the basis of indications emerging from a specific analysis carried out on the individual financial statements of 60 companies, relative to the financial year 2011, the data of the revenues of smaller companies, for which detailed information is not available, have been estimated. With reference to the year 2011, both for the table in question and for the subsequent tables, the data are not completely standardised and therefore are not directly comparable with the corresponding figures given in the last Annual Report. This is because the companies have at times made additions and re-classifications due both to changes and additions in the calculation methodologies adopted and, in some cases, changes in the scope of the company's economic activity. This has therefore led to adjustments in terms of economic amounts, in some cases of a more than marginal nature. Moreover, in the following tables, in the case of data expressed in currency, merely for rounding purposes, the sum of the decimals of the single addenda might not be equal to that of the total result, as similarly the values relative to the percentage changes might not all be equal compared to the calculation of the data indicated in the tables, almost always expressed for simplicity in billions of Euro.
86
Table 1.4. Fixed and mobile telecommunications - Gross revenues (€ billions) 2011 2012 % change Fixed network 19.57 18.45 -5.7 Mobile network 21.03 19.53 -7.1 Total 40.59 37.97 -6.4 Source: processed and estimated by the Authority using company data
Considering the result of the two sector components separately - retail expenditure of private and business users (Table 1.5) and revenues from intermediate services provided to other operators (Table 1.6) - the reduction in fixed-network sales, as for the retail markets, is greater than that of the mobile network (respectively -6% and -2.3%). Intermediate revenues fall by 14.9% on average, but in this case the mobile network shows the greater contraction (- 26.3% against -4.7% for the fixed network).
Table 1.5. Final expenditure of private and business users (€ billions) % change 2011 2012 ‘12/'11 Fixed network 14.86 13.97 -6.0 Mobile network 16.81 16.42 -2.3 Total 31.67 30.39 -4.1 Source: processed and estimated by the Authority using company data
Fixed network In 2012, there was a fall of about 5.7% in total revenues, mainly due to a decrease in those generated by the sale of origination, termination and transit services, which undergo – by effect of resolutions 92/12/CIR and 187/13/CONS – a regulated unit price reduction estimated as about 20%, and an average reduction in total volumes of about 7.5%. Revenues for access services (ULL, virtual ULL, shared access, WLR, bitstream and bitstream naked) show an opposite trend, and have increased by about 5.7% because of the growth in total sales volumes (+5.4% for unbundling services), which indicates the growing infrastructure of the alternative operators, as well as a slight increase in the prices of unbundling services (+2.88%) and naked bitstream services (+1.35%), as established by resolutions 36/12/CIR and 37/12/CIR. At the same time, there is a reduction in the unit prices of the shared bitstream service (- 0.89%), pursuant to resolution 37/12/CIR, while WLR services, as from the second quarter of 2012, decrease by 4.2% pursuant to resolution 643/12/CONS.10
Table 1.6. Revenues from intermediate services (€ billions) 2011 2012 % change Fixed network 4.70 4.48 -4.7 Mobile network 4.22 3.11 -26.3 Total 8.92 7.59 -14.9 Source: processed and estimated by the Authority using company data
In spite of the increased traffic volumes (+6% in minutes received on Mobile network mobile network terminals),wholesale revenues for the mobile network decrease,
10 In 2012, the consistency of Full ULL, Virtual ULL, Shared Access, DSL Naked and WLR accesses grew by just over 100,000 lines compared to 31 December 2011.
87
in particular, because of the effects of the unit price reduction in voice calls received on mobile networks contemplated by resolutions 667/08/CONS and 621/11/CONS. It is in fact estimated that, considering the average prices in force in 2011 and 2012, the annual unit price reduction is about 35% (Table 1.7).
Table 1.7. Prices of voice-call termination services (€ cent/minute) 1st 2nd 1st 2nd Average Average % half half half half price price change 2011 2011 2012 2012 2011 2012 H3G 9.0 6.3 6.3 3.5 7.65 4.90 -35.9 Telecom 6.6 5.3 5.3 2.5 5.95 3.90 -34.5 Italia Vodafone 6.6 5.3 5.3 2.5 5.95 3.90 -34.5 Wind 7.2 5.3 5.3 2.5 6.25 3.90 -37.6 Media* 6.19 4.02 -35.1 * Value estimated by the weighting of the specific percentage reductions envisaged for the single mobile operators for the respective market shares in wholesale traffic minutes terminated in 2011 and 2012 on their own networks for the termination services due to calls from other mobile networks. Source: processed by the Authority
The final total expense shows a strong reduction compared to that of the Retail expense previous year (-4.1% against -2.6% in 2011), with a reduction in the private segment of 2.5% and in the business segment of 7.2% (Table 1.8). In particular, the reduction in expenditure is more marked for the fixed-network business segment (-7.9% against -5.9% for last year), while it is more contained in the mobile private segment (-1.6% against 0.9% in 2011).
Table 1.8. Final expenditure for each customer category (€ billions) 2011 2012 % change Fixed network 14.86 13.97 -6.0 - Private 7.69 7.36 -4.3 - Business 7.17 6.60 -7.9 Mobile network 16.81 16.42 -2.3 - Private 13.57 13.35 -1.6 - Business 3.24 3.07 -5.4 Fixed and mobile 31.67 30.39 -4.1 network - Private 21.26 20.71 -2.5 - Business 10.42 9.67 -7.2 Source: processed and estimated by the Authority using company data
In 2012, the private sector, representing approximately 52.7% of revenues on fixed networks and over 81.3% on mobile networks, is confirmed as the main component of total end consumption. The incidence of household expenditure on total retail revenues of the operators has slightly increased, from 67.1% in 2011 to 68.1% in 2012. In Figure 1.7, the final expenditure is indicated - for all telecommunications services - divided according to type of service/clientele.
88
Figure 1.7. Final expenditure according to type of network and type of clientele (2012, in %)
mobile - fissa - affari; 10,1 residenziale; 24,2
mobile - residenziale; fissa - affari; 43,9 21,7
Source: processed and estimated by the Authority using company data
With regard to investments (Table 1.9), there has been a decrease of Investments 0.6% (compared to a decrease of 3% the previous year). This result is due to two opposite trends: while fixed-network operators' investments have decreased by 6.5% (for contraction ascribable to both the main operator and the competitor), those of the mobile sector have increased by 7.7%.
Table 1.9. Investments in fixed assets (€ millions) 2011 2012 % change Fixed network 3,515 3,288 -6.5 - of which OLO 1,480 1,389 -6.1 % OLO 42.1 42.2 Mobile network 2,494 2,685 7.7 Total 6,009 5,973 -0.6 % fixed network 58.5 55.0 % mobile network 41.5 45.0 Source: processed and estimated by the Authority using company data
With regard to the profitability of the sector, in 2011 the EBITDA was on Sector average equal to 40.9% of revenues (41.4% in 2010 in comparative terms), profitability while for 2012 certain main market player estimates indicate a decrease of around 1%. The basically unchanged profit margins, in a context of strong competitive pressure intensified by the negative macroeconomic situation and by increasingly contained consumption, was achieved thanks to internal reorganisation process of the production processes, with a further reduction in the direct workforce (-3.5% in 2011).11
11 The 2011 profit and employment data refer to the analysis of the income statement of the individual 2011 financial statement of 77 companies which offer telecommunications services (fixed network, mobile network, MVNO, WiMAX). The estimates for 2012 are calculated on the basis of information supplied and in part estimated relative to BT Italia, CloudItalia, Fastweb, H3G, Tiscali, Telecom Italia, Teletu, Vodafone and Wind.
89
In the competitive situation of the main telecommunications services retail market operators, there has been a decrease in the weight of Telecom Italia (- 0.7) and above all in that of Vodafone (-1.6), to the advantage of Wind, in particular (+0.7), but above all of H3G which has gained 1.5 (Table 1.10).
Table 1.10. Final expenditure of fixed and mobile network users divided according to operator (%) 2011 2012 Telecom Italia 47.4 46.7 Vodafone group 21.8 20.1 Wind 14.3 15.0 Fastweb 4.7 4.9 H3G 4.1 5.6 BT Italia 2.7 2.4 Other 5.0 5.2 Total 100.0 100.0 Source: processed and estimated by the Authority using company data
As already mentioned in the last reports to Parliament, the technological and commercial features of telephony make it very difficult to draw a picture in comparable terms of the trend of unit revenues, an indicator which shows the trend in prices to the public. Given this fact, with regard to voice services alone, an estimate is given Unit revenues below (Table 1.11) of the trend in unit revenues for both fixed and mobile telephony, broken down into private and business users. In particular, in 2012, there was a consistent acceleration in the reduction of average unit revenues, which fell all together by 11%. The pressure on fixed-network prices is concentrated in the business segment, where there has been a reduction of 13.3%, although the more intense reduction is in the mobile segment (-13.8%) due to a fall of 8.7% in specific revenues, while volumes increased by 6%. As last year, the popularity of the voice-data bundle, with specific offers and options aimed at creating customer loyalty seems to be at the core of the particularly large reduction, in the mobile network, in unit revenues from private customers (-15.7%). In fact, in this case growth of 5.8% has been registered in the "on net" voice traffic, together with a simultaneous reduction of 9% in the relative revenues.
90
Table 1.11. Unit revenues in telephony services (2012/2011, % change) Private Business Private + Business Fixed network 12 -2.0 -13.3 -7.6 Mobile network 13 -15.7 -4.4 -13.8 F+M average -11.9 -8.5 -11.0 Source: processed and estimated by the Authority using company data
With regard to data-service revenues, also in consideration of the various measuring systems adopted by companies, there is a well-known difficulty in providing meaningful data indicators with a sufficient level of standardisation. However, it can be conservatively estimated that in 2012 unit revenues per GB of traffic have decreased compared to the previous year by more than 20%, resulting in just over 1.5 €/GB month.14
Focus 9 - The European Digital Agenda indicators All the data and macroeconomic trends shown in this chapter allow for a swift comparison between the objectives set by the European Digital Agenda and the progress achieved by Italy. In the last year (as emphasised several times in chapter 1), the European Union's guidelines represent an important stimulus for the diffusion of the new technologies within the socio-economic and institutional systems of the various Member States. The targets set by the European Digital Agenda are many and ambitious, and they appear aimed at optimum exploitation of the potential of the information and communication technologies, in order to foster innovation, economic growth and the spread of value- added services throughout the euro area. In particular, the Commission instructed the States to undertake certain action, in order to achieve the targets of the European Digital Agenda, such as: 1) creating a single digital market; 2) increasing inter-operability and standards; 3) consolidating online trust and security; 4) promoting high-speed and ultra-high-speed Internet access for all; 5) investing in research and innovation; 6) improving digital literacy and skills and inclusion in the digital world; 7) benefitting society thanks to intelligent use of technology. In this context, it is therefore possible to compare the concrete trends in Italy with the objectives indicated by the European Digital Agenda, with specific reference to certain indicators. The data over the years show increasing use of digital technologies in Italy, but, on the other hand, there is a certain gap compared to the European average (Table 2.12). As regards infrastructure indicators, directly influenced by regulation, total investment in the development of the networks is, in terms of revenue, 15%, against the EU average of 12%. The percentage of broadband fixed lines equal to or greater than 10 Mbps is equal to 13%, against the European average of 48%. The percentage of fixed broadband lines equal to or greater than 30 Mbps is almost zero, while in the EU it is around 8%. The diffusion of mobile lines, however, is well above the European average (1.59 compared to 1.27 SIMs per user), with a limited expenditure per user: in fact, average revenues per user on the retail mobile market is Euro 170 compared to the
12 The values are constructed with reference to the data for only the companies for which detailed information is available and they regard only vocal telephony on dial-up networks regarding - for revenues and traffic - fixed network local, national and international routes and to mobile networks. The revenues do not include broadband services which, often offered as part of voice + data bundles, contribute in a non-marginal manner to the reduction of revenues and vocal telephony service volumes only on the dial-up network. Public telephony is also excluded. 13 Revenues and minutes of vocal traffic have been considered, relative to calls to mobile networks (off-net and on-net), national fixed networks and international networks. 14 Revenues from data services refer to the income from Internet access and navigation, SMS, MMS and other video traffic transmitted from user terminals and mobile TV services. Unlike the last Report, the data refer to both MNOs and MVNOs.
91
average of Euro 221. With regard to the indicators relative to demand, for which the degree of diffusion is not strictly linked to regulatory action, the percentage of households with Internet access in Italy in 2012 is around 63%, against a European average of 76%, and regular users (i.e. those who connect at least once a week) are well below the European average (49% compared to 67%).
Table 1.12. Digital Agenda: Italy - European Union comparison ITA EU27* INFRASTRUCTURE Investments in TLC compared to sector revenues (%) 15.7 12.4 Broadband coverage (% pop.) 98.8 99.3 Fixed broadband coverage (% pop.) 96.8 95.3 Mobile broadband coverage (% pop.) 96.5 89.9 Percentage of accesses at a speed ≥10 Mbps (%) 12.8 48.4 Percentage of accesses at a speed ≥30 Mbps (%) 0.2 8.5 Mobile lines (% pop.) 159 127 Unit expense per mobile line (Euro) 169.9 221.1 USE OF THE INTERNET Population which regularly uses the Internet (%) 48.6 67.5 Households with Internet access (%) 63 76 Households with BB Internet access (%) 55 72 * 2012 or last available year. Source: processed by the Authority on company, Digital Scoreboard and Eurostat data
Fixed network In 2012, the fall in revenues of companies which offer telecommunications services on fixed networks fell even more sharply than in the previous year (- 6.0% against -3.9%) (Table 1.13). With regard to the main two components of the market – the on-dial and broadband networks – the former sustained a contraction in income of 8.5% (against -6.5% the previous year), while broadband service resources showed a marginal increase of 0.2% (compared to corresponding growth of 3% in 2011).
Table 1.13. Fixed network – User expenditure according to type of service (€ billions) 2011 2012 % change Final services on: 11.58 10.97 -5.2 - dial-up networks * 7.22 6.60 -8.5 - broadband networks** 4.36 4.37 0.2 Other data services*** 0.54 0.53 -2.5 Other revenues**** 2.74 2.46 -10.1 Total 14.86 13.97 -6.0 * Including income from access services, telephony services (local, national, international, fixed/mobile), Internet dial up, net revenues from non-geographic telephone numbers and from public telephony; ** Including fixed fees and consumption; *** Including dial-up data transmission services and direct circuits rented to the end customer (excluding OLO); **** Including revenues from the sale/hire of equipment, terminals and accessories and other types of revenues not expressly considered above. Source: processed and estimated by the Authority using company data
Broadband With reference to broadband services according to type of contract (Table services 1.14), in 2012 the progressive spread of flat-rate offers continued, which now
92
represent more than 77% of contracts stipulated for broadband services, while offers specifically on consumption are just over 7%.15
Table 1.14. Types of broadband service contracts (%) 2011 2012 Flat-rate 74.3 77.4 Semi-flat-rate 16.9 15.4 Consumption 8.8 7.2 Total 100.0 100.0 Source: processed and estimated by the Authority using company data
and traffic on In 2012, the contraction in traffic on dial-up networks continued, with an dial-up networks average decrease of 7.5% (Table 1.15). All areas were involved. Dial-up Internet and public telephony have taken on entirely marginal dimensions: together they represent about 1.5% of total traffic. Local and national calls show an average contraction of more than 9%. Direct calls to international numbers have also fallen (-3.3%), as well as those towards numbers assigned to mobile services (-6.5%).
Table 1.15. Traffic on dial-up fixed networks according to route (billions of minutes) 2011 2012 % change Local 40.63 37.71 -7.2 Internet dial-up 2.16 1.16 -46.3 National 27.69 26.12 -5.7 International 2.60 2.51 -3.3 Mobile networks 10.85 10.14 -6.5 Public telephony 0.10 0.08 -20.2 Total 84.03 77.73 -7.5 Source: processed and estimated by the Authority using company data
Broadband access (Figure 1.8 and Figure 1.9) had reached 13.7 million at Broadband the end of 2012, with net growth in the year of around 160,000 accesses, access confirming a progressive deceleration.
15 The range of activities considered in the analysis by type of contract include, for the OLO, Full and Virtual ULL access, xDSL Bitstream, Shared Access, Wholesale Line Rental, FTTH and rented lines. The changes compared to the results of the previous year are due to different classification methods adopted by some companies.
93
Figure 1.8. Broadband accesses on fixed network (millions)
Source: processed and estimated by the Authority using company data
Figure 1.9. Net increases in broadband accesses (millions)
Source: processed and estimated by the Authority using company data
Data traffic on fixed networks is estimated as having just exceeded 3,500 Data traffic petabytes, marking an increase, in standardised terms, of about 16% compared to volumes in 2011. Consequently, because of the trend in subscriptions to broadband services, it can be estimated that traffic per person grew in 2012 by more than 10%. Growth in the demand for capacity is certainly influenced both by the increase in Internet users - in this regard Istat (in Cittadini e nuove tecnologie - Anno 2012 [Citizens and new technologies - Year 2012]) estimates that in 2012 households with broadband web access increased from 45.8% to 48.6% – and by the progressive availability of video services and applications in streaming mode, as well as the continual growth in social network users. To this regard, for example, Google declares that YouTube registers more than one billion visitors a month, while it is estimated that 72 hours of video are loaded on the platform
94
every minute. Facebook states that it has over 23 million Italian users of the social network per month, with growth of 7.69% compared to the previous year. At the same time, growth in the nominal speed of broadband connections and broadband continued to increase in 2012. The average incidence of connections with connection speed capacities of more than 10 Mbit/s, particularly requested for the use of video services, reached 12.8% (8.2% in 2011), which corresponds to more than 20% (from 10.3% in 2011) for OLO accesses (Table 1.16).
Table 1.16. Broadband accesses according to nominal speed bracket (%) 2011 2012 OLO OLO+TI OLO OLO+TI >144Kbps ≤2 Mbps 7.5 13.5 5.9 11.5 >2Mbps <10Mbps 82.2 78.3 73.5 75.7 ≥ 10 Mbps 10.3 8.2 20.6 12.8 Total 100.0 100.0 100.0 100.0 Source: processed and estimated by the Authority using company data
The competitive positioning of the operators which offer broadband services to households and companies shows that the market share of Telecom Italia, expressed in terms of broadband lines, continues to decrease (Figure 1.10), and that in the last two years it has lost 3.3 points.16
16 The data refer to those requested as part of the updating of European reporting on broadband; however, the ranges of relative goods and services differ slightly from those indicated in the following table relative to regional distribution of total direct accesses to broadband, which considers only the main forms of access, excluding, for example, permanent virtual cycles, rented lines, etc. At the same time, in the analysis of connection rates on a territorial basis, the data also include virtual ULL accesses, which, in turn, are not included in European reporting. Therefore, the value for Telecom Italia's market share of broadband accesses on fixed network (51.4% at December 2012) shown in figure 2.10 differs slightly from the corresponding national average value indicated in the following tables relative to the regional situation, since the two aggregates refer to merchandise ranges that are not completely similar. In the corresponding data given in the last Report (fig. 2.8, page 86), WiMax accesses were not included, therefore the reference data are not perfectly equivalent.
95
Figure 1.10. Telecom Italian's market share of broadband retail services (%)
Source: processed and estimated by the Authority using company data
As at March 2013, Vodafone, Wind and Fastweb hold more than 41% of Broadband the retail broadband market services, an increase of almost 1% compared to market shares March 2012.
Figure 1.11. Market shares of broadband retail services (March 2013 in %)
Source: processed and estimated by the Authority using company data
96
The decrease in the number of accesses via the fixed network again Access continued last year, with a total number of lines which, in the first quarter of distribution at the 2013, show just above 21.5 million accesses (Table 1.17), have fallen by 931 national level thousand lines compared to 2010.17 This reduction represents the balance between the contraction of Telecom Italia accesses (-1.6 million) and the growth of about 672 thousand accesses of the alternative operators, which together exceeded 7.7 million. This led to a progressive fall in Telecom Italia's market share, which is now at 64%.
Table 1.17. Access to the fixed network (thousands) Dec- Dec- Mar-13 Dec-12 10 11 Access Telecom Italia 15,380 14,681 14,000 13,777 Access OLO 7,086 7,425 7,655 7,758 - Full unbundling 4,703 4,953 5,225 5,314 - Virtual ULL 79 63 35 32 - Fibre optic 279 279 288 293 - DSL Naked 1,036 1,087 1,114 1,121 - WLR 954 957 801 771 - WiMax 36 86 192 227 Total access 22,466 22,105 21,656 21,535 Telecom Italia share (%) 68.5 66.4 64.6 64.0 Source: processed and estimated by the Authority using company data and regional data The number of accesses to the fixed network, as for accesses to broadband services, is rather differentiated at regional level. The national average of households with a fixed-network connection is above 69%. However, the situation differs, and to a considerable extent, in the various geographic areas of the country (Table 1.18), ranging from 80.5% in Lazio to 59.4% in Calabria, while the main metropolitan areas are almost at 91%.18
17 For a clearer representation of the market in terms of subjects (households and companies) with specific subscriptions, and consistent with what is illustrated in the quarterly Observatory of December 2012, accesses in wireless WiMax technology are also included. 18 The results shown in the table cannot be compared with those in table 2.19 of the previous Report. Firstly - with reference to the number of accesses - slight adjustments and reclassifications have been made to ensure standardisation with other quantitative data collected from companies and/or transmitted formally for other purposes (e.g. European reporting on broadband, the EU digital agenda scoreboard). Furthermore the demographic data (population and households) used in this Report, unlike last year, refer to data published recently by Istat, which at 31.12.2011 (the last figure available on the Istat website at 30.4.2013) indicate a population of 59.4 million and 25.4 million households; therefore they are not comparable with last year's data which were relative to updates carried out by Istat but on a sample basis.
97
Table 1.18. fixed-network access (December 2012, % of households) Piedmont 67.6 Aosta Valley 62.7 Lombardy 72.3 Trentino-Alto Adige 62.9 Veneto 67.7 Friuli-Venezia Giulia 69.3 Liguria 71.2 Emilia-Romagna 69.3 Tuscany 72.0 Umbria 68.3 Marche 70.6 Lazio 80.5 Abruzzo 64.5 Molise 63.1 Campania 70.6 Puglia 66.6 Basilicata 60.7 Calabria 59.4 Sicily 64.2 Sardinia 59.6 ITALY 69.5 Main towns/cities 90.8 North West 70.8 North East 68.1 Centre 75.6 South and Islands 65.4 Source: processed and estimated by the Authority using company and Istat data
Market shares With regard to the competitive picture of fixed-network direct access, on a national basis Telecom Italia – as already observed – registered a market share of approximately 65%, but with marked differentiation at the geographic level (Table 1.19).
98
Table 1.19. fixed-network access – market shares (December 2012, %) Telecom BT Vodafone Fastweb Wind Tiscali Other Tot. Italia Italia Italia Piedmont 64.7 8.9 13.5 0.4 1.5 9.9 1.0 100 Aosta Valley 74.7 6.0 6.9 0.1 0.6 11.0 0.6 100 Lombardy 61.4 11.9 11.5 0.6 1.8 10.9 1.8 100 Trentino A.A. 78.4 3.5 6.5 0.2 0.5 9.9 1.1 100 Veneto 72.6 4.3 9.2 0.3 0.8 11.0 1.7 100 Friuli V.G. 73.2 4.8 10.1 0.2 1.4 9.5 0.7 100 Liguria 58.8 13.0 13.5 0.3 1.6 11.8 0.9 100 Emilia-Romagna 68.7 8.2 10.8 0.4 1.4 9.6 0.9 100 Tuscany 71.3 6.2 10.5 0.4 1.7 8.8 1.2 100 Umbria 72.7 5.5 8.6 0.2 0.6 7.7 4.7 100 Marche 73.6 5.5 9.1 0.2 1.0 8.4 2.1 100 Lazio 56.1 12.9 17.4 0.4 2.6 9.2 1.4 100 Abruzzo 69.0 8.3 10.5 0.2 1.0 9.4 1.6 100 Molise 74.8 3.7 10.6 0.3 0.4 9.6 0.7 100 Campania 58.4 8.9 22.5 0.2 0.8 7.7 1.4 100 Puglia 57.8 6.8 21.7 0.2 0.6 9.5 3.3 100 Basilicata 77.8 5.0 6.6 0.2 0.8 8.6 1.0 100 Calabria 75.4 2.4 10.1 0.1 1.3 8.5 2.1 100 Sicily 62.9 5.3 18.2 0.2 1.5 10.2 1.8 100 Sardinia 61.3 2.8 7.3 0.2 18.8 8.3 1.2 100 ITALY 64.6 8.3 13.5 0.3 1.9 9.7 1.6 100 Main 41.1 23.6 22.5 0.8 2.5 8.4 1.2 100 towns/cities North West 62.1 11.2 12.2 0.5 1.7 10.7 1.5 100 North East 71.6 5.9 9.7 0.3 1.1 10.2 1.2 100 Centre 64.1 9.4 13.6 0.4 2.0 8.9 1.7 100 South and Islands 62.7 6.3 17.5 0.2 2.5 8.9 1.9 100 Source: processed and estimated by the Authority using company data
As already illustrated in the last Reports, certain structural conditions (the of Telecom Italia lack of large towns/cities and a prevalently mountainous geological location) are historically at the core of Telecom Italia's significantly high market share in some regions, as in Trentino Alto Adige (78.4%), Basilicata (77.8%), Calabria (75.4%) or Aosta Valley (74.8%) – all regions featuring lower than the national average of fixed-network penetration. In parallel, in regions with large towns/cities, Telecom Italia's market share has fallen considerably, as in the case of Campania (58.5%) and Lazio (56.1%). On the other hand, the results of competitor operators are linked to and of competitor strategic choices based on the reinforcement of their respective offers in the operators large cities and towns. In the case of Fastweb, the national average figure of 8.3% is much higher in Lombardy, Liguria and Lazio, where it has market shares of well above 10%. Wind (13.5% on national scale) reaches market shares of over 20% in some Southern Italian regions (Puglia, Campania) and around 18% in Lazio and Sicily. Vodafone's market share (just under 10% nationally) tends to be relatively uniformly distributed over the country, with limited differences from one region to another, the extremes of which are 7.7% in Campania and Umbria and 11.8% in Liguria. The evidence relative to the main towns and cities confirm a more lively competitive situation than in less densely populated areas, with Telecom Italia
99
holding a market share (just above 40%) much lower than its national average, while Wind and Fastweb are both considerably below 20%.19 Considering all the fixed and mobile network technologies able to guarantee broadband services, at the end of 2012 the coverage level can be The degree of estimated at 95% of the population. infrastructure About 3.3 million citizens and about 200 thousand local units of companies and institutions can take avail of a broadband connection only through satellite technologies.20 With the availability of the next-generation geostationary satellites, these technologies represent, in any case, a solution consistent with the national targets which aim to guarantee universal access to broadband services throughout the whole country. The net coverage of basic connection services (at least 2 Mbps), at the end of 2012 was almost the same as in 2011 (around 95%). However, with regard to the coverage level of the ADSL2+ services (up to 20 Mbps), coverage has increased considerably, reaching 70% of the telephonic population, compared to 64% at the end of 2011. The analysis of the 156 main industrial districts also shows that basic infrastructure data are in line with the national context, while differences increase considerably for ADSL2+ technologies, with a value 8 points lower than the national average. With regard to radio technologies, mobile network operators have invested in the upgrading of mobile network broadband services (HSPA), offering end customers nominal performances up to 42 Mbps, with a coverage which has reached about 80% of the population and over 4,000 towns and cities. Overall, the net coverage of mobile services has exceeded 95% of the population, with a high level of overlapping with the coverage guaranteed by ADSL services on fixed network. At the same time, the WiMax operators have continued to develop their own networks, the coverage of which had reached almost one third of the Italian population at the end of 2012. With regard to the performance effectively available at the user's home or office, it must be remembered that the situation is very varied according to the differing levels of infrastructure and, in particular, the distance between the hub and the end user. It can therefore be estimated that at the end of 2012 the average download speed on a fixed network exceeded 5 Mbps with an increase on 2011 of 5%, while the average value measured on mobile networks is still much lower (Source: Between, Broadband Observatory, April 2013. In Europe, Italy is eleventh in the classification of broadband coverage. In The national this context, the National Broadband Plan presented by the Ministry of Economic broadband plan Development intends to guarantee a broadband connection at least 2 Mbps to all citizens. For this purpose, between 2013 and 2014 further public resources will be made available (both national and European) for a total amount of about Euro 350 million, and there will also be private co-funding on the part of the telecommunications operators which participate in the initiatives. From the technological viewpoint, different solutions are contemplated (fibre optic, copper, wireless, mobile, satellite), along with different action models: from the creation of publicly owned backhauling infrastructure to connect areas in digital divide, to the financing of investment projects presented
19 The data for towns and cities do not include WiMax accesses. 20 Source: Between, Broadband Observatory, April 2013.
100
by telecommunications operators in order to foster the expansion of broadband services in digital-divide areas, especially relative to the access network. Other forms of support are contemplated for users located in rural or marginal areas for the purchase of terminals. Through the National Broadband Plan, Italy should be able to reach the intermediate target fixed by the Digital Agenda on broadband service coverage, albeit slightly behind the date indicated by the European Union (100% coverage in 2013). Companies' NGN With reference to ultra-broadband development, the scenario in the projects medium term (2013-2015) can be summed up as follows. For the fixed network, projects have been launched in both FTTC (Fibre optic To The Cabinet) architecture and FTTH (Fibre optic To The Home) architecture. At the end of April 2013, fibre-optic services were available in 13 cities, with coverage for about 10% of the population. Telecom Italia and Fastweb will construct their own networks, mainly in FTTC architecture, while the Metroweb Italia projects and those in the Autonomous Province of Trento will favour FTTH architecture. With regard to fourth-generation mobile services (LTE), at the end of April 69 towns and cities can receive the service, covering about 20% of the population. By the end of 2015, the towns and cities reached will be several hundred, and more than 50% of the population will have coverage. While these private-operator projects go ahead, the State and Regions are and that of the starting the first broadband infrastructure works in the country, experimenting State and the with various public-private partnership models. Regions In particular, the Ultra Broadband Strategic Project of the Ministry of Economic Development contemplates the laying of fibre-optic cables, not overlapping private investments, with the use of public funds as a lever to accelerate the operators' investments. The project will be launched in the South of Italy, thanks to the resources made available by the Cohesion Action Plan, which amount to almost Euro 400 million (for Basilicata, Calabria, Campania, Molise and Sicily), with an additional amount of co-funding which will come from the telecommunications operators. In other regions, however, independent regional or provincial works are already in progress, as is the case in the Autonomous Province of Trento, which has launched the construction of an ultra-broadband network to cover its own territory by 2018, by founding a company with mixed public-private capital (Trentino NGN). At the same time, the region of Sardinia has set itself the task of constructing passive fibre-optic infrastructure by laying cables when the works are carried out for the construction of the methane gas network. Lastly, the region of Lombardy has started a series of experiments on its own territory for the creation of fibre-optic access infrastructure in parts of the area with high concentrations of businesses. As is known, the geological conditions and the population density of large cities are primary factors which contribute to the creation of broadband services, since they influence investments in infrastructure and in the forecast revenues. In this regard, figures 2.11 and 2.12 illustrate, for the macro regional area, the differentiation in the broadband penetration rates according to the different
101
Broadband classes of values (positively and negatively) diverging from the national penetration in the average.21 regional macro In the first case (greater coverage than the national average), there is a areas strong prevalence, as last year, in the Central and Northern provinces, while no Southern province has a penetration of more than 10% of the average national value. In other words, less than 20% of the population of Southern Italy live in provinces with a penetration rate higher than the national average, while 90% of the population in areas with penetration higher than the national average live in central-northern regions. Conversely, if one considers the provinces with minor broadband coverage, they are mainly in the south, with over 80% in the case of provinces with penetration below 30% of the national average. In the case of provinces whose capital cities are the major cities of Italy, these have a penetration of just over 30%, which, however, ranges from 23% for Palermo and Catania, to just under 35% for Rome, and to just above 36% for Milan.
Figure 1.12. Individuals resident in provinces with higher than national average broadband penetration (December 2012, %) Fino a + 10% Tra + 10% e +20%
NE; CE; NE; 7,9 20,9 18,8 SI; 41,7 NO; 25,7
CE; NO; 11,8 73,3 Tra +20% e Superiore a +30%
CE; +30% NE; 3,2 34,7 NO; NE; 41,8 34,8
NO; 30,5 CE; 55,0
Source: Authority processing and estimates using Istat, Telecom Italia, Fastweb, and Wi-Max operators' data
Figure 1.13. Individuals resident in the provinces with broadband penetration below the national average (December 2012, %)
21 The data has been processed on a provincial basis with a reference population on a national level equal to 59.4 million. Telecom Italia retail DSL access, wholesale ULL access, virtual ULL access, shared access, bitstream, Fastweb's fibre-optic access and the WiMax access of Aria, Linkem, Mandarin and WaveMax are all included. With the reference scope thus defined, national broadband penetration at 31 December 2012 is 24.87%. Key for macro regional areas: SI (South and Islands) = Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, Sicily; CE (Central Italy) = Marche, Lazio, Umbria, Tuscany; NE (North-East) = Friuli V.G., Emilia Romagna, Trentino A.A., Veneto; NW (North-West) = Liguria, Lombardy, Piedmont, Aosta Valley.
102
Fino a – 10% Tra – 10% e -20%
SI; NE; NE; 25,2 30,1 30,7 SI; 51,5
CE; NO; NO; 22,3 22,5 17,8 Tra -20% e -30% Inferiore a -30%
NO; NE; 9,7 11,6 CE; 8,2
SI; SI; 82,1 88,4
Source: Processing using Istat, Telecom Italia, Fastweb, and Wi-Max operators' data
With regard to broadband accesses22 in the country, a total of about 43% of households23 have a broadband line, with often distinct variation between the different Italian areas (Table 2.18). Values above average are therefore registered in Lazio (54.6%), Campania (48.7%) and Lombardy (47.1%), while Basilicata, Calabria and Molise have average values of between 30% and 35%.
Table 1.20. Broadband access (December 2012, % of households) Piedmont 40.3 Molise 30.5 Aosta Valley 37.4 Campania 48.7 Lombardy 47.1 Puglia 42.2 Trentino-Alto Adige 38.6 Basilicata 32.3 Veneto 39.8 Calabria 34.9 Friuli-Venezia Giulia 40.6 Sicily 41.0 Liguria 43.4 Sardinia 39.6 Emilia-Romagna 42.3 ITALY 43.9 Tuscany 44.4 Main towns/cities 63.2 Umbria 40.5 North West 44.7 Marche 44.6 North East 40.8 Lazio 54.6 Centre 49.0 Abruzzo 38.5 South and Islands 41.9 Source: processed and estimated by the Authority using company data
As already underlined in the last Report, broadband use by businesses is not easy to quantitatively assess, in view of the unusual employment structure Business of Italian companies, because of the large number of family businesses, in which broadband cases family and business use often coincide. The business usage data are services
22 Broadband access is made up of Telecom Italia's Xdsl accesses and, for the OLO, in addition to the “data unbundling”, “bitstream” and “fibre-optics” consistent with the present structure of EU reporting on the matter, also the virtual ULL and WiMax accesses. 23 The number of Italian households considered is that at 31 December 2011, as published by Istat, based directly on census data. Therefore the data are not the same as those indicated in last year's Annual Report (cf. note 42, page 95).
103
therefore based on the data of 4.829 million "local company units" where 94.5% have a staff of between 1 and 9 persons, while the average workforce does not exceed 3.6 persons.24 Given this, it is estimated that broadband accesses by businesses represent just over 50% on a national basis and almost 63% in large cities. Obviously the spread of broadband is highly differentiated according to company size. To this regard, it is estimated that over 92% of companies with at least 10 employees use broadband connection on a fixed network.25 Similarly, total fixed-network accesses in the following Table 1.21 gives, on a regional basis, a picture of the competitive situation relative to the Family broadband broadband service subscribers of the main operators. services On a national basis, Telecom Italia's market share at the end of 2012 is on average equal to 51.6%, with particularly significant figures in Calabria (66.1%), Trentino Alto Adige (66.9%) and Basilicata (66.2%), while in Sardinia, Liguria, Puglia and Lazio it is around 44%.26 At the same time, the consolidation process – already pointed out in the last Report – of the main OLOs (Vodafone, Wind and Fastweb) which together, at the end of 2012, have 42% of the market (against 40.7% at the end of 2011), is confirmed. Fastweb, in a context of overall growth of its own market share, confirms its activity particularly in the main Italian towns, where it is estimated to have an average market share of around 33%, which is higher than that estimated for Telecom Italia (around 30%). Wind, which compared to last year has increased its own market share by a few decimals, has achieved particularly important results in Puglia (27%), Campania (25.5%) and Sicily (22.2%). Lastly, with regard to Vodafone, on the one hand it is still the alternative operator with major territorial uniformity of its own market share, but at the same time shows a slight decrease in 2012, at both national and municipality levels.
24 Source: Istat Struttura e dimensioni delle unità locali delle imprese - 2010 [Structure and size of local business units - 2010], ed. 27 December 2012. It is also stated that a "local unit corresponds to a business enterprise or a part of a business enterprise situated in a topographically identified locality. In said locality, or starting from said locality, one or more persons carry out (also possibly on a part time basis) economic activities on behalf of the same company [...]. A company with premises in several localities is therefore a company which carries out its activity in several places, each of which represents a local unit of the company". 25 Istat, Le tecnologie dell’informazione e della comunicazione nelle imprese, anno 2012 [Information and communication technologies in companies, year 2012], 18 December 2012, page 2. 26 The slight discrepancy with what is indicated in figure 2.10 is due to the fact that the types of access considered are not quite the same. In this case, for example, shared access lines are not considered, due to their marginal nature, while in the data requested for European reporting accesses using minor technologies are also included.
104
Table 1.21. Broadband access – market share (December 2012, %) Telecom BT Vodafone Fastweb Wind Tiscali Other Tot. Italia Italia Italia Piedmont 49.7 14.6 16.5 0.9 2.8 13.2 2.2 100 Aosta Valley 62.4 10.1 8.5 0.3 1.7 15.7 1.3 100 Lombardy 47.2 18.1 13.3 1.1 3.2 13.7 3.4 100 Trentino A.A. 66.9 5.9 8.9 0.6 1.1 14.4 2.2 100 Veneto 59.0 7.4 12.1 0.8 1.8 15.5 3.3 100 Friuli V.G. 60.2 8.2 13.2 0.6 3.0 13.3 1.5 100 Liguria 43.3 20.4 16.5 0.7 2.8 14.3 2.0 100 Emilia- 54.4 13.4 13.3 1.0 2.7 13.4 1.9 100 Romagna Tuscany 59.5 9.9 13.2 0.9 3.0 11.2 2.3 100 Umbria 59.5 9.2 11.2 0.5 1.4 10.1 8.1 100 Marche 63.2 8.7 11.5 0.6 1.8 10.5 3.6 100 Lazio 44.9 18.5 18.9 0.8 4.0 10.3 2.6 100 Abruzzo 56.6 13.6 12.8 0.7 2.1 11.4 3.0 100 Molise 59.2 7.9 16.0 0.8 1.2 13.1 1.7 100 Campania 49.4 12.4 25.5 0.4 1.3 8.5 2.5 100 Puglia 44.2 10.5 27.0 0.4 1.3 10.9 5.7 100 Basilicata 66.2 9.4 8.3 0.5 1.8 11.6 2.1 100 Calabria 66.1 4.5 12.2 0.4 2.4 10.6 3.8 100 Sicily 52.0 8.1 22.2 0.5 2.6 11.4 3.2 100 Sardinia 43.9 4.4 8.1 0.5 30.0 11.0 2.2 100 ITALY 51.6 12.9 16.3 0.7 3.3 12.1 3.0 100 North West 47.5 17.4 14.4 1.0 3.1 13.7 2.9 100 North East 57.9 9.8 12.4 0.8 2.2 14.3 2.5 100 Centre 52.5 14.1 15.8 0.8 3.3 10.6 3.0 100 South and 50.9 9.6 21.1 0.4 4.2 10.4 3.4 100 Islands Source: processed and estimated by the Authority using company data
With regard to the total expenditure of households and companies on the Expenditure on fixed network (Table 1.22), in 2012 Telecom Italia's market share was just over fixed-network 61.2%, slightly below the 2011 figure. The aggregate weight of Wind and services Fastweb has grown by over 1 point, to the detriment of BT Italia (-0.4) Vodafone (-0.1) and Tiscali (-0.2). With regard to the competitive situation for home use, recovery has been registered for Telecom Italia (+0.5%) and Wind (+0.3%) at the expense, in particular, of Vodafone and Tiscali (both -0.4%). In the business market, Fastweb's results are particularly impressive (+1.6%), strengthened further by its position as the number two operator in the sector, while Telecom Italia and BT Italia have moved backwards by 1.8% and 0.6% respectively.
105
Table 1.22. Final expenditure of users per operator (%)27 User private business expenditure 2011 2012 2011 2012 2011 2012 Telecom Italia 61.7 61.2 63.4 63.9 60.0 58.2 Wind 9.0 9.4 14.3 14.6 3.2 3.5 Fastweb 10.0 10.7 7.5 7.5 12.7 14.3 BT Italia 5.3 4.9 0.0 0.0 11.1 10.5 Vodafone Italia 5.8 5.7 9.9 9.5 1.5 1.5 Tiscali 1.8 1.6 2.7 2.4 0.7 0.7 Other 6.3 6.5 2.1 2.1 10.8 11.4 Total % 100.0 100.0 100.0 100.0 100.0 100.0 Total (€ billions) 14.86 13.97 7.69 7.36 7.17 6.60 Source: processed and estimated by the Authority using company data
Excluding revenues deriving from access services, the weight of Telecom Italia in dial-up and broadband services (Table 1.23) in 2012 has fallen marginally (-0.4) to just under 52%. At the same time, Wind and Fastweb have both grown by 0.7 points and expanded their growth in the business segment by 0.9 and 1.6 points respectively. Contraction especially in home users is shown by Tiscali (-0.2) and Vodafone (-0.5).
Table 1.23. Revenues from end users for dial-up and broadband services (%) 28 Total private business 2011 2012 2011 2012 2011 2012 Telecom Italia 52.1 51.7 51.2 51.7 53.0 51.6 Wind 10.1 10.8 15.8 15.9 3.8 4.7 Fastweb 17.3 17.9 13.0 13.1 22.0 23.6 BT Italia 5.2 4.6 0.0 0.0 11.0 9.9 Vodafone Italia 8.3 8.2 13.7 13.1 2.4 2.4 Tiscali 3.0 2.9 3.8 3.6 2.1 2.1 Other 4.0 3.9 2.5 2.5 5.6 5.7 Total 100 100 100 100 100 100 Total (€ billions) 7.68 7.24 4.04 3.91 3.64 3.33 Source: processed and estimated by the Authority using company data
The aggregate represented by access revenues only from telephony services represents the most static market segment and that less inclined to innovation, in which the weight of access revenues determines a competitive situation very different from the other areas considered.
27 The market shares in 2011 (as also in the case of the values given in the following table), because of certain variations in the calculation methods used by companies also after the changed information structure which the Authority requests from companies, reclassifications and, in some cases, the diverse range of activities performed, cannot be compared directly with the corresponding values given in the last Report to Parliament. 28 The revenues from services on dial-up networks include local, national and international vocal traffic, dial-up Internet traffic, fixed and mobile traffic, and net revenues from calls to non-geographic numbers. Revenues from broadband services include fees, and voice and data services paid according to consumption. Access fees are excluded.
106
In the case in point, although there is a consistent reduction in total revenues (-8.5% vs the -6.0% average of fixed telephony) and a simultaneous reduction in traffic, it is clear that the weight of the fixed-cost component (i.e. mainly the access fee) tends to rise (Table 1.24). In fact, Telecom Italia's tariff review as of 1 July 2011 has in part contributed to the average increase in its market share of 0.4 points, which increases to almost 1 point in the residential segment, in which none of the main competitors considered have increased their market share. In the business segment, particularly good results are seen at Fastweb (+1.5).29
Table 1.24. Distribution of revenue from telephony services and access on dial- up networks (%) Total private business 2011 2012 2011 2012 2011 2012 Telecom Italia 73.1 73.5 71.5 72.4 75.4 75.3 Wind 9.5 9.6 14.9 14.4 2.0 2.1 Fastweb 3.5 3.8 1.3 1.0 6.5 8.0 BT Italia 4.5 3.9 0.0 0.0 10.9 9.9 Vodafone Italia 6.0 6.1 9.9 9.7 0.5 0.5 Tiscali 0.2 0.2 0.2 0.2 0.2 0.2 Other 3.2 3.0 2.3 2.3 4.4 4.0 Total 100 100 100 100 100 100 Total (€ billions) 7.19 6.58 4.21 3.98 2.98 2.60 Source: processed and estimated by the Authority using company data
With reference to broadband services (Table 1.25), where competitive dynamics are particularly intense, the value of the broadband market compared to that of telephony and fixed fees (above table) has increased from 61% in 2011 to 66% in 2012, confirming the progressive decline of traditional services.
Table 1.25. Distribution of revenue from end services on the broadband network (%) Total private business 2011 2012 2011 2012 2011 2012 Telecom Italia 42.3 42.2 39.6 40.9 45.5 43.9 Wind 12.2 13.2 18.8 19.5 4.5 5.7 Fastweb 26.3 26.3 20.2 20.0 33.5 33.9 BT Italia 1.8 1.7 0.0 0.0 3.9 3.7 Vodafone group 9.0 8.3 13.1 12.1 4.1 3.8 Tiscali 4.3 3.9 6.2 5.6 1.9 1.7 Other 4.2 4.4 2.1 2.0 6.7 7.3 Total 100 100 100 100 100 100 Total (€ billions) 4.36 4.37 2.37 2.38 2.00 1.99 Source: processed and estimated by the Authority using company data
The weight of Telecom Italia has decreased but to a very marginal extent (-0.1). This result is determined, on the one hand, by the recovery in the residential segment (+1.3) and, on the other, by the loss registered in the
29 The basic fee for B and C categories has increased from Euro 13.40 a month to Euro 13.75, representing an increase of 2.6%.
107
business segment (-1.6), where Fastweb (+0.4) and above all Wind (+1.2) are particularly aggressive.
Mobile network In the personal communication markets using mobile technology, total Expenditure on expenditure, which had already registered a contraction in 2011, has fallen even personal more intensely (-2.3%) (Table 1.26). Compared to last year, income from voice communication services has sustained a net reduction of 8.7%, and there has been marked services deceleration in the growth of data services (+1.6%, compared to an increase of 8.6% last year).30 The net growth in "other revenues" is mainly due to the considerable increase in the sale of devices, thanks to the popularity of smartphones and tablets, which obviously have higher unit prices. With an increase in sales of around 40% on 2011 values, and an increase of 21% in the total value of handsets on the Italian market on the part of all the distribution channels, it is estimated that the weight of mobile operators on the sale of handsets in 2012 has increased. It is worth noting that, like last year, the mobile operators have been intermediaries for about 30% of the total value of handset sales in Italy (Source: IDC Italia, April 2013).
Table 1.26. Breakdown of users' expenditure by type of service (€ billions) 2011 2012 % change Voice services 9.95 9.09 -8.7 Data services 4.65 4.72 1.6 Other revenues 2.21 2.61 17.9 Total 16.81 16.42 -2.3 Source: processed and estimated by the Authority using company data
Even if income from data services has not substantially changed from last year, the decrease in revenues from voice and intermediate services led to growth in 2012 of the weight of the data component with respect to total mobile telephony sales (Figure 1.14). In the last year, data revenue well exceeded the 50% of voice revenue, and now represents, considering total resources and retail resources in the sector as the reference scope, almost 20 and 30% respectively.
30 It must be noted that the data available this year are not perfectly comparable with those of last year, because certain companies have broken down the total cost into voice services, data services and terminals in a different manner. This has led to a reduction in revenues from data services (by about 4.65 vs 4.93 billion) to the advantage of voice services, which have increased from about 9.7 to 9.9 billion.
108
Figure 1.14. Revenues from data/voice services, retail and totals (%)
Source: processed and estimated by the Authority using company data
Voice traffic (Table 1.27) grew again in 2012 (+6.0% against +9.6% last year), but it must be noted that, for the first time, the traffic to fixed devices has undergone a slight decrease (-0.9%) because of the continuous contraction in fixed-network access and the growth of the mobile-only households. At the same time, contrary to the trend in recent years, there has been growth in off-net calls greater than the growth of on-net calls, which is probably due to the further decrease in call termination prices, as well as the increased MVNO customer base. Consequently, the on-net component, both voice and SMS, has slightly declined (Table 1.28), albeit remaining above 58%.
Table 1.27. Mobile telephony voice traffic (billions of minutes) 2011 2012 % change Fixed network 14.9 14.8 -0.9 Mobile on-net 81.2 83.7 3.2 Mobile off-net 30.3 35.3 16.6 Other destinations 9.6 10.4 7.9 Total 136.0 144.2 6.0 Source: processed and estimated by the Authority using company data
Table 1.28. On-net component of revenues from voice calls and SMS/MMS (% of the total) 2011 2012 Voice 60.1 59.3 SMS/MMS 55.8 54.4 Average 59.1 58.2 Source: processed and estimated by the Authority using company data
A synthetic view is given below of revenues from voice services broken down by route (Table 1.29) and by type of data service (Table 1.30)
109
Income from services on mobile networks (which, in 2012, represent about 74% of the total) suffer a reduction of 8.5%, with a differentiation between revenues connected to on-net calls (-9.8%) compared to off-net calls (- 6.7%).
Table 1.29. Revenues from voice services according to route (€ billions) 2011 2012 % change Mobile network 7.40 6.76 -8.5 - on-net 4.45 4.01 -9.8 - off-net 2.95 2.75 -6.7 Fixed network 1.38 1.21 -11.8 International networks 1.18 1.11 -5.7 Total 9.95 9.09 -8.7 Source: processed and estimated by the Authority using company data
With regard to data services, within a continuous growth of total income, two opposing trends can be observed: the first is a decrease in revenues from SMS of more than 8%, while those linked to the use of online services have grown by more than 12%. The results illustrated have therefore allowed the latter to reach 53% of revenues (48% in 2011) in the market considered. It is to be noted that innovative data services are beginning to appear on the market, such as mobile payment which, albeit still in its early stages, registered revenues of about Euro 50 million in 2012.
Table 1.30. Revenues from data services according to type (€ billions) 2011 2012 % change SMS 2.19 2.00 -8.3 Internet access and navigation 2.23 2.50 12.3 Other data services 0.23 0.22 -7.4 Total 4.65 4.72 1.6 Source: processed and estimated by the Authority using company data
Growth in revenues from data services is obviously linked to the progressive popularity of advanced terminals (smartphones and tablets), enabled for surfing and the use of Internet services, especially those linked to social network participation. Mobile network Give the above, the SIMs which have carried out data traffic in the first data traffic quarter of 2013 can be estimated at 32 million (Figure 1.15)31, with growth of 36% compared to the corresponding quarter of 2011 and of 17% compared to the first quarter of 2012. In parallel, the "data-only" SIMs have increased, reaching 8.6 million.
31 In consideration of the considerable methodological changes adopted by companies in the quantification process, consequent to which the values obtained lack standardisation to a non-marginal extent in respect of those published last year in figure 2.14 on page 103, it was deemed opportune to omit the indication of time periods prior to the fourth quarter of 2012, but to indicate the period of time considered in December's quarterly Observatory. Furthermore, as of this year - unlike in the past - the data not only include the MNO figures but also the MVNO figures.
110
At the same time, data traffic volumes transmitted on mobile networks (Figure 1.16) have exceeded 250 petabytes (+31% compared to 2011) and they have increased more than ten-fold since 2008.
Figure 1.15. Data SIMs and connect cards (millions)
Source: processed and estimated by the Authority using company data
Figure 1.16. Data traffic on mobile network (petabytes)
Source: processed and estimated by the Authority using company data
The final total expenditure for SIMs (Table 1.31) in 2012 has fallen by Unit SIM 4.1%, to just under Euro 170 Euro/year. This trend derives from an accentuated revenues decrease in voice revenues and, for the first time, a change, also negative albeit contained (-0.3%), in the unit expenditure for data services, which remains at around 49 Euro/year.
111
Table 1.31. Unit revenues per active SIM (€ per year) 2011 2012 % change Total final expenditure 177.2 169.9 -4.1 Voice services 102.2 91.7 -10.3 Data services 49.0 48.9 -0.3 Source: processed and estimated by the Authority using company data
per user Income per user32 has fallen on average by 2.3% (Table 1.32) which is also a greater decrease than that in 2011. Analysing the two main components, revenue from voice services decreases by 8.6% and expenditure on data services increases by 1.6%, resulting in just under 100 Euro/year.
Table 1.32. Unit revenues per user (Euro/year) 2011 2012 % change Total final expenditure 352.7 344.5 -2.3 Voice services 203.4 186.0 -8.6 Data services 97.6 99.1 1.6 Source: processed and estimated by the Authority using company data
The continuing fierce competition on the market, reinforced also by the growth of the MVNOs (for which the increase in the average customer base is estimated at about 900 thousand) has produced a heavy fall in unit revenues for the main types of services (Table 1.33). In terms standardised to those of 2011, revenues by minute of voice calls and per have fallen to less than 6.4 cents/minute (-13.9%), SMS "cost" 15.2% less, communication while unit revenues from data have decreased by 15.5%.33
Table 1.33. Unit revenues for voice, SMS and data traffic 2011 2012 % change Voice conversation (€ cents/minute) 7.41 6.38 -13.9 SMS sent (€ cent/message) 2.46 2.09 -15.2 Data traffic (€/GB) 12.81 10.83 -15.5 Source: processed and estimated by the Authority using company data
32 The values in the table in question were calculated taking as a reference the census data of the resident population at 31.12.2011 (59.4 million) published by Istat (http://dati.istat.it/?lang=en&SubSessionId=88652b9b-1017-4cef-84a6-c190b4e3b19b extraction of 26 April 2013). Since the National Statistics Institute (Istat) has not yet published historic series of comparable data (specifically relative to the end of 2010 and at the end of 2012), on this occasion the number of users in 2011 and in 2012 is assumed as being constant. Using the same methodology as in the past, by assumption users are estimated as being 95% of the population between 11 and 80 years of age. Therefore the total figure is estimated at 47.66 million, about 0.5 million fewer than last year's estimate. 33 On this occasion revenue from MMS and other content generated by user terminals, Internet access and surfing, mobile TV services, other innovative data services such as mobile payment, services for interaction with the Public Administration, etc. have been considered.
112
The competitive situation in 2012 shows (Table 1.34) a non-marginal fall in the market share of Vodafone (-3.4%) to the advantage of Wind (+0.7) and Mobile market above all H3G (+2.7), while Telecom Italia has returned to the position of shares market leader but with a slight reduction in its market share (-0.4), and the MVNOs represent just above 3% of the market. The largest decrease for Vodafone is in the private segment (-4) whereas Wind increases in both segments, while the growth of H3G brings it close to 10% of the private market and to 14% in the business market.
Table 1.34. Market shares considering final expenditure by type off clientele (%)
- of which - of which Final private business expenditure34 customers customers 2011 2012 2011 2012 2011 2012 Telecom Italia 34.8 34.4 30.6 30.7 52.4 50.3 Vodafone 35.8 32.4 38.7 34.7 23.8 22.2 Wind 19.1 19.8 21.5 22.0 9.1 10.2 H3G 7.6 10.4 6.8 9.6 11.3 13.7 MVNOs 2.6 3.1 2.5 2.9 3.4 3.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 Total (€ billions) 16.81 16.42 13.57 13.35 3.24 3.07 Source: processed and estimated by the Authority using company data
Looking at the competitive situation of the market according to type of operator (MNO/MVNO) (Table 1.35), the structure of the network operators confirms what has already been noted relative to the preceding table, and it is interesting to observe, in respect of the MVNOs, how the model - adopted by Fastweb, BT Italia, Tiscali and Green ICN – based on the integration of the fixed- network services with those of the mobile network, showed signs of saturation in 2012, with a fall in market shares which, overall, has reached 4%.
34 The market shares for 2012, because of certain variations in the calculation methods and reclassifications adopted by the companies (except for "3", all present in both fixed and mobile telephony), cannot be compared with the corresponding values given in the previous Report to Parliament.
113
Table 1.35. User expenditure – market shares by type of operator (%)
MNO 2011 2012 MVNOs 2011 2012 Telecom Italia 35.7 35.4 Poste Mobile 52.4 55.8 Vodafone 36.8 33.4 Fastweb 17.0 16.7 Wind 19.6 20.4 BT Italia 12.7 9.1 H3G 7.9 10.7 Coop Italia 5.8 6.8 Total 100.0 100.0 Daily Telecom 4.9 4.4 Total (€ billions) 16.37 15.92 Others 7.2 7.2 Total 100.0 100.0 Total (€ billions) 0.44 0.50 Source: processed and estimated by the Authority using company data
However, the business model based on postal and financial services continues to find favour with the market, with Poste Mobile, seeing growth of MVNO income of more than 13%, achieving an increase of almost 3.5%, thus coming close to 56% of the segment (and 1.7% of the total mobile market). Competitive pressure has led to a reduction in unit revenues also in this market segment, with ARPU (average revenue per user) increasing from Euro 132 in 2011 to 123 in 2012 (-7.3%) (values calculated on the annual average customer base). Considering voice and data service in detail (Table 1.36) Vodafone has undergone an average decrease of just over 2%, which practically reaches 3% in the business segment, where Wind has increased by the same amount. H3G and the MVNOs obtain positive results in the private segment (+0.8), while Telecom Italia shows a marginal fall in both compartments.
Table 1.36. Market shares of voice and data services (%)
Voice + data Voice services Data services 2011 2012 2011 2012 2011 2012 Telecom Italia 34.9 34.5 35.2 34.9 34.1 33.8 Vodafone 35.9 33.9 34.4 32.6 39.1 36.2 Wind 19.8 21.0 22.4 23.0 14.4 17.3 H3G 6.8 7.5 5.0 5.8 10.5 10.6 MVNOs 2.6 3.2 2.9 3.7 1.9 2.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 Total (€ billions) 14.60 13.81 9.95 9.09 4.65 4.72 Note: Compared to users' total expenditure (see above), the figures given are those of the shares relative to only the core services of the mobile managers (voice and data), therefore excluding the “other revenues” i.e. income deriving from the sale of other services and products such as devices and other terminals and accessories. Source: processed and estimated by the Authority using company data
In 2012 active SIMs increased by over 900 thousand units, consequent to a fall of the same volume in prepaid lines and a simultaneous increase of over 1.8 million in subscriptions, of which 1.4 million are held by private customers (Table 1.37).
114
The above findings seems to confirm what was registered last year. i.e. that the growth of subscription contracts (which have reached almost 19% of the total) reflects the customer loyalty strategies with bundle offers and demonstrates the importance, in a saturated market, of data SIM dynamics, in a context of strong growth of dedicated devices (such as tablets).
Table 1.37. Active SIMs by type of customer and type of contract (in thousands) Private Business Total customers customers 2011 2012 2011 2012 2011 2012 Active lines 83,534 84,059 12,507 13,213 96,041 97,271 - of which, 78,617 77,754 1,120 1,057 79,737 78,811 prepaid - of which, post- 4,917 6,305 11,388 12,156 16,304 18,461 paid Source: processed by the Authority using company data
The analysis of the trend of SIMs by operator (Table 1.38) in 2012 casts Distribution of light on a fall in the weight of Telecom Italia and Vodafone (by respectively 0.5 SIMs by operator and 1 point): the average result of the former is due to opposite trends, with a fall in the private segment and an increase in the business segment, whereas the latter has undergone decrease in both segments. Growth continues for the MVNOs, which earn almost one point, reaching a total market share of almost 5%. Table 1.38. Active SIMs per operator (%) - private - business Total SIMs customers customers 2011 2012 2011 2012 2011 2012 Telecom Italia 33.6 33.1 30.4 29.5 54.3 55.6 Vodafone 31.2 30.2 31.8 30.8 27.1 26.4 Wind 21.9 22.3 24.3 24.9 5.5 5.4 H3G 9.6 9.8 9.3 9.8 11.1 9.6 MVNOs 3.8 4.7 4.1 4.9 1.9 2.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 Total SIMs (mln) 96.04 97.27 83.53 84.06 12.51 13.21 Source: processed and estimated by the Authority using company data
More in detail, regarding the MNOs, there is no great change (Table 1.39): a 0.9% decrease for Telecom Italia and Vodafone together and an increase of the same amount for H3G and, in particular, for Wind; of the MVNOs, there is a slight decrease in the weight of the first five main operators, who hold just under 90% of the market at the end of 2012.
115
Table 1.39. Active SIMs – market share by type of operator (%) MNO 2011 2012 MVNOs 2011 2012 Telecom Italia 34.9 34.7 Poste Mobile 55.7 54.7 Vodafone 32.4 31.7 Fastweb 14.8 14.8 Wind 22.7 23.3 Coop Italia 7.7 7.1 H3G 10.0 10.3 ErgMobile 6.9 7.0 Total 100.0 100.0 Daily Telecom 6.0 5.1 Total SIMs (mln) 92.39 92.72 Others 8.9 11.1 Total 100.0 100.0 Total SIMs (mln) 3.65 4.55 Source: processed and estimated by the Authority using company data
The trend of the total customer base, determined by the dynamics of lines Mobile number transferred and new lines acquired – mainly through the activation of the mobile portability number portability service – provides a significant indicator of the state of competition on the market. In particular (Table 1.40), the sum of lines acquired and lines lost by the MNOs in 2012 exceeded 58.5 mln (+15.5% compared to 2011). Wind is the only network operator which grew, regarding both new lines acquired (+1.4%) and the allocation of transferred lines (+2%). The availability of base data on an operator's transferred lines (acquired and lost) shows that there is a "dynamic relationship with the market" (Figure 1.17).
Table 1.40. Active SIMs of network operators – acquisitions and disposals (%) Lines acquired Lines disposed of 2011 2012 2011 2012 Telecom Italia 31.8 29.8 29.2 30.4 Vodafone 30.5 30.5 35.4 32.8 Wind 26.2 27.6 23.7 25.8 H3G 11.5 12.0 11.7 11.0 Total MNO 100.0 100.0 100.0 100.0 Source: processed and estimated by the Authority using company data
116
Figure 1.17. SIM/customer base change (2012 in %)
Note: Index representing the ratio between the sum of the lines acquired and those lost (the numerator) and the average customer base in 2010 (denominator), the latter considered as half of the sum of total volumes at 31 December 2011 and 31 December 2012. Source: processed and estimated by the Authority using company data
Overall, operations carried out through the mobile number portability service reached 50 million at the end of 2012 (+12.7 million compared to 2011). From the examination of the annual operations, the effectiveness of resolution no. 147/11/CIR is clear, which, having drastically reduced the time necessary (to less than two working days) for the activation of the service has strongly encouraged companies to accept offers that are aggressively competitive in respect of the customers of the other operators (Figure 1.18).
117
Figure 1.18. Mobile Number Portability – annual operations (millions)
Source: processed and estimated by the Authority using company data
Table 1.41 shows, on an annual basis, for each operator, the dynamics of the operations in terms of lines lost and acquired (donor and recipient). In terms of “donor” operators, the quotas of H3G and Telecom Italia have fallen respectively by 3.6 and 2.7 percentage points, while at the same time they gain as “recipients”. The result, in terms of change in volume, shows H3g improving its own "balance" by almost 600 thousand lines and Telecom by over 200 thousand. Wind also shows an increase, as both donor and recipient, with net balance reduced by 170 thousand lines. Vodafone's capacity to attract customers from the other operators has reduced (-3.7) and in absolute value the balance has decreased by over 600 thousand lines.
Table 1.41. Mobile Number Portability: distribution between operators (%) Donor Recipient 2011 2012 2011 2012 H3G 11.3 7.7 9.8 11.2 Telecom Italia 31.4 28.7 22.9 24.9 Vodafone 29.6 31.1 31.5 27.8 Wind 22.3 25.7 26.5 27.2 MVNOs 5.3 6.7 9.2 8.9 Total 100.0 100.0 100.0 100.0 Source: processed and estimated by the Authority using company data
118
2.3. Media services The media sector as a whole, is undergoing a structural change, in which 2012 was a year of crucial transition. As discussed in detail below, all the communication media except the Internet sustained a sharp decline in revenues. In particular, despite the macroeconomic crisis in progress, the Internet recorded an increase of over 10%, while all other sectors suffered heavy losses. The value of Figure 1.19 shows the evolution of the media sector in terms of resources, media services from 2009 to 2012, clearly showing the reduction over the last year and offering indications regarding the evolution in progress and the recent changes in the weight of different media.
Figure 1.19. Development of the resources of the communication means (€ mln)
(*) For 2012, the value shown in the Figure represents the Authority's estimate. Source: processed by the Authority using company data
It is estimated that in 2012 the media sector (including both advertising and revenues from paid services) suffered a general decline of about 9% compared to 2011; the size of the decrease is likely to bring the industry back to levels significantly lower than those recorded in 2009 (Euro 15.7 million compared to 16.6 four years ago). Of the traditional media, the only market which, albeit showing a decrease last year, has grown over the last four years is pay-TV, thanks to the spread of a model more geared towards customisation of content than to offering generalised content. In this sense, however, the Italian market is lagging behind the other developed countries.
119
From the advertising point of view, for the first time there was a drastic fall in television advertising revenues (-18%), a field which, until last year, had presented a strong holding power, even during a period of overall stagnation. As early as next year, dealing with a longer period of time, it will be possible to assess the evolution of the market, estimating how much of the crisis in the sector can be attributed to cyclical factors and how much to phenomena of a structural nature.
The development It is worth noting, in fact, the development of new forms of of new forms of communication that go beyond the simple concept of media convergence. These communication changes are no longer limited to the publishing world, which was the first to suffer from the impact of digital media, but they are also beginning to affect the television industry. The Internet is fast becoming an alternative tool to take television content directly to viewers, leading to a change not only in users' consumption habits, but also in the business prospects of publishing and audiovisual content providers. In 2012, there was in fact an exponential growth of the use of video on the Internet. Worldwide, about 1.3 billion people watched on average 162 videos online per month.35 It is to be noted that video content became popular when quality content was available, that is when there was a change from the mere availability of user-generated content to "premium" content. The interactivity, enhanced by the spread of social networks and combined with the viral nature of the medium, leads to increasingly complex forms of dis-intermediation and/or re-intermediation. The increased availability of Internet access, also and especially mobile, has improved and enhanced users' experience of media consumption, contributing to a rapid increase in mobile media consumption.36 The rapid adoption of mobile devices (smartphones and tablets) results in a very fragmented digital landscape. In particular, in the last year, multi platform television services have been created for the enjoyment of pay TV also in mobile mode. An evolution of new formats is taking place, for the broadcasting of advertising which is increasingly elaborate and sensitive to the profiles of the users of the medium (via social networks, mobile adv.). These characteristics have made online advertising the second biggest form of advertising in Italy. In the past year, similar to what is happening in terms of content, video advertising has greatly evolved, combining the opportunity to carry out timely promotion addressed to a specific target with the ability to offer an audiovisual advertising experience. In fact, because of the different trends between traditional media and new The ratio media, the balance of the two areas is still tipped towards the use of traditional between media. The resources attracted by the new media (approximately 10% in 2012), traditional means and new media 35 ComScore Video Metrix, February 2013, and ComScore, The Past, the Present and the Future of Online Video, Audiovisual Media Days, 23.04.2013 Munich.
36 Comscore, Mobile Future in Focus 2013.
120
although growing constantly, are still a minority compared to those of traditional media (90%) (Figure 1.20). In this framework of strong change, it is therefore necessary to consider that traditional media, such as television in particular, still represent in Italy, but also abroad, by far the prevalent sources of entertainment and information for citizens. The new edition of the Observatory on the use of the media, which will be published by the Authority in autumn this year, will provide additional feedback and information on this development.
Figure 1.20. Traditional media vs the Internet
(*) For 2012, the value shown in the Figure represents the Authority's estimate. Source: processed by the Authority using company data
Correspondingly, the systems on the market for assessment, at all levels37, are evolving in order to capture the various specific types of media evolution in progress.38 The tools for The Authority has various tools to improve the ability to analyse the analysis phenomena and to follow closely, and scientifically, the evolution of the media developed by the industry. In addition to the above-mentioned Observatory on the use of the Authority media by citizens, in January this year the first edition of the Observatory on advertising was published (cf. Focus 10).
37 To this regard, the Federation of Advertising Operators (FCP) has amended the request for information to its members for online advertising, in order to cater for all forms of advertising available on this medium. 38 For example, in the more advanced countries there has recently been a reduction in the use of the social networks through wired connections, but the analysis of the data also shows a marked increase in the time spent on use via mobile devices (cf. Comscore Mobile Metrix)
121
As for the analysis of the offer, the Authority has avail of the System Economic Survey, to which all media market players are obliged to respond, including advertising agencies that operate on such means. Starting next year, all subjects which gather online advertising will be required to comply with the disclosure obligations, since the law has included these within the Integrated Communications System, so that the Authority will be able to give census-type data and information on all the media. In any case, as for the last two years, data and information on all media are given herein (TV see par. 2.3.1, Radio see par. 2.3.2, newspapers and magazines see par. 2.3.3 and the web see par. 2.3.4), including the Internet, which provides an estimate of the overall market including all the major players of the sector (broken down into search engines, social networks, traditional dealerships). Lastly, the Authority has carried out and continues to carry out surveys (see for example that on advertising revenues which it has just concluded with resolution no. 551/12/CONS) in order to gain in-depth knowledge of the most innovative markets, and to provide a stable basis for its own regulatory and supervisory action. The Survey on Internet Services and Online Advertising is being carried out within this sphere (started last January). The aim is to examine all the issues related to the evolution of the web, encouraging the participation of professionals and users of these services.
2.3.1. Television
Introductory framework: legislative changes and market evolution Over the past three years, the television industry has experienced profound changes, both in terms of business and technology, as well as The processes of legislation. In particular, the digitalisation of the networks and the development transformation of distribution platforms with greater transmission capacity have increased the taking place in variety and availability of both free and paid content. This process has overcome television the problems of scarcity existing for analogue audiovisual media and expanded the technical potential related to the same, contributing to the development of economic activities and business models offered by audiovisual-content distributors. What is primarily reflected in a profound transformation of audiovisual communication and by a general linear model - as traditionally conceived - has evolved according to nonlinear and customised forms, where the user may access content using multiple devices and methods (such as simulcast, replay- TV and catch-up TV and the net TV offers) and at different times of the day. In such a scenario, the two main distinctions for the end user become, on the one hand, that between free and paid services and, on the other, that between linear and nonlinear services, i.e. usable simultaneously with the community of other viewers tuned in to the same content. In parallel, there has
122
been an evolution of the business models of the traditional operators: new players have appeared, such as content-sharing platforms, which are flanked by the figures of the network operators, content providers and service providers (already redefined in the light the transition to digital), sharing their own audiovisual content and/or that of third parties and offering them to the end user in packages free of charge or as paid services. On the other hand, however, last year's data still show a persistent preference on the part of users for audiovisual content through traditional platforms (digital and satellite), while the forms of usage connected to Internet web TV remain the minority, and joint electronic communications services and audiovisual services with IPTV technology are also marginal. From an economic viewpoint, the overall picture is affected by the persisting economic downturn. Advertising revenues and consequently free-to- air television suffer most (which is the most important advertising market). Pay- TV is affected to a lesser extent, with a marginal decline.
General outline After a slight decrease registered in 2011, the trend of television service revenues in 2012 has significantly decreased (-8.7%) (Table 1.42). This decline Trend of primarily regarded free-to-air TV (-11.9%), while pay-TV revenues have revenues decreased less (-3.5%). The reduction in total television revenues is in fact mainly due to the decrease in advertising revenues.
Table 1.42. Total television revenues broken down by relevant market (€ mln)
Revenues (€ mln) Incidence Δ2012/ on the 2009 2010 2011 2012* 2011 total (%) (2012) Free TV 5,419.90 5,618.78 5,512.65 4,855.30 -11.9% 59.0% Pay TV 3,169.83 3,406.17 3,490.94 3,368.90 -3.5% 41.0% Total 8,589.73 9,024.95 9,003.59 8,224.19 -8.7% 100.0% * Estimated values. Source: processed by the Authority using company data
To this regard, as can be seen from Table 1.43, while in 2010 there was a recovery in advertising revenues, there was stagnation in 2011 which worsened in 2012 with a decline estimated by the Authority at -17.9%. However, advertising remains the main source of funding for audiovisual services on traditional media, especially free-to-air television, with a share of 42.2% of total resources. The pay offer is also affected by the economic situation, although to a much lesser extent, with an estimated reduction of
123
1.4%. Revenues from subsidies and agreements with public bodies have also decreased, while those from licence fees are the only source of funding which has registered positive growth (+2.3%).
Table 1.43. Total television revenues divided according to type (€ mln) Incidence Δ on the 2009 2010 2011 2012** ’12/’11 total (%) (2012) Licences* 1,531.53 1,586.15 1,606.15 1,643.23 2.3% 20.0% Paid services 2,867.23 3,006.60 3,050.45 3,006.72 -1.4% 36.6% Advertising 4,024.15 4,282.36 4,221.27 3,467.52 -17.9% 42.2% Grants/Agreements 166.82 149.85 125.72 106.73 -15.1% 1.3% Total 8,589.73 9,024.96 9,003.59 8,224.19 -8.7% 100% (**) For the correct allocation of the amount of the licence fee to be assigned to the television activity, the separate accounting system of RAI was taken into account, relative to the financial year 2011, and the relative accounting aggregates: the licence fees to be attributed to television broadcasting were calculated by applying to the total value a percentage equal to the direct costs attributed to the public service (aggregate A of the official accounts). ** Estimated values. Source: processed by the Authority using company data
Like last year, the recessionary economic environment, on the one hand, determines a reduction in advertisers' budgets, and a consequent decrease in advertising revenues; on the other hand, the impact of the economic downturn on the real income of households has led to a reversal of the trend of growth in revenues from fee-based services. In the case of pay-TV, the purchasing power of households has decreased considerably over the years, given the stronger growth in the prices of pay-TV offers than in consumer prices; conversely, the trend of the TV license fee (i.e. the government tax for possessing a receiver) was more in line with inflation.
124
Figure 1.21. Television prices for consumers
Source: Istat
With regard to the breakdown of revenues by operator, as shown in Table 1.44, there continues to be a three-part division in the sector between Mediaset, Sky Italy and RAI, which jointly collect about 90% of total resources. More specifically, in 2012, there was a sharp decline in sales of the Mediaset group (- 13.2%) and the RAI group (-7.5%), mainly due to decreasing advertising revenues. Sky Italia revenues have also decreased, although to a lesser extent (-1.4%), reflecting the greater resilience of pay television. The remaining 10% of television revenues is spread among a large number of national and local free-to-air broadcasters and pay-TV services, including the Telecom Italia group, which offers free-to-air programmes through its subsidiary Telecom Italia Media. However, in 2013 this group sold the assets relating to the La7 channel to the Cairo Communications group.
125
Table 1.44. Television revenues broken down by operator (€ mln)
Incidence Δ on the 2009 2010 2011 2012** ’12/’11 total (%) (2012) Mediaset 2,562.98 2,893.16 2,865.48 2,487.79 -13.2% 30.2% Advertising 2,251.45 2,433.37 2,347.90 1,966.49 Pay services 311.53 458.35 516.41 520.22 NewsCorp./ 2,583.18 2,706.44 2,668.84 2,631.62 -1.4% 32.0% Sky Italia Advertising 154.67 268.92 258.86 195.12 Pay services 2,428.50 2,437.52 2,409.98 2,436.50 RAI 2,490.25 2,571.93 2,532.13 2,343.18 -7.5% 28.5% Licences* 1,531.53 1,586.15 1,606.14 1,643.23 Advertising 909.90 946.58 890.69 683.56 Telecom 152.68 154.15 158.82 146.61 -7.7% 1.8% Italia Media Advertising 146.78 154.15 158.82 146.61 Other 800.64 699.27 778.32 614.99 -21.0% 7.5% operators Advertising 561.35 479.33 565.01 475.74 Total 8,589.73 9,024.95 9,003.59 8,224.19 -8.7% 100.0% (**) For the correct allocation of the amount of the licence fee to be assigned to the television activity, the separate accounting system of RAI was taken into account, relative to the financial year 2011, and the relative accounting aggregates: the licence fees to be attributed to television broadcasting were calculated by applying to the total value a percentage equal to the direct costs attributed to the public service (aggregate A of the official accounts). ** Estimated values. Source: processed by the Authority using company data
Demand for television entertainment and information Although continuing to show a slight decrease, the audience of general broadcasters remained unchallenged in 2012 (Figure 1.22). More specifically, comparing the data relative to the average daily share, RAI has around 40%, Television and Mediaset just under 35%, accounting together for about 75% of the audience audience. The 6 general channels of the two broadcasters have registered a fall in average audiences, only in part compensated by themed channels. The audience trend of the other terrestrial broadcasters has shown an increasing trend in the last year, while the Sky channels and those of the other satellite broadcasters have sustained a stable decline of around 12-13%.
126
Therefore, the historic operators show inertia, and the general channels are undergoing a slow, but constant decline with a correlated consolidation of the themed channels, also thanks to the spread of terrestrial digital, indicating a more personalised consumption of television content.
Figure 1.22. Television audience
Source: processed by the Authority using Auditel data With reference to the reception methods of the television product, the completion of the digitalisation process is evident from the fact that at the end of 2012, with the completion of the switch-off, analogue broadcasting has ceased. Almost 85% of the population receive television content using terrestrial digital technology, while the rest of the audience watch via the satellite platform which, compared to last year, has shrunk slightly (-1.1%). Lastly, audiences using IPTV platforms are completely marginal, smaller even than previously, and this seems to be an indication that users greatly prefer watching television broadcast on the traditional platforms.
Table 1.45. Television audiences by platform
Mar-10 Mar-12 Mar-13 Average Share Average Share Average Share Platform audience (%) audience (%) audience (%) Analogue 5,055,873 48.0 1,196,198 11.0 0 0.0 Digital 3,763,948 35.7 7,814,445 71.9 9,865,394 84.4 terrestrial Satellite 1,586,942 15.1 1,807,831 16.6 1,812,015 15.5 IPTV 29.845 0.3 20.074 0.2 7.501 0.1 Source: processed by the Authority using Auditel data
As regards news, there is a general fall in the audiences of TV news programmes transmitted by the main national broadcasters, indicating greater
127
attention on the part of viewers to alternative types of news programmes. In particular, in both the morning and evening time brackets, the two main news programmes (TG1 and TG5) have each lost almost 2 percent of their audience. The news programme of La7, which last year registered an increase in audiences (up to 10% in the evening time bracket), also shows a slight fall (-2 percent). The audience data of the main news programmes of the satellite platforms (Sky TG24) are substantially stable, with values of just under 0.5%.
Table 1.46. Audiences of the main news broadcasts in 2010 and 2011
2010 2011 2012 Average Average Average Programm Time Share Share Share Channel viewers viewers viewers e bracket (%) (%) (%) (,000) (,000) (,000) Rai1 TG1 morning 26.51 1.315 25.57 1.466 24.40 1.405 late Rai3 TG3 12.34 1.208 13.43 1.308 12.21 1.204 morning CANALE 5 TG5 morning 23.54 1.282 22.49 1.292 21.61 1.260
LA 7 TG LA 7 morning 4.76 228 4.86 249 4.46 223
Sky TG 24 Sky TG 24 morning 0.88 40 0.93 52 0.81% 46
Rai1 TG1 daytime 26.74 4.529 24.01 4.257 22.59 4.056
Rai2 TG2 daytime 18.07 2.858 18.76 3.059 18.13 2.979
Rai3 TG3 daytime 11.90 1.806 12.65 2.007 11.60 1.888
Rai3 TGR daytime n.a. n.a. 17.14 2.943 16.43 2.862
CANALE 5 TG5 daytime 24.29 3.901 21.82 3.623 19.95 3.326 STUDIO ITALIA 1 daytime 20.93 2.674 19.53 2.554 17.75 2.334 APERTO LA 7 TG LA 7 daytime 3.66 536 5.70 1.009 4.70 842
Sky TG 24 Sky TG 24 daytime 0.37 53 0.45 76 0.44 76
Rai1 TG1 evening 26.91 5.915 23.66 5.300 22.59 5.101
Rai2 TG2 evening 9.60 2.311 9.96 2.450 8.83 2.196
Rai3 TG3 evening 14.38 2.245 14.70 2.344 12.85 2.120
Rai3 TGR evening n.a. n.a. 15.23 2.921 14.19 2.789
RETE 4 TG4 evening 6.42 1.002 6.06 977 5.68 941
CANALE 5 TG5 evening 22.38 4.911 20.11 4.515 19.26 4.361 STUDIO ITALIA 1 evening 10.72 1.351 9.70 1.266 8.04 1.118 APERTO LA 7 TG LA 7 evening 4.98 1.079 9.55 2.166 7.81 1.780
Sky TG 24 Sky TG 24 evening 0.22 50 0.32 55 0.29 51 Source: processed by the Authority using Geka data
128
Free TV With the completion of the switch-off process, almost the entire Italian Free-to-air population is reached by the digital signal (both terrestrial and satellite) and in services March 2013 22.8 million households had at least one digital receiver (an increase of 500,000 on the previous year). Compared to last year, the already varied range of free television channels has been further enriched, thus increasing the wide choice of themed channels available to users.
Table 1.47. Main free-to-air TV channels Digital native Ex- (DTT, Channel Publisher Analogue satellite, IP TV) Rai 1 X RAI Rai 2 X RAI Rai 3 X RAI Rai 4 X RAI Rai 5 X RAI Rai Sport 1 X RAI Rai Sport 2 X RAI Rai News 24 X RAI Rai Scuola X RAI Rai Storia X RAI Rai Gulp (also+1) X RAI Rai Movie X RAI Rai Premium X RAI Rai Yoyo X RAI Canale 5 (also +1 and HD) X Mediaset Italia 1 (also +1 and HD) X Mediaset Rete 4 (also +1) X Mediaset Boing (also +1) X Mediaset Iris X Mediaset La5 X Mediaset Mediaset Extra X Mediaset Italia 2 Mediaset X Mediaset TgCom24 X Mediaset La7 X Telecom Italia Media La7D X Telecom Italia Media MTV X Telecom Italia Media MTV Music X Telecom Italia Media Deejay TV X Gruppo Editoriale L’Espresso Repubblica TV X Gruppo Editoriale L’Espresso Cielo X Sky Italia Real Time (also +1) X Discovery DMAX X Discovery K2 X Switchover/Discovery Frisbee X Switchover/Discovery Yellow X Switchover/Discovery Focus X Switchover/Discovery Coming Soon X Anica Class News X Class SportItalia X Interactive
129
SportItalia2 X Interactive SportItalia24 X Interactive Source: The Authority
With regard to economic resources, however, the competitive situation The economic shows that very high shares are still held by the two main operators (RAI and resources of free Mediaset), which together still hold no less than 87.2% of the market. Compared TV to the previous year, however, RAI has reinforced its position (+2.4%), while that of Mediaset continues to fall, reaching a figure below 40%. This is due to the trend of the licence fee, which, in periods when there is a sharp fall in the market, helps to limit the losses of public television. The share of the third operator (Telecom Italia Media) is stable, although negligible (3%), as are the positions of the other operators. The market structure therefore shows a significant and lasting level of concentration (with an increasing HHI index compared to last year).
Table 1.48. Free TV - Market shares of the main operators (%)
Market shares 2009 2010 2011 2012* RAI 45.9 45.8 45.9 48.3 Mediaset 41.1 42.3 41.2 38.9 Telecom Italia Media 2.6 2.6 2.9 3.0 Other operators 10.5 9.3 10.0 9.9 Total 100 100 100 100 HHI concentration index 3.809 3.903 3.827 3.861 * Estimated values. Source: processed by the Authority using company data
Pay TV At the end of 2012, pay-TV subscribers accounted for about 40% of total Pay-TV television households. The satellite platform continues to be the leading pay-TV subscribers platform, accounting for more than half of pay-TV households, while digital terrestrial accounts for about 40%. With regard to the individual operators, after the fall in 2010, the Sky market share shows a moderately positive increase (+1.1%), confirming it as the unquestionable market leader. The second operator (Mediaset) also shows a positive trend. Both operators have progressively enriched their programming, within the sphere of greater customisation of the television schedule, also based on interactive use. In addition, new themed channels have been introduced, as well as high-definition or 3D programmes, creating variation in the quality of the respective programming. Lastly, the service has extended to web viewing (especially in mobile mode via tablet).
130
The market structure remains strongly concentrated, also because of the Distribution of high endogenous sunk cost for the acquisition of premium television content resources (especially films, series and football). The concentration index is higher than the critical threshold of 2,500 and, in the last year, the Authority forecasts an increase, with an inversion of the trend of the previous two years.
Table 1.49. Pay TV - Market shares of the main operators (%)
Market shares 2009 2010 2011 2012* News Corp/Sky Italia 81.5 79.2 76.5 77.6 Mediaset 10.6 15.1 17.0 17.8 Other operators 7.9 5.7 6.6 4.6 Total 100 100 100 100 HHI concentration 6.761 6.542 6.140 6.338 index * Estimated values Source: processed by the Authority using company data
2.3.2. Radio
Radio, like television and other means of mass communication, has a dual economic structure, i.e. listeners and advertisers, from which most revenues of the sector derive.39 The main source of funding for radio broadcasters, the only one from the viewpoint of economic competition, is therefore the sale of advertising space and, precisely because of the aforesaid dual relationship, as with other means, the trend of advertising revenues strongly depends on radio audiences.
Audience Consequently, the present absence of any universally recognised official assessment system for measuring radio audiences, since Audioradio went into liquidation, and the suspension of the publication of audience data on the part of the same, could have serious repercussions on the trend of the radio advertising market, because of the important negative effects that can be caused on this media and on its capacity to attract advertising revenues, since the media centres and advertisers need certain and reliable data in order to plan their advertising campaigns (cf. Annual Report 2012, par. 2.2.2.). However, some research companies have recently launched their own surveys in order to obtain more precise data on the audiences of radio broadcasters. In particular, the company Gfk Eurisko has carried out a radio audience survey entitled Radiomonitor. According to this survey, out of a reference population of about 53 million, 34 million listen to the radio on an
39 Other revenues come from the licence fees and from agreements and public subsidies.
131
average day. The national radio station with the largest audience is RTL 102.5 with about 6.6 million listeners. This is followed by Radio Deejay (5.2 million), Radio 105 (5 million), and RDS (4.7 million), while Rai Radio 1, Rai Radio 2 and Rai Radio 3 register fewer listeners, with 4.4 million, 3.1 million and 1.4 million, respectively. Compared to other forms of media, the radio has certain particular Radio in the features, both in terms of content broadcast and in terms of the ways it is used, media context which take on relevance also for the purpose of advertisers' investment decisions. With regard to content, radio can offer audio content exclusively. In particular, the radio programme schedules are, in most cases, composed of music, news and entertainment/informative programmes. This media also features widespread reception by mobile devices; this phenomenon directly influences the usage methods and therefore the peaks of radio listening throughout the course of the day, which are concentrated in the so-called drive time (7-10 and 16-21), consequently influencing the broadcasters' editorial programming. In this sense, radio listening on the part of the user is normally accompanied by television viewing, without replacing it, and with which it shares similar features. This also explains the existence of a certain degree of the integration of the services, with the presence of national players which are active both via radio and television (RAI, Fininvest, L’Espresso Publishing Group). In this regard, radio listening tends to be linked to television viewing, since it tends to be concentrated at times and places (above all via mobile devices or in the office) when watching television is not possible. As such, radio seems to represent a medium which is complementary to television, both for users and for advertisers. In fact, radio does not normally represent the principal medium of an advertising campaign. More often, the broadcasting of radio advertisements is planned as an extension of a television campaign, usually to increase coverage of a young target group which is traditionally under-represented by television. With regard to the range of radio content on offer, Table 1.50 shows the The radio content publishers present in the radio-broadcasting sector, the relative radio offered broadcasters and the agencies which manage the sale of advertising space for such broadcasters. In particular, in 2012 no important changes were registered in the structure of national radio, which still features the prevailing presence of large multimedia publishing groups, active on several communications platforms, and vertically integrated also in terms of advertising revenues: RCS, L’Espresso, RAI, Mondadori and Il Sole 24 Ore. Other categories of subjects in the sector are the independent commercial operators, such as RTL, Radio Dimensione Suono, Radio Italia and Radio Kiss Kiss. These last two broadcasters, however, entrust their advertising sales respectively to the L'Espresso group (agency: Manzoni & C. s.p.a.) and to the Mondadori group (agency: Mondadori Pubblicità s.p.a.). Lastly, there are a few non-commercial
132
broadcasters which cover specific audience segments: Associazione Radio Maria and Radio Radicale. Beside the national broadcasters, there are also a multitude of local radio stations, with varying sizes of consumer pools which range from the multi- regional to the municipal. In some cases these manage to obtain significant shares of audiences.
Table 1.50. The national radio broadcasting offer
Publisher Broadcaster Licensee Finelco Group (a RADIO 105, RMC RADIO shareholder of the RCS Gruppo Finelco S.p.A. MONTECARLO; VIRGIN RADIO Mediagroup) Gruppo Editoriale A. Manzoni & C. RADIO CAPITAL, RADIO DEEJAY, M2O L’Espresso S.p.A. Openspace Pubblicità RTL 102.500 hit Radio RTL 102.5 S.r.l.
RAI Radiotelevisione RADIOUNO; RADIODUE; RADIOTRE; Sipra S.p.A. Italiana ISORADIO; NOTTURNO ITALIANO
Radio Dimensione Suono RDS 100% GRANDI SUCCESSI RDS Advertising S.r.l. Monradio Mondadori pubblicità RADIO R101 (Mondadori/Fininvest) S.p.A.
RADIO ITALIA SOLOMUSICA A. Manzoni & C. Radio Italia Group ITALIANA S.p.A. Il Sole 24 Ore RADIO 24 Il Sole24 Ore S.p.A. Mondadori pubblicità Radio Kiss Kiss RADIO KISS KISS S.p.A. Mondadori pubblicità Associazione Radio Maria RADIO MARIA S.p.A. Production centre RADIO RADICALE Source: The Authority
With regard to economic resources, Table 1.51 shows total revenues for Radio revenues the period 2009-2012, broken down by type. In particular, in 2012, of the 677 million attributable to the radio, both local and national, 104 million derives from public service fee payments, amounting to 15.4% of total revenues; 525 million from advertising, equal to 77.6%, and 47 million from agreements and state grants (7%). Observing the trend of the values, it can be seen that in 2012, continuing on from the previous year, radio, along with growth of 2.3% in income from licence fees, registered a marked reduction in advertising revenues (-7.1%), which still continue to represent the main source of funding for the sector, (about 78%). This seems to be a counter trend in respect of the performance of this platform in the years before 2011, when advertising revenues displayed a
133
positive trend. In the last four years, radio advertising has fallen by 6%, while the market as a whole shows a decrease of 3%, thanks to the support of the licence fee, whose slow but constant growth is maintaining a section of the radio services (that of services for the public).
Table 1.51. Total radio revenues divided according to type
Revenues (€ mln) Incidenc Δ2012/ e on the 2011 2009 2010 2011 2012* total (%) (2012) Licences** 98.1 99.27 102.20 104.55 2.3% 15.4% Advertising 558.66 598.92 565.81 525.49 -7.1% 77.6% Grants and 40.66 47.51 47.48 47.48 0.0% 7.0% subsidies Total 697.42 745.70 715.49 677.53 -5.3% 100% * Estimated values. ** For the correct allocation of the amount of the licence fee to be assigned to television activity, the separate accounting system of RAI was taken into account, relative to the financial year 2011, and the relative accounting aggregates: the licence fees to be attributed to television broadcasting were calculated by applying to the total value a percentage equal to the direct costs attributed to the public service (aggregate A of the official accounts). Source: processed by the Authority using company data
With regard to the position of the various operators on the market, Table Distribution of 1.52 shows that in 2012 the first five together hold more than half of the total radio revenues resources. However, as can also be seen from the value of the concentration index HHI (885), which, for that matter, has decreased compared to the 2011 value, the market structure appears substantially competitive. Table 1.52. Market shares of the main operators (%) 2009 2010 2011 2012* RAI 22.9 21.4 21.8 21.5 Gruppo Editoriale L’Espresso 10.1 13.0 12.7 13.1 Finelco 10.3 10.4 10.2 10.1 RDS 7.1 7.0 6.8 7.5 RTL 7.7 7.6 7.2 6.3 Mondadori 3.6 3.8 4.0 4.1 Il Sole 24 ore 2.1 2.2 2.4 2.3 Other operators 36.3 34.6 34.9 35.1 Total 100 100 100 100 HHI concentration index 895 894 896 885 * Estimated values. Source: processed by the Authority using company data
134
The main operator is RAI with a market share of 21.5%, slightly less than that of the previous year. It is followed by the L'Espresso Group, with a market share of 13%, and the Finelco Group whose market share has decreased slightly to 10.2%. The independent radio broadcasters, RTL and RDS, hold a market share of about 7%, which has also decreased slightly compared to the previous year. There are other operators who hold marginal shares, below 5%, as well as subjects of a largely local nature.
135
2.3.3. Publishing
General outline The publishing sector has primary importance in ensuring pluralism of information, since it allows for easy mass communication of news and ideas. For this reason, publishing has always attracted the Authority's interest in all countries, although it is expressed differently in the case of daily newspapers, which are fundamental for information purposes, or magazines, which respond to different requirements and needs.40 More recently, the focus has been extended to the digital world, which has deeply changed the information sphere and, in particular, publishing. The technological evolution has in fact revolutionised the possibilities and The evolutionary methods for mass communication of information. This first affected daily processes of the newspapers, in virtue of the fact that, given the features of the product (the sector news for the day before), the Internet immediately represented a possible alternative for consumers. In fact, after the music section, newspapers represent the product that, more than others, has had to face the digital challenge. The changes in demand are therefore accompanied by significant changes in the offer. As has already happened in other countries (primarily in the United States and the UK, at the cutting edge of this evolution), there are also exclusively online newspapers in Italy; the communication method and manner change, also in the case of hardcopy versions; and new digital products are becoming successful (ranging from the now obsolete PDF version of the hardcopy, to the new digital versions and news-content apps).41 This evolution is now crossing the entire media world, with significant repercussions not only for newspapers but also magazines and, as seen in the preceding paragraphs, the world of radio and television. In this sense, 2012 seems to have represented a time of change for the whole sector, not only economically (due to the prolonged economic crisis in progress), but above all of a structural nature. The analysis carried out in this paragraph focuses on the daily newspaper and magazine market, with particular attention paid to the evolution of digital publishing. Digital evolution, the web, the relationships between these media and the news seem so complex that this year the Authority has decided to launch a specific survey in the future (approved by resolution no. 39/13/CONS). The trends of the last year, illustrated herein, show that the evolution in progress is simultaneously offering many and increasing opportunities for the communication of information, but that it is still difficult for the information, both in hardcopy format and in its many digital formats, to be adequately monetised. In fact, in spite of the significant growth in this area, neither advertising
40 See resolution no. 555/10/CONS, cit. 41 See, for example, Vincenzo Cosenza Giornalismo, social media e nuove metriche, Problemi dell’informazione, yr. XXXVII, no. 2, August 2012.
136
development nor the evolution of the payment component seem sufficient to sustain the decline that the publishing sector has suffered in recent years. While digitalisation presents new critical aspects, such as the most evident already described, it could nevertheless allow for overcoming certain structural limits of the sector such as the need for widespread distribution of the hardcopy press and the problems, brought to the fore on several occasions and still very relevant, connected to the distribution of such products42 and to reaching younger targets, who prefer digital tools and the Internet as a means of obtaining information, turning to hardcopy newspapers increasingly rarely43. With regard to structures, however, the publishing sector shows no Sector structures important transformations as yet, compared to the past, but continues to be rather fragmented, featuring a few large publishing groups which hold the market positions thanks to consolidation of the brand name and the integrated nature in both the vertical and the transversal sense (in the publishing markets and, in general, in the other media), and a great many smaller subjects focused on a specific geographical sphere or type of product. The publishing sector, apart from its structural decline, has suffered greatly from the country's macroeconomic crisis. With reference to the sector as a whole, the Authority estimates that in the last year alone its value has fallen by 14.1%, with a contraction of almost Euro 1 billion (873 million). Considering the period from 2009 until today, the reduction is almost 20%, going from Euro 6.5 billion at the beginning of the period to Euro 5.3 in 2012 (Table 1.53).
Table 1.53. Total revenues from publishing (€ millions) 44(*)(**) Incidence on the 2009 2010 2011 2012*** ∆ ’12/’11 total (2012) Daily newspaper 3,121.13 2,968.12 2,899.55 2,595.20 -10.5% 48.9% s Magazines 3,422.46 3,424.35 3,281.41 2,712.32 -17.3% 51.1%
42 Some publishers, like Fatto Quotidiano, have used precisely the digital version to circulate their products in geographical areas which are not very profitable. 43 In spite of the fact that some surveys indicate that younger readers prefer new forms of communication to obtain information, the penetration of such publishers' sites remain anchored to the same age bracket which reads the hardcopy newspaper. This is amplified by the fact that the monitoring systems are separate for the different media, which does not help to adequately measure certain trends. Furthermore, Audipress registers visitors to the websites of hardcopy newspapers only jointly with the reading of the hardcopy versions and ADS started monitoring the circulation of the digital versions only in 2013. 44 It must be remembered that the data refer to the entire publishing sector (and not to a sample of main operators) and follow the procedures for evaluating the economic dimensions of the Integrated Communications Sector (ICS) (see resolution no. 220/13/CONS). The only difference is in the calculation of the value of the collateral products, which in the ICS, according to the definition given by the legislation in force, regard only books and musical products, while this document relates to all types of products.
137
TOTAL 6,543.59 6,392.47 6,180.95 5,307.52 -14.1% 100.0% * The figure also includes the value of the collateral products that are neither books nor audio products and which are not included in the ICS estimate. **The figure includes revenues from the sale of online publishing products and services except advertising annuals, but not revenues from publishers' online advertising which is included in the online market (see par. 2.3.4). *** Estimated values. Source: processed by the Authority using company data
Digital publishing, the only expanding area for both newspapers and Digital publishing magazines, has compensated the current decline only to a minimum extent; the incidence of digital products, at least in the part on sale to the public, is in fact still very limited although growing in terms of both volumes and values. Analysing the 2012 data of a representative sample of the main publishing groups, in terms of volumes, digital copies in publishing as a whole represent about 4.5% of total copies, while the value of revenues from the sale of digital products and services is about 2% of total revenues from the sale of publishing products and services. This partial discrepancy is due to the fact that the average price of digital publications is lower than that of hardcopy versions, owing to both the lower costs of publishing (printing) and circulating the two types of product, and to the fact that the digital products are still in the launch stage and therefore are the subject of special offers which reduce average revenues. Growth of digital products, in terms of volumes, is considerable as regards newspapers, compared to a still timid start in digital magazine publishing45: in fact, the number of digital copies of magazines is still marginal (about 3 million copies compared to 65 million newspaper copies). Further confirmation of the growing importance of the digital world is given by the fact that, as of January 2013, ADS - Accertamenti Diffusione Stampa, the association which certifies the circulation of newspapers and magazines - has been monitoring the circulation and sale of digital editions of the newspapers and magazines. In this case, digital edition means "an exact replica, and not a reformatted version, of the hardcopy edition with all its pages and including advertising, available on various digital devices and distributed electronically as an inseparable and exclusive unit", whereas the sale of digital copies refers to "the total copies of a digital edition sold at a qualifying price which is at least 30% of the sale price of the hardcopy edition". These considerations imply that a reform of the anti-concentration limits at present in force is increasingly more urgent and necessary (see law no. 416 of 1981). Analysing the revenues from core business (see Table 1.54), the trend Analysis of registered in recent years is confirmed. In particular, there is an accentuated publishing contraction of advertising revenues and those deriving from the sale of collateral revenues products, in both cases around 19%, and a lesser reduction in revenues from
45 It must also be considered that magazine publishing responds to needs other than that of being informed and the hardcopy version maintains greater appeal (for the graphics, the glossy paper, etc.).
138
the sale of copies (-10%). In the case of advertising, the main cause is linked to the contraction of the average price of advertisements, also proportioned to the falling circulation of newspapers and magazines. Vice versa, revenues from the sale of copies have resisted more successfully, consequent to increases in the average sale prices of copies circulated to the public. Lastly, collateral products continue the decline which began after the boom of such products in the middle of the last decade. The most indicative figure of the transformations that have taken place in recent years in the entire publishing sector is therefore represented by the decrease in the incidence of advertising revenues with respect to revenues from the sale of copies. Including the value of revenues from the sale of digital copies, this component has proportionately increased to over half of the total sales, while advertising is barely over 40%.
Table 1.54. Publishing. Core business revenues Revenues (€ mln) Incidenc ∆ e on the ’12/’11 2009 2010 2011 2012***** total (%) (2012) Copies sold* 3,111.50 3,077.33 3,013.08 2,714.57 -9.9% 51.1% Advertising** 2,794.10 2,762.68 2,649.16 2,143.24 -19.1% 40.4% Collateral 499.58 380.97 371.15 302.15 -18.6% 5.7% products *** Grants and 138.41 171.49 147.57 147.57 0.0% 2.8% subsidies**** TOTAL 6,543.59 6,392.47 6,180.95 5,307.52 -14.1% 100.0% *The figure includes hardcopy and digital copies. **The figure does not include online advertising. *** The figure also includes the value of the collateral products that are neither books nor audio products, which are not included in the ICS estimate. **** The figure regards revenues deriving from agreements with public subjects and public grants. It is assumed that this figure has remained constant in 2011. ***** Estimated values. Source: processed by the Authority using company data
As shown by Figure 1.23, the trend of the newspaper price index, which Publishing prices until the early years of the last decade was stably kept below the general index of consumer prices, began to grow well above the inflation rate in 2009. On the contrary, the magazine price index, in line with the general trend of consumer prices until the end of the last decade, was generally below the inflation rate. In the last year, this trend has become more accentuated, leading to a greater difference between the two prices indices. This appears to be linked to the differing market power of the two products, with newspapers, especially the most important ones, maintaining a certain price-making capacity in view of the popularity of their brand names and the differentiation of newspapers in fairly
139
separate market niches.
Figure 1.23. Price indices: publishing compared to general consumer prices (1995-2012)
Source: ISTAT
On the other hand, with regard to advertising revenues in the publishing sector, as already analysed in last year's Report, the average cost of advertisements has decreased considerably. The strategy of the publishers, which during the advertising market crisis have reacted by reducing the sale price of their advertising space and increasing the sale price of the products to the public, seems to have involved, in a two- faceted market structure, a further fall in circulation (Figure 1.24 for newspapers), aggravating the structural decline in advertising terms.
Daily newspapers The above described dynamics of the shift in funding sources from The sale of daily advertising to the sale of copies regards newspapers in particular. As already newspapers mentioned, it can be seen from Figure 1.24 that the fall in average sales of hardcopy newspapers continued in 2012, registering a reduction of 6%; this trend is valid in general for all circulation according to the ADS data. In parallel, there has been a decrease in readers of more than 5%, according to Audipress, bringing the number of readers to 42.7% of the adult population; there are few exceptions to this, almost all of which are local newspapers.
140
Figure 1.24. Average daily newspaper sales (1995 - 2012) (units)
Source: FIEG, La stampa in Italia 2010-2012, April 2013.
The newspaper offer, considering the new entries and the closures, has The newspaper 46 registered a reduction in publications , although not so evident in view of the offer current crisis, except as regards the free press, of which only three publications remain on the market (Metro, Leggo and Dnews), the City publications of the RCS group having closed down. With reference to the aggregate of Italian daily newspapers, in Table 1.55 below the full range is presented, including both national and local newspapers, distinguishing between general, political, sports, financial and other specialist newspapers. The circulation of these newspapers can be found in the Appendix to the Annual Report (which also takes into account geographic areas), while this section presents data on the popularity and circulation of the main newspapers in the sector. In general, as can be expected, there is a generalised decrease in the circulation of daily newspapers.
46 The newspapers which have closed down include Avanti, the subject of legal disputes.
141
Table 1.55. Daily newspapers in Italy by type
Information – of which free press DNews Leggo City In Città Verona Metro Information – of which paid Corriere – quotidiano dell’Irpinia La Sicilia Quotidiano di Alto Adige / Corriere delle Alpi / Trentino Corriere di Bologna Bari Corriere Adriatico Dolomiten Libero Corriere di Caserta Giornale di Brescia Libertà Editoriale Oggi Il Gazzettino Il Domani Giornale di Sicilia Il Giorno Il Secolo XIX Il Mattino di Padova Il Piccolo BresciaOggi Messaggero Veneto Il Tirreno Il Tempo Corriere Il Quotidiano (Calabria) L’Unione Sarda Fiorentino Gazzetta del Nuovo Quotidiano di Puglia La Nuova Ferrara Sud La Città quotidiano di Salerno e provincia Nuovo Corriere Barisera La Prealpina La Nuova Sardegna La voce nuova Corriere Corriere dell’Alto Adige Nuova Gazzetta di Modena Il Gettone Cronache di Napoli Nuova Gazzetta di Caserta La Stampa Gazzetta di Reggio Modena Qui L’Arena La Il Giornale di Vicenza La Tribuna di Treviso Discussione Il nuovo Riformista Calabria Ora La Provincia Quotidiano di Sicilia Corriere del Veneto La verità La Nuova del Sud Cronacaqui.it Linea La Provincia Quotidiano Gazzetta di Parma Ottopagine La Voce di Mantova Il Corriere Laziale Rinascita La provincia (Cremona) Il Giornale di Calabria L’Italiano Corriere Corriere della Sera Il Nuovo Corriere (FI) (Forlì) Die Neue Sudtiroler Tageszeitung Il Sannio Quotidiano La Voce Giornale di Bergamo L’Informazione - Il Domani Il Manifesto Il Fatto Quotidiano La Nazione Italia Sera Il Giornale Nuovo della Toscana La Provincia Pavese La Repubblica L’ordine di Corriere del giorno (Puglia and Lucania) La Voce della Città Taranto Como La Voce di Romagna Quotidiano di Foggia Metropolis Buongiorno Campania Puglia Avvenire Il Paese Corriere del Trentino Primorski dnevnik Nuovo Corriere di Corriere Mercantile Primo piano Molise Como L’Eco di Bergamo Trapaniok Foggia Sera Polis Quotidiano Gazzetta di Mantova Il Centro La Nuova di Venezia e Mestre Il Cittadino Il Giornale Corriere del Mezzogiorno (anche Bari e Puglia) Il Giornale dell’Umbria Il Mattino Il Cittadino oggi Corriere Nazionale Il Quotidiano del Molise Il Messaggero Il Quotidiano della Basilicata Il Resto del Carlino L’Altro fax Il Giornale dell’Emilia Romagna Senzacolonne La Cronaca La Gazzetta del Mezzogiorno Specialist – of which political (*) Roma L’Avanti! Cronache di Liberal Il Socialista Lab Europa La Voce Repubblicana Secolo d'Italia L'Unità Liberazione giornale comunista La Padania Il Denaro Democrazia Cristiana L’opinione delle libertà Terra Il Foglio quotidiano Ore 12 Specialist – of which economic (*) MF/Milano Finanza Finanza e Mercati ItaliaOggi Il Sole 24 ore New Bot L’economia in gioco Tuttosport Specialist – of which sport (*) Il Romanista
142
Corriere dello Sport / Stadio Gazzetta dello sport Impresa Specialist – of which other (trade unions, institutional, etc.) L'avvisatore marittimo artigiana Conquiste del lavoro Scuola e insegnanti (*) The “Political” category refers to all the daily newspapers which receive contributions in as much as being the newspapers of a political party or movement or, having the necessary requisites, which received contributions on 31.12.2005 (pursuant to art. 3 paragraph 10 of Italian Law no. 250/1990 and art. 20, paragraph 3-ter of Italian Decree Law 223/2006 converted by Italian Law 248/2006) or in as much as newspapers of political movements, which were transformed into cooperatives by and no later than 1 December 2001 (art. 153 of Italian Law 388/2000).
Source: The Authority
The trends illustrated above involved a strong decrease in daily newspaper Newspaper revenues. For the year 2012 (Table 1.56), the Authority estimates that revenues newspaper publishing has undergone a total decline of 10.5%, due mainly to the reduction in advertising revenues (-16%) and, to a lesser extent, to the fall in revenues from the sale of copies (-5%). Revenues from the sale of collateral products continues to show contract significantly (-15.6%).
Table 1.56. Daily newspapers. Core business revenues
Revenues (€ mln) ∆ Incidence 2012/201 on the total (*****) 2009 2010 2011 2012 1 (%) (2012) Copies sold (*) 1,291.14 1,266.72 1,268.13 1,204.62 -5.0% 46.4% Advertising(**) 1,500.67 1,410.80 1,358.55 1,141.37 -16.0% 44.0% Collateral products(***) 214.27 153.82 151.18 127.54 -15.6% 4.9% Grants and 115.05 136.78 121.68 121.68 0.0% 4.7% subsidies(****) 2,968.1 TOTAL 3,121.13 2,899.55 2,595.20 -10.5% 100.0% 2 (*) The figure includes hardcopy and digital editions. (**) The figure does not include online advertising. (***) The figure also includes the value of the collateral products that are neither books nor audio products, which are not included in the ICS estimate. (****) The figure regards revenues deriving from agreements with public subjects and public grants. It is assumed that this figure has remained constant in 2011. (*****) Estimated values. Source: processed by the Authority using company data
From the analysis of a representative sample of the main newspaper publishers, about 65 million digital copies were sold in 2012, three times the figure for 2011, bringing the incidence of digital copies to 6.3% of total copies sold. In fact, in most cases it seems to be that the hardcopy version is substituted by the digital version, rather than there being an expansion of total readers. Although the need for information has not fallen, the method for acquiring it is changing: the consumption of newspapers is declining, but web information
143
portals are now used by one third of Italians. The customisation of the access portals, the possibility of creating personal multimedia programme schedules, and the use and exploitation of the social networks stimulate the tendency to customise access to content sources and selection. In this context, the daily paper, at least in the traditional sense, is going through a crisis period.
With regard to the analysis of the market framework, the table gives the Market structure shares of the main publishing groups (Table 1.57). As mentioned above, the structure of the sector has not undergone particular changes in recent years, in spite of this revolution. This market shows little concentration, at least on a national scale, with an HHI index of about 900, largely stable over the course of time. Also the structure of the shares of the single operations does not seem to change over time, albeit registering an estimated slight reduction in the position of the major operators. In any case, the two major operators (L’Espresso Publishing Group and RCS) continue to lead, while the others follow with shares below 10%.
Table 1.57. Daily newspapers. Market shares of the main publishing groups (%) Market shares (%)
2009 2010 2011 2012* L'Espresso Group 19.4 19.3 20.1 19.9 RCS Mediagroup 18.9 17.3 17.5 17.9 Caltagirone 8.0 7.9 7.5 7.0 Monrif 6.4 6.6 6.5 6.4 Il Sole 24 Ore 6.3 5.9 6.3 5.8 Itedi (La Stampa) 5.4 5.6 5.7 5.7 Amodei (CorSport; Tuttosport) 3.7 3.9 3.7 3.7 Other 31.9 33.5 32.7 33.5 Total 100 100 100 100 HHI concentration index 953 892 927 921 (*) Estimated values. Source: processed by the Authority using company data
The following Table 1.58 shows the competitive position of the two main daily newspaper publishers expressed in terms of volume (or circulation). In line with previous years, the order of the corporate groups is different compared to the value classification. In particular, RCS with a share of 17.5% is first, with 3 percentage points more than Gruppo Editoriale l’Espresso; Caltagirone confirms its third position with a share of 10.1%; while the remaining operators hold shares considerably below 10%.
144
Table 1.58. Daily newspapers. Market shares in terms of volume (2011).
Circulation Copies Copies Company Name of publication Copies sold Type No. % distributed distributed 524,322,202 17.50 423,144,692 1,387,347 308,893,623 Corriere della Sera 223,878,390 7.50 173,869,628 489,774 170,628,389 paid RCS daily newspapers Gazzetta dello Sport 168,712,145 5.60 119,754,188 334,509 118,071,455 paid City Bari 3,929,000 0.101 3,929,000 18,190 free press City Bologna 5,728,000 0.20 5,728,000 26,642 free press City Firenze 5,739,950 0.20 5,739,950 26,697 free press City Genova 3,765,000 0.10 3,765,000 17,512 free press City Italia City Napoli 9,659,000 0.30 9,659,000 44,718 free press City Roma 27,100,000 0.90 27,100,000 126,047 free press City Verona 2,187,628 0.10 2,187,628 10,175 free press City Torino 11,364,900 0.40 11,364,900 52,860 free press City Milano S.p.A. City Milano 33,495,878 1.10 33,495,878 155,795 free press Editoriale Corriere di Corriere di Bologna 5,298,540 0.20 4,528,317 14,847 3,802,017 paid Bologna S.p.A. Editoriale Fiorentina Corriere Fiorentino 7,813,381 0.30 7,484,868 22,014 5,383,928 paid S.p.A. Editoriale Veneto Corriere del Veneto 15,650,390 0.50 14,508,335 47,568 11,007,834 paid S.p.A. 402,495,991 13.50 315,363,539 962,173 311,903,644 Gruppo editoriale La Repubblica 210,144,544 7.00 160,576,727 448,538 159,681,727 paid L'Espresso S.p.A. Editoriale la Nuova La Nuova Sardegna 24,628,830 0.80 20,702,079 57,827 20,418,703 paid Sardegna S.p.A. Messaggero Veneto 17,861,912 0.60 15,229,694 49,447 15,051,465 paid Editoriale FVG Società Messaggero del Lunedì 2,820,355 0.10 2,382,208 47,644 2,351,141 paid per Azioni Il Piccolo 13,944,105 0.50 11,374,436 36,930 11,225,191 paid Piccolo del Lunedì 1,923,750 0.10 1,636,519 32,730 1,612,048 paid Gazzetta di Mantova 12,934,073 0.40 11,246,729 31,415 11,115,918 paid Nuova Gazzetta di Modena 4,826,056 0.20 3,609,195 10,082 3,586,117 paid Gazzetta di Reggio 5,772,048 0.20 4,350,680 12,153 4,471,372 paid La Nuova Ferrara 4,690,821 0.20 3,597,354 10,048 3,551,984 paid La Provincia Pavese 9,225,759 0.30 7,209,834 20,196 7,063,028 paid Il Centro 11,546,788 0.40 8,837,229 24,685 8,598,159 paid Finegil Editoriale La Città - daily newspaper S.p.A. 4,286,370 0.10 2,936,340 8,202 2,840,432 paid of Salerno and the Province Il Mattino di Padova 13,341,314 0.40 11,068,935 30,919 10,941,763 paid La Tribuna di Treviso 8,287,206 0.30 6,755,343 18,870 6,668,362 paid La Nuova di Venezia e 5,850,883 0.20 4,358,275 12,174 4,225,884 paid Mestre Il Tirreno 34,980,957 1.20 27,511,830 76,849 26,896,763 paid S.E.T.A. Società Alto Adige/Corriere delle editrice tipografica 15,430,220 0.50 11,980,132 33,464 11,603,587 paid Alpi / Trentino atesina S.p.A 303,157,686 10.10 252,459,448 886,049 130,623,493 Il messaggero S.p.A. Il Messaggero 96,277,752 3.20 68,676,524 192,912 66,391,884 paid Leggo S.p.A. Leggo 115,198,291 3.90 115,198,291 500,862 free press Il Gazzettino Il Gazzettino 37,376,775 1.20 28,504,562 79,622 25,917,176 paid Il mattino S.p.A. Il Mattino 36,704,802 1.20 26,627,978 74,380 25,357,207 paid Corriere Adriatico
S.p.A. Corriere Adriatico 8,629,751 0.30 6,452,041 18,022 6,173,200 paid Quotidiano di Puglia Nuovo Quotidiano di Puglia 8,969,615 0.30 6,999,352 19,551 6,784,026 paid S.p.A. Quotidiano di Brindisi, Lecce 700 - 700 700 0 paid e Taranto 153,852,252 5.10 Il Resto del Carlino 66,902,362 2.20 52,253,157 146,367 49,009,792 paid Poligrafici Editoriale La Nazione 55,578,476 1.90 41,700,542 116,808 40,143,664 paid S.p.A. Il Giorno 31,371,414 1.10 20,775,810 58,196 19,614,134 paid Il Sole 24 Ore S.p.A. Il Sole 24 Ore 119,719,825 4.00 95,960,185 268,045 50,015,936 paid 1,488,501,008 49.7 1,061,625,459 3,457,247 804,006,754 2,992,048,964 100 1,208,741,957 4,048,486 830,347,462 Source: Processed by Agcom using company data
145
For that matter, it must be remembered that the Authority has already had occasion to state (cf. resolution no. 555/10/CONS) that for the daily newspapers the local vocation is highly important. Therefore, if at the national level the market for daily newspapers is not very concentrated, at the local level the circulation of these newspapers could, in some specific cases, be more polarised, resulting in a higher level of concentration than that indicated by an analysis carried out at the national level. In conclusion, the daily newspaper market has, on the one hand, a low concentration and limited barriers to entry, further reduced by digital communication. For that matter, there is a certain market stability and at the same time considerable concentration (on volumes and value) as regards both readers and advertising.
Magazines Magazine publishing, featuring high differentiation in type of product, shows noteworthy differences also in the evolution processes towards digital publishing. The digital innovation is causing deep change also in this sector, as regards both production and distribution, and in terms of the introduction of new products and services. Often the digital innovation depends on product innovation (tablets, applications, etc.) although certain tools drive certain segments, but this does not cover the transformations taking place throughout Magazine the publishing chain. publishing Analysing the data of a sample of the major publishing groups, in 2012 the incidence of the digital magazine is still limited. In terms of volumes, digital copies represent only 1.5% of total copies sold. It must be considered that the sample analysed is composed of operators who passed to the new digital offers more quickly. The market situation is therefore very backward. The limited multimedia nature of magazines is also reflected in the low readership figures for the sites for the hardcopy titles: the most popular magazine (Donna Moderna) is, according to the latest Audiweb data, only in 35th position of the most visited sites in Italy (Audiweb View, Brand, February 2013). On the other hand, specialist sites available only on the web are gaining ground, addressing the same targets as traditional magazines, such as Pianetadonna.it which is in 23rd position nationally. As with the other media, for magazines the year 2012 appears to represent a move towards the digital offer. Probably induced by the continuing crisis which has hit the whole sector and has involved significant restructuring, many publishers, also of small or medium size, are moving towards the web and tending to digitalise the publishing offer. According to the study L’utilizzo dell’online e dei new media tra gli editori ANES, confronto 2010-2012 [The use of online and new media among ANES publishers, comparison 2010-2012] (ANES Monitor 2012), there are significant changes compared to previous years: the web-native component of published editing has grown; the use of mobile
146
devices has taken root; the use of social networks and newsletters has increased; user profiling on the basis of registration data has taken on importance and, at the same time, the offer of online advertising tools has changed. Magazine publishing, because of the high diversification in type (from entertainment to professional information and free-time news) and the consequent segmentation into niches, has always been a market of interest for advertising investors in search of a specific consumer target. However, in recent years this narrow specialisation of the consumer target reached seems to have lost, at least in part, its appeal, in view of the increased use of behavioural targeting and re-targeting techniques within the sphere of online advertising. The analysis of revenues from core activities shows, in fact, a sharp Magazine reduction (-22.4%) of advertising revenues as well as a considerable fall in publishing revenues from the sale of copies (-13.5%), while the decline in collateral resources products seems unending (-20.6%). Consequently, in the last year the economic trend as a whole shows contraction of more than 17%, with an overall value of revenues of barely more than Euro 2.7 billion (Table 1.59). In 2009, this value was Euro 3.4 billion, therefore the value of this market has fallen by one fifth in only four years.
Table 1.59. Magazines Revenues from core activities (€ mln) Incidenc ∆ ’12/ e on the
’11 (%) total in (*****) 2009 2010 2011 2012 2012 Copies sold* 1,820.36 1,810.61 1,744.94 1,509.95 -13.5% 55.7% Advertising** 1,293.43 1,351.88 1,290.61 1,001.87 -22.4% 36.9% Collateral 285.31 227.15 219.97 174.61 -20.6% 6.4% products *** Grants and 23.36 34.71 25.89 25.89 0.0% 1.0% subsidies**** TOTAL 3,422.46 3,424.35 3,281.41 2,712.32 -17.3% 100.0% *The figure includes hardcopy and digital copies. **The figure does not include online advertising. ***The figure also includes the value of the collateral products that are neither books nor audio products and which are not included in the ICS estimate. ****The figure regards revenues deriving from agreements with public subjects and public grants. It is assumed that this figure has remained constant in 2011. ***** Estimated values. Source: Processed by Agcom using company data
In spite of the strongly diversified nature of the sector, the result seems to indicate a common trend towards the various market niches. On the offer side, magazines feature the existence, on the one hand, of about ten national operators (Table 1.60) representing about half of the market in terms of value; on the other hand, a myriad of minor publishers (almost 2,000) which address specific segments.
147
Table 1.60. Main market operators Main magazines and Group Advertising broker publishers Panorama, Tv Sorrisi e Canzoni, Mondadori Pubblicità Fininvest/Mondadori Grazia, Donna Moderna, Chi, S.p.A. Flair; Focus, etc. Oggi, Visto, Novella 2000, Astra, CS Mediagroup RCS Pubblicità S.p.A. Amica, Max, Dove, etc. Vogue, Glamour, CQ, Traveller, Condé Nast AD, Wired, Vanity Fair, etc. L’Espresso, National Geographic Gruppo Editoriale A. Manzoni & C. Italia, Mente & Cervello, Limes, L’Espresso S.p.A. MicroMega, Le Guide dell’Espresso, etc. Elle, Elle Decor Italia, Gente Hachette Rusconi Hachette Enigmista, Gente, Gioia, Elle Pubblicità S.p.A. Spose, etc. Agrisole – Il Sole 24 Ore, Guida Division within the Il Sole 24 Ore al Diritto, La Settimana Fiscale, holding. Il Sole 24 Ore Lombardia, etc. Airone, Antiquariato, Arte, Cairo Cairo Pubblicità Bell’Italia, Bell’Europa, In Communication S.p.A. Viaggio, Diva e Donna, Settimanale Dipiù, etc. Cucina Naturale, Il Dentista Division within the Tecniche Nuove Moderno, GT- Il Giornale company Termoidraulico, etc. Quattroruote, Dueruote, Division within the Editoriale Domus Quattroruote Vendo & Compro, company Ruote classiche, Top Gear, etc. Class, Case & Country, Class Pubblicità Gentleman, Campus, Capital, Class S.p.A., Classpi Patrimoni, Global Finance, MMF Digital S.p.A. Magazine, etc. Solocase, Solocase Ed. Milano e Division within the Terra Nova Editore Lombardia, Casa Annunci Ti company Trova Casa, etc. Tre Pi Pubblicità Porta Portese, Click. Up For It, SEGE S.r.l. Porta Portese News, etc. Source: Processed by Agcom using company data
The market structure shows little concentration and reflects an evolution towards increasing competition, since, except for sporadic cases, the share of the major publishing groups tends to decrease over time in favour of medium and small operators. This is shown by the concentration index HHI, which not only has very low values (around 400 points) but has also registered a slight decline (Table 1.61). With regard to market shares, Mondadori, although its own share has fallen, maintains the position of leadership, followed by RCS Mediagroup, Condé Nast, L’Espresso, Hearst and Cairo.
148
Table 1.61. Magazines Market shares of the main publishing groups (%) Market shares
2009 2010 2011 2012* Mondadori 14.2% 14.2% 14.0% 13.2% RCS Mediagroup 9.4% 9.0% 8.8% 7.5% Condé Nast 4.8% 4.9% 5.2% 5.7% L'Espresso Group 4.6% 4.3% 4.3% 4.3% Hearst Magazines - 3.1% 3.3% 3.4% Italia Cairo 3.2% 2.7% 3.2% 3.9% De Agostini 3.5% 2.4% 2.4% 2.0% Il Sole 24 Ore 3.0% 2.7% 2.5% 2.6% Other 57.3% 55.4% 56.2% 57.5% Total 100.0 100.0 100.0 100.0 Concentration index 467 409 409 375 HHI * Estimated values. Source: Processed by Agcom using company data
The other operators, especially the more specialised ones, seem able to maintain their positions better.
2.3.4. The Internet
General outline Our country is still engaged in the pursuit of the growth targets defined in the "Europe 2020" strategy in the sectors of employment, innovation, education, social integration and climate/energy. Every Member State must adopt specific, concrete measures to implement the common strategy. In particular, within the wider Europe 2020 strategy, the European Digital Agenda (COM(2010)245) is one of the leading initiatives. The Digital Agenda was presented by the Commission in May 2010 with the purpose of optimum exploitation of the information and communication technologies (ICT), confirming their key role in fostering innovation, economic growth and competition. The main objective of the Agenda is to obtain sustainable socio-economic advantages thanks to a single digital market based on fast and ultra-fast Internet and on inter-operable applications, in the belief that a more widespread and more effective use of digital technologies will be able to stipulate employment and improve the well- being of European citizens, ensuring new communication possibilities, easier access to public services, a more efficient transport system, and a better health service. The digitalisation The process of digitalising the economy is therefore a central factor for the process growth and recovery of our country, where, however, there is still a delay in the affirmation of the digital economy with respect to the rest of the world, and also
149
a progressive fall in the sales of the IT sector (-4%), due to the crisis in the traditional components which still have a preponderant role in Italy. The high and growing spread of the more innovative segments, such as digital content, the associated online advertising, the new ICT solutions, online music and publishing, and the devices for the use of digital services (smartphones, eReaders and tablets) shows that these segments suffer less from the current macroeconomic crisis, but they are already increasingly important in the Italian economy, contributing to the significant transformations taking place in consumption and business models (of both products and processes). But these phenomena, although to be appreciated, are taking place in a national context of recession and structurally barely touched by innovation, also as regards economic policies (Cf. Assinform Report 2013). In spite of the delays registered, in Italy too the technological evolution is producing positive effects, above all linked to the development of the Internet and of the services supplied via the web. The Internet is now recognised as an irreplaceable communication tool, leading progressively to the development of new forms of use and economic exploitation of this platform. For that matter, the Authority has affirmed, on several occasions, the central role of the spread of the Internet, both for national economic development and for its growing importance as regards competition and the pluralism of information.47 In Italy, access to the Internet continues to show constant growth rates, Use of the with an increase of 7% on last year, and about 38.4 million people have access Internet to the Internet from at least one device and/or location; this represents 79.6% of individuals between 11 and 74 years of age. Access to the Internet is mainly from a home PC (74%), but also from one's place of work (48% of employed persons) and access in mobile mode continues to rise: 34.8% surf the Internet from mobile phones and/or smartphones, while 5.6% use tablets (Audiweb data). The most exposed population segments are the young (over 92% of people between 11 and 34 years of age) and those who live in the larger towns and cities (with more than 100,000 inhabitants). The penetration rate also exceeds 90% for university graduates, which indicates a significant connection between access to the Internet and level of education. Access to the Internet is mainly to obtain information on various subjects and because this media, which is extremely flexible, can satisfy users' needs for specific information in the best way and in real time.48
47 Cf. Agcom, Segnalazione al Governo in tema di liberalizzazioni e crescita: Un’agenda digitale per l’Italia of 12 January 2012; see also resolution no. 555/10/CONS “Procedure for the identification of the relevant markets in the integrated communications system”; resolution no. 551/12/CONS bearing “Closure of the survey on advertising revenues launched by resolution no. 402/10/CONS”; and lastly “Observatory on Advertising Results of the First Edition”. 48 Audiweb data show that 42% of people between 11 and 74 years of age use the Internet because “it allows for obtaining information on any subject”, 26.5% because “there are things you can only find on the Internet”, 25% because you can “take avail of a service quickly in remote mode (public administration, universities, travel booking, etc.)”, 22.9% because “I like to keep up with the news in real time”.
150
One-time users49 in Italy in the month number almost 30 million (29.6, see Table 1.62), representing growth of 7% on the previous year. In two years, growth has been 27%, equal to 6 million additional users who take avail of the web. With regard to users on an average day, there has been an even greater increase in the last year, of 10.2%. In this case, in just two years, there has been an increase of 3.4 million people who connect to the web every day; however, these figures are still behind those of the rest of Europe. There are about 15 million people who have never used the Internet: the main reason lies in the lack of knowledge of computers and, to a lesser extent, lack of interest in this media.50
Table 1.62. Use of the Internet in Italy Online audience Jan-11 Jan-12 Jan-13 Δ (‘13/’12) Active users in the month 23,156 27,658 29,605 7.0% (000) Active users on an 11,307 13,362 14,726 10.2% average day (000) Source: Audiweb Database, January 2013 data
The data show that the Internet has become an inseparable part of the Italian's media diet, it influences their everyday life, but also the planning strategies of companies which increasingly invest in this media. Italians are keen and active Internet users, used to linking up via several devices, increasingly mobile, fond of videos, favourable to e-commerce, and to a greater extent than the Internet users of the other European countries.51 Digital operators, on their part, have acquired an increasingly important role, holding and controlling users' data. In the world of the media, the greatest negotiating power is held by those who understand the behaviour and needs of the public, and this knowledge, together with experience in collecting this information, is increasingly the prerogative of technological companies.
From the users' viewpoint The development of the Internet and its undoubted success with the public, on the one hand, involve deep changes and alternatives in the way of exploiting content and, in particular, information content, as well as exchange and the sharing of resources on the part of users (first side). On the other hand,
49 The term 'one-time users' refers to those how have visited a site or an application at least once in the period considered. Users who have visited a site or used an application several times in the period are counted only once.
50 To this regard, 55.6% of these individuals (between 11 and 74 years of age) declare that they have never used the Internet because they don't know how to use a computer, while 30.7% declare that they are not interested in using it (Source: Audiweb). 51 Cf. Mediascope Europe 2012 study, conducted by IAB Europe in collaboration with the national IABs.
151
the interest in this platform on the part of advertising investors is growing, also stimulating the creation of new forms of advertising, increasingly more elaborate and sensitive to the profile of the users of this media (advertising side). The Internet is therefore an increasingly more indispensable element for the growth of a company's competitiveness (in fact, 49.2% of Italian companies have their own website). Again in 2012 all the media available were greatly and generically made use of. The technological development and the increasing use of different devices also favours the simultaneous use of the various communication media. With regard to users, the development of the Internet, strictly linked to technological growth, makes new products and ways of using the various content available to users (publishing content, videos, entertainment) and of sharing the same, contributing to the cultural development of the country. As the Authority has already pointed out on several occasions, the Internet, which offers specific innovative products with a particular format and features like that of interactivity, is a new media distinguished by a wide but still specific user base. Although technically the Internet and the other communication platforms are not interchangeable (cf. resolution no. The Italians and the new 555/10/CONS), the new ways of using the content which the Internet makes media possible means that the use of the web generates effects on the use of the other communication means. On the Internet, users watch television programmes, interviews, videos; they listen to music and radio programmes; they read newspapers; and they do all this using different tools, both fixed (PC) and mobile (laptops, tablets, smartphones). Certainly the sector which has been more affected by the development of the Internet and by the advent of new technologies is that of the press, and especially daily newspapers. This market continues to be the most hit, negatively and positively, by the "web revolution". In the last year, there has been a sharp increase in the use of publishing content online (see infra), both through access to the Internet sites of newspapers and magazines, and through the purchasing of digital versions (in PDF format or downloadable versions for tablets) of the hardcopy versions. This leads to a change in the use of the news, but also in the genesis of the same, as well as in how advertising investments are made in the press sector. On the demand side, the consumer, through the Internet, can buy single copies or subscribe to a favourite newspaper/magazine, or consult the sites of dozens of digital publications by navigating in the Internet, usually free of charge. On the offer side, the structure and organisation of the publishers' work changes, from the genesis of the news to the publication of the same. The new digital modes which have impacted the press also involve the side of advertising investments which, moving from hardcopy to digital, abandon the limits and the high costs of paper printing and exploit the opportunities offered by interactive digital communication. Thus, new opportunities and connections between different sectors are opened up, and communication (also advertising) is enriched by further innovation and is addressed to a user who is no longer a passive reader.
152
Again regarding users and, therefore, the use of the Internet by The social consumers, the continuous spread and success of social networks must be networks mentioned. They are different among themselves and are used by an extremely large and growing number. Social networks are constantly expanding and they now account for the greater part of the time spent online by national and international web users. In 2012, 30 million Internet users in Italy, i.e. over 85%, used social networks habitually, an increase of 7.8% on 2011 (Source: IAB Italia). The spread of social networks in general, and of Facebook in particular, is influencing the evolution of the web itself, inducing changes in both social and political behaviour with repercussions also on advertising which, in time, has responded to this change in two ways: investing more in social networks and modifying the forms of interaction with consumers, creating direct and continuous contact between the latter and the advertising companies. The quantity and quality of the data held by social networks on each user in fact allow for creating highly specific and targeted advertising. Again regarding social networks, it is worth noting, in particular, that Twitter, although it is rather a niche product and its importance is more contained than that of Facebook (in fact, it is in 50th position in terms of audience, with 3.5 million one-time visitors), has taken on considerable importance in terms of information and political communication. In using the various always-on devices, smartphones and tablets play a The spread of predominant role. In particular, the data show that about 45 million Italians new consumption between 11 and 74 years of age (92%) declare that they have a mobile phone devices and about 17 million say they have access to the Internet from their own device (Audiweb data).52 Vice versa, about 3 million people, almost 6% of the Italian population between 11 and 74 years of age, declare they own a tablet: this group has a decidedly qualified social-demographic profile in terms of education and professional status. The activities which these people mainly carry out are navigating on the Internet (60%), sending and receiving e-mails (36%), using social networks (34%), and consulting search engines (33%). The data record between 10% and 30% for other activities, which imply navigation, such as downloading and using applications53, consulting weather forecasts, finding itineraries and maps, and watching videos. In particular, there is growing interest on the part of users in the applications downloaded and used on smartphones and tablets; in general the most popular applications are those connected to games (57.3%) and weather forecasts (48.1%), followed by those which allow for access to and chatting on social networks (45%).54 The increased access to the Internet from smartphones and tablets
52 The young (between 11 and 34 years of age) in the Centre and North West of Italy, and those who live in the large towns and cities (with more than 100,000 inhabitants) in the centre of Italy access the Internet from mobile phones/smartphones more than other demographic groups. The highest concentration rates are among the young and qualified in terms of education and professional status. 53 According to Audiweb data, about 5 million (73.9%) have downloaded an application at least once, and almost three quarters have downloaded only free applications, while 25.5% (1.223 million individuals) have downloaded paid applications. 54 Audiweb Trends –December 2012- Accumulative data 4 cycles of 2012.
153
contributes to the development of new usage and consumption methods, leading to a change in the content chain and creating new opportunities for mobile- mode investments. More generally, it can be stated that the use and spread of the Internet has lead to certain changes in users' behaviour, resulting in an evolution of the use of all media, with important consequences with respect to the plurality of information. The Internet, as already stated, is a platform onto which all media converge and interaction is therefore inevitable. Users have discovered new ways of using the media, reading online news, viewing television content and videos again on the Internet, but also discovering new content and new services created specifically and exclusively for the web. In this sense, it is sufficient to consider that YouTube (of the Google group) registers constant growth in Italy (see Table 1.63), having increased from the eighth most visited site in terms of single visitors in 2009 to the third most visited site in February 2013. Today it counts an audience equal to 66.9% of active users (and 34.8% of the entire population, compared to 64.9% and 32.9% respectively in February 2012), and with a notable increase in the time spent by each person.
Table 1.63. The first 15 sites on the web in terms of audience (February 2013) % % Audienc Time Pages Ran Activ Popula Site e per per k e - (000) user user users tion 21:02:3 2,032. Total 28,599 100 52.0 2 6 Google 1 26,025 91.0 47.3 01:46:29 212.2 Facebook 2 22,179 77.6 40.3 07:12:03 705.5 YouTube 3 19,135 66.9 34.8 01:12:45 91.0 MSN/WindowsLive/Bin g 4 15,391 53.8 28.0 00:48:48 65.3 Virgilio 5 14,848 51.9 27.0 00:52:10 100.0 Microsoft 6 14,270 49.9 26.0 00:37:41 13.7 Wikipedia 7 14,259 49.9 25.9 00:15:01 19.1 Yahoo! 8 14,228 49.7 25.9 00:29:05 51.4 Libero 9 13,604 47.6 24.7 01:15:32 147.5 Blogger 10 11,353 39.7 20.7 00:11:19 16.0 La Repubblica 11 10,189 35.6 18.5 00:28:57 36.9 Leonardo.it 12 10,101 35.3 18.4 00:10:21 18.3 eBay 13 9,758 34.1 17.7 00:37:46 74.8 Skype 14 9,156 32.0 16.7 01:40:28 16.5 Corriere della Sera 15 8,888 31.1 16.2 00:27:18 36.0 Source: Audiweb
154
Table 1.64. The first 10 companies on the web in terms of audience (February 2013)
% % Total Time Total Pages Audience Company Rank Active Popula- minutes per pages per (000) users tion (000) user seen user 36,106,56 21:02:3 58,130,55 Total 28,599 100 52.0 6 2 5 2,032.6 02:43:5 Google 1 26,476 92.6 48.2 4,339,773 5 7,485,116 282.7 07:12:0 15,647,30 Facebook 2 22,179 77.6 40.3 9,582,578 3 5 705.5 01:42:2 Microsoft 3 21,735 76.0 39.5 2,225,797 4 1,362,220 62.7 00:52:3 Telecom Italia 4 15,479 54.1 28.2 813,447 3 1,557,072 100.6 Wikimedia 00:15:1 Foundation 5 14,322 50.1 26.1 218,446 5 277,204 19.4 00:16:0 Banzai 6 14,320 50.1 26.0 230,793 7 408,944 28.6 00:29:0 Yahoo! 7 14,231 49.8 25.9 413,846 5 731,729 51.4 01:15:3 Libero Network 8 13,606 47.6 24.7 1,027,938 3 2,008,022 147.6 00:41:2 eBay 9 11,793 41.2 21.5 488,814 7 950,235 80.6 Youtube- 00:16:4 nocookie.com* 10 11,463 40.1 20.9 191,884 4 199,740 17.4 *Market View aggregation which includes the audience of the YouTube channels dedicated to the official partners.
Source: Audiweb
From the viewpoint of competition, of the first five operators in terms of Audiences on the audience, three are web operators (Google, Facebook and Wikimedia), one Internet comes from software development (Microsoft) and one from telecommunications (Telecom Italia). Italian web operators, in addition to Telecom Italia, are Banzai and Libero Network. Also in some countries like the USA, the UK, Germany, France and Spain (as shown in Table 1.65), the leading companies are web operators, and operators from the telecommunications sector specifically are found among the first few places. The international comparison, on ComScore data, shows that there is a general trend with differences linked to the specific types of national Internet users. In general, the international leadership of Google is confirmed, which is the first operator in all the countries considered, although important positions are held by the major web operators (particularly Amazon, eBay, Facebook, Microsoft, Yahoo! and Wikimedia). Together with these, the presence of certain national telecommunications operators is emerging (Telecom Italia, AOL, Deutsche Telekom, Orange, Telefonica), as well as other multimedia operators (Axel, BBC, CBS, Prisa, Turner) and digital natives.
155
Table 1.65. The top 10 companies on the web in terms of audience: international comparison Rank Italy USA UK Germany France Spain 1 Google Google Google Google Google Google 2 Facebook Yahoo! Microsoft Facebook Microsoft Microsoft 3 Microsoft Microsoft Facebook Microsoft Facebook Facebook Unidad 4 Telecom Italia Facebook Yahoo! eBay Yahoo! Medios Digitales 5 Wikimedia AOL Inc. Amazon Amazon Orange Prisa Deutsche Terra- 6 Banzai Amazon BBC Wikimedia Telecom Telefonica CCM – 7 Yahoo! Glam Media eBay Axel Springer Yahoo! Benchmark Glam 8 Libero Network Wikimedia Wikimedia Iliad-Free.fr Vocento Media Schibsted/A Groupe CBS untis- 9 eBay Wikimedia United-Internet Pages Interactive Infojobs-20 Jaunes min. Schibsted/A Youtube- Turner Hubert Burda untis- 10 Apple Wikimedia nocookie.com* Digital Media Infojobs-20 min. *Market View aggregation which includes the audience of the YouTube channels dedicated to the official partners. Source: Audiweb for Italy and comScore for USA, UK, Germany, France, Spain
In terms of information, the following table shows the audience reached by some of the classic media operators' sites, illustrating that these operators, too, although not among the most visited, are undergoing generally positive development. In particular, the role played by the most important newspapers (La Repubblica, Corriere della Sera and La Stampa) and by the television broadcasters (Medisaset-Tgcom24 and Rai) is confirmed and there are also new publishers, such as that of Il Fatto Quotidiano, with more than 3.5 million unique users.
156
Table 1.66. The first 15 sites of the classic media operators (February 2013) % % Time Pages Audience Site Rank Active Popula- per per (000) users tion user user La Repubblica 11 10,189 35.6 18.5 00:28:57 36.9 Corriere della Sera 15 8,888 31.1 16.2 00:27:18 36.0 TGCOM24 22 6,209 21.7 11.3 00:14:50 25.8 La Stampa.it 27 5,855 20.5 10.6 00:11:11 14.6 Rai 28 5,328 18.6 9.7 00:10:14 13.2 Quotidiano.net 30 5,271 18.4 9.6 00:05:57 9.4 Donna Moderna 35 4,675 16.3 8.5 00:06:14 12.2 Sky.it 39 4,309 15.1 7.8 00:10:27 17.5 Il Sole 24 Ore 40 4,256 14.9 7.7 00:11:31 14.4 La Gazzetta dello Sport 43 4,132 14.4 7.5 00:21:48 31.0 ANSA 51 3,780 13.2 6.9 00:12:40 17.5 Il Fatto Quotidiano 55 3,560 12.4 6.5 00:12:34 11.0 Video Mediaset 61 3,187 11.1 5.8 00:12:45 14.6 Il Messaggero 64 2,979 10.4 5.4 00:08:47 10.5 Quotidiani Espresso 80 2,505 8.8 4.6 00:10:48 17.3 Source: Audiweb
The advertising element online advertising revenues includes all the advertisements circulated on the Internet, regardless of the users' navigation equipment (fixed PC, laptops, Forms of tablets, smartphones, etc.), the communication mode (fixed, mobile, nomadic) advertising on and the other navigation characteristics. In detail, following the international the Internet IAB classification, the following categories of online advertising can be defined on the basis of the format: display (traditional advertising format containing text, logos, static and dynamic images); video advertising (audio-video advertising content transmitted via streaming or download); search (advertising which appears on the pages listing search results); classified/directory (advertising in the form of category and telephone lists transmitted on the web); mobile (web advertising transmitted over the mobile network); other types, including performance, i.e. advertising sold by means of an immediate effectiveness indicator (cost per lead or cost per action). Considering the companies which invest on the Internet, it can be observed that display-type advertising (including video and mobile) is the most requested format (accounting for about 40% of advertising), followed by search and classified/directory type advertising, these latter formats having a more direct connection between advertising and purchase. The usage increase in terms of social media users had led to the decision of companies to allocate part of their resources to the purchasing of advertising space on the social networks, even if, in spite of the success with the public, from the viewpoint of economic resources these are still a minority (below 10%). online advertising generates benefits for the companies which, thanks to small costs and innovative communication strategies, can reach consumers on an increasingly more global market, carrying out national advertising campaigns on a mass-communication basis; online advertising also benefits the user who
157
can access an infinity of services free of charge. online advertising is also distinguished from that of other media because it can identify and efficiently reach specific user groups, thanks to the capacity of identifying and segmenting the consumers, and due to the possibility of precisely measuring the effectiveness of the advertisements, with direct consequences on the methods for defining pricing strategies and levels.55 With regard to advertising investments, the Internet seems to be a medium, in its present state, more similar to publishing in respect of demand: many companies, generally of small dimensions and with very limited budgets, invest in it. Low costs to access the advertising platform is one of the key aspects which, unlike publishing, in terms of investment, allows for small or large advertising campaigns which can reach subjects without geographic limitations.
The economic resources Since the information and entertainment content available on the web are generally free of charge56, advertising in these spheres represents the main Revenues from source of income for those who operate on the Internet.57 From the viewpoint of advertising on advertising sales, the Internet now represents the central factor in terms of the Internet technological and market change in the entire advertising sector: in fact, advertising on the Internet, albeit in a period of stagnation, is growing at an incredible rate: in the last year alone there has been an increase of 10% in revenues. Since 2011, the Internet has been the second most important advertising platform, having overtaken radio as long ago as 2006, and more recently newspapers and magazines (see below). The sale of advertising space takes place in the display mainly through the advertising brokers mandated to sell advertising space on the communications platform. The brokers may be internal, owned by the publisher, or external. In Italy, as abroad, an important role is also played by the media centres, of which the advertisers choose to take avail in order to use a series of intermediation services both before and after the negotiation and purchase of advertising
55 Cf. Annex A to resolution no. 551/12/CONS Indagine conoscitiva sul settore della raccolta pubblicitaria [Fact-finding survey on the advertising space sales sector], Chapter 5. 56 There is also a tendency toward the progressive introduction of so-called premium models based on the use of paid Internet content, although these models are still in the introductory phase and, following in the wake of those in other countries, they are based on forms of financing by means of the direct payment of a sum on the part of the users, at times stimulated by free content. 57 Decree law no. 63 of 18 May 2012, bearing "urgent measures on the reordering of contribution to publishing companies, as well as the sale of newspapers and magazines and of institutional advertising" converted with amendments by law no. 103 of 16 July 2012, the revenues from online advertising (and via the various platforms, also in direct forms, including resources obtained from search engines, social platforms and sharing), contemplates the re-entry of ICS revenues into the basket.
158
spaces from brokers (see infra).58 In the case of search engines, however, forms of automated sales are becoming popular, through networks which place advertising demand and offer in contact with each other in real time. The balance between the two market components is found through forms of online auctions (a more complete discussion of these matters is given in the aforementioned Indagine conoscitiva sul settore della raccolta pubblicitaria, referred to by resolution no. 551/12/CONS). In Italy, the online advertising sector has amply exceeded, in value, one billion Euro, representing, as mentioned above, the second most important advertising means after television. In spite of the moment of crisis our country is The value of currently experiencing, which involves stagnation of the advertising markets Internet (see infra), the online advertising market shows a counter trend, i.e. growth, advertising sales even in 2012. In the last year the sector has grown overall by more than 10%, while the national component alone is 12.2% (Table 1.67). It is worth noting that in four years the market has almost doubled, going from 817 million Euro in 2009 to 1.5 billion in 2012.
Table 1.67. Market value of online advertising.
Revenues (millions of Euro) ∆ 2012/2011 2009 2010 2011 2012 (%) National and local online advertising 817.53 1,177.29 1,407.52 1,552.59 10.3% National online advertising 620.63 779.84 1,009.30 1,132.74 12.2% (excluding classified/directories) * The companies which have contributed to enhancing the online advertising market are: Adsolutions; Advit; Arcus; Banzai; Buongiorno; ClassPubblicità; Click Adv; Dada; CRM; Ed. Condé Nast; Edimotive; Editoriale Domus; Facebook; Finelco; Google; Hearst; Hi Media; Leonardo ADV; Libero SRL; Manzoni; Matrix; Mediamond; Microsoft MSN.IT; MyAds; PBM; Publikompass; Publitalia; Rcs; Reed Business; SEAT; Sipra; Sky Pubblicità; SPE; SPM; Sportnetwork; Subito.it; Tag Advertising; TGADV; Tiscali; Tradedoubler; WebAds; Websystem Il Sole 24 Ore; Yahoo!Italia.
Source: processed by the Authority using company and FAP data
There is still a clear differentiation (Table 1.68) between the operators that are active exclusively in the digital world (such as Google, Microsoft, Yahoo!, Facebook) and the subjects which also operate on other media. The former still represent the larger (and growing) category, obtaining over 70% of national resources, in line with what was observed previously regarding the audience levels of the various corporate groups which operate on the network.
58 Annex A to resolution no. 551/12/CONS “Indagine conoscitiva sul settore della raccolta pubblicitaria" [Fact-finding survey on the advertising space sales sector].
159
Table 1.68. The national online advertising market in Italy - market shares Revenues (€ mln) Incidence Δ2012 on the 2009 2010 2011 2012 /2011 total (%) (2012) Classic media operators 319.45 254.67 277.01 303.03 9.4% 26.8% Internet operators 301.18 525.17 732.29 829.71 13.3% 73.2% Total 620.63 779.84 1009.3 1132.74 12.2% 100.0% HHI 2,622 2,559 2,639 2,535 Source: processed by the Authority using company and FAP data
The analysis of the situation of the national online advertising sector shows a concentrated structure, with an HHI index value permanently above the threshold of 2,500 points.59 The extreme variety and fragmentation of the Internet interfaces with a high and structural concentration of the online advertising market. For that matter, the network's capacity for viral diffusion translates into incredibly fast introduction and affirmation of new sites and services, causing, on one hand, a lively industrial market, and on the other, the evolution towards a context featuring the presence of few large operators and a myriad of smaller companies. The last decade featured the affirmation of the search engines, with the leadership first of Yahoo! and then of Google, already market leader from the middle of the last decade and now the operator with the greatest market power. The Internet sector, as pointed out above, featuring high and flexible The dynamics of the dynamics, is in a state of continuous and rapid change. In particular, the Internet sector and changes in progress regard important questions such as, among others, the monitoring activity model for the distribution and use of content, the presence of many different operating systems, the development and weight of the different payment systems, and the role of the new devices which will be launched on the market thanks to continuous technological development. Furthermore, the Internet sector, at its core a means which cuts across all the other media, presents many complex aspects which touch on many different issues. Particular importance is taken on (also from the viewpoint of the evolution of the economic and competitive scenario), by aspects linked to respect for privacy (which concern the Privacy Authority60), and behavioural elements analysed by the national61 and international62 antitrust Authorities. There is therefore a need for careful monitoring aimed at avoiding the closure of such an innovative and dynamic
59 In accordance with the Merger Guidelines of the European Commission and of the United States Department of Justice/Federal Trade Commission, a market with an HHI of more than 2,500 points can be defined as concentrated. 60 The Privacy Guarantor has launched an inquiry into Google to ensure respect for the law regarding the protection of personal data. This initiative is coordinated with that of other European authorities e.g. France, Germany, United Kingdom, the Netherlands and Spain. 61 Cf. Agcom, Case A420 – FIEG – FEDERAZIONE ITALIANA EDITORI GIORNALI/GOOGLE, of 22 December 2010. 62 Cf. European Commission, Case AT.39740 — Google.
160
market, based on a scrupulous analysis of the benefits but also of the costs of every intervention, in compliance with the principles established by Europe in the case of innovative markets. This is the direction followed by the recent launch, on the part of the Authority, of the survey on the sector of Internet services and online advertising, in order to monitor the Internet sector and deepen knowledge on the competitive dynamics in effect (cf. resolution no. 39/13/CONS entitled: Avvio di una indagine conoscitiva sul settore dei servizi Internet e sulla pubblicità online [Launch of a fact finding survey on the of Internet services and online advertising sector]).
2.3.5. Advertising Below, an analysis is given of the advertising sector63 by both the classic and the innovative (the Internet) media using a description of the distinguishing features as regards both offer and demand. With regard to the advertising offer, after a short presentation of the operators present, the overall investment dynamics and the various means are illustrated. For the purposes of the examination of advertising demand, on which the Authority launched periodic monitoring activity (the Observatory on advertising, see par. 1.4 Focus 4), the factors which influence the advertiser's choice amongst the various media on offer are illustrated, along with the particular features of the individual advertising tools. Lastly, for brokerage services, an analysis is given of the competitive situation and the structures of the contractual agreements which suggest market failures that do not allow the advertising system to reach effective market balances.
The advertising offer The sector, as regards the services offered, is composed of a great many advertising brokers, controlled by the owners of the main communications platforms, from independent operators to the large publishing groups. The Advertising brokers owned by the publishers generally sell, with exclusive rights, all or part brokers of the advertising spaces on the media owned by the group, but they may also have sale mandates for ad space on third-party media. To complete the
analysis, it should be noted that there is a limited number of publishers who interact directly with the advertisers without using broker services. The brokers receive remuneration in proportion to the sales achieved (with revenues net of
the amount transferred to the publishers) by their own sales networks at a and specialised territorial level which, in most cases, are highly specialised as regards operators merchandise, i.e. on the basis of the relationship with the clientèle (whether through a media centre go-between or otherwise). Lastly, with the spread of the
63 With reference to advertising communication as a whole, therefore considering both advertising via the various media including the Internet (above the line) and the other forms of corporate marketing which do not use communication means (below the line), the Authority, with resolution 551/12/CONS, concluded the fact-finding survey, the results of which, given in Annex A), are explained both in Focus 4 par. 1.4, and in paragraph 3.2.1.3.
161
Internet, there are a number of operators, with growing economic power, specialised in the sale of online advertising which offer their services in both the national and international sphere, with a more streamlined organisational structure featuring minor presence at local level, but with a significant product and process innovation capacity, also facilitated by the large and constant technological investments made at a global level by such operators. The main advertising brokers are listed below, with indication of the group and company by which they are controlled.
Table 1.69. Main publishing groups of the advertising offer (Italy, 2012)
Group of reference Company of reference Advertising brokers
Publitalia'80 S.p.A. Mediaset S.p.A. Digitalia'08 S.r.l. Fininvest Mediamond S.p.A. (50%) Arnoldo Mondadori Editore Mondadori pubblicità S.p.A. S.p.A. Mediamond S.p.A. (50%) RAI Radiotelevisione Italiana Rai Sipra S.p.A. S.p.A. Seat Pagine Gialle Seat Pagine Gialle S.p.A. Seat Pagine Gialle S.p.A. Gruppo Editoriale Gruppo Editoriale L'Espresso A.Manzoni & C S.p.A. L'Espresso S.p.A. RCS Mediagroup RCS Mediagroup S.p.A. RCS Pubblicità S.p.A. Google Google Ireland Ltd. Google Ireland Ltd. Sky Italia s.r.l News Corporation Fox International Channel Italy Sky Italia S.r.l. s.r.l Telecom Italia Telecom Italia Media S.p.A. MTV Pubblicità s.r.l Matrix S.p.A. (Italiaonline Weather Investments II Italiaonline s.r.l ADV and iopubblicità) Confindustria Il Sole 24 Ore S.p.A. Il Sole 24 Ore S.p.A. Caltagirone Caltagirone S.p.A. Piemme S.p.A. Advance Publication Condénast Condénast Pubblicità Editrice la Stampa S.p.A. Publikompass S.p.A. Fiat Publikompass S.p.A. Società Pubblicità editoriale Monrif Monrif S.p.A. S.p.A. Hachette Rusconi Pubblicità Hearst Communication Hachétte Rusconi s.p.a. S.p.A. Finelco Gruppo Finelco S.p.A. Gruppo Finelco S.p.A. Cairo Communication S.p.A. Cairo Communication Cairo Communication S.p.A. Cairo Pubblicità S.p.A. Class Editori Class Editori S.p.A. Class Pubblicità S.p.A. Classpi Class Pubblicità
S.p.A. Microsoft Microsoft S.r.l. Microsoft Adv Other operators Source: The Authority
162
Going on to analyse advertising sales in Italy on all communications Advertising sales media, the value was Euro 8.3 billion in 2012, recording a reduction of more than 13%. The dynamics of advertising revenues, as already registered by the Authority (cf. the Observatory on advertising, 2011 first edition, pp. 14 and following), shows a cyclical trend typical of the advertising sector. Total advertising sales increased relatively until 2008, but as of 2009, coinciding with the difficult economic situation, there was a drastic reduction which was not been recovered in the following years (Table 1.70). In fact, in 2010, media advertising recovered partially (+5.1%), but well below that necessary to reach the levels of the sector prior to 2009, then going on to sustain a loss in 2011 of more than 2%. Going on to analyse the sales in the individual advertising markets, trends Breakdown of differ according to segment. Firstly, until 2011 television showed a stable advertising sales evolution over time (at a more or less balanced rate), with fluctuations due to by medium the country's macroeconomic situation, while in 2012 there was a significant reduction in revenues (-18%). Radio, however, after the positive dynamic trend typical of the medium, although fluctuating significantly, until 2010, fell drastically in 2011 (-6%) at the moment of the liquidation of the company which measured radio audiences (Audiradio). The estimates for 2012 also show further contraction of revenues (-7.1%). The publishing segment, however, displays a structural crisis, above all aggravated by the country's economic and financial situation. Advertising in daily newspapers has lost about one fourth of its value in the period examined (2009-2012). Although the 2010 figure is influenced by a partial re-allocation of revenues from newspapers to magazines, the market trend appears to be due to a phase of decline in the life cycle of the hardcopy product. This evidence is confirmed by the aggregate figure of newspapers and magazines which, in four years, shows a fall of more than one fifth of total advertising revenues. Coinciding with the crisis of advertising in the publishing segment, there is an opposite trend for online advertising. As of 2011, the Internet has become the second most important advertising media in Italy, catching up with, and overtaking, both newspapers and magazines. Also the estimated values of advertising on the web in 2012 confirm entirely different dynamics from the development seen for the other communication media.
163
Table 1.70. Division of advertising revenues (national and local) according to communication means Incidence ∆ Revenues (€ mln.) on the 2012/2011 total 2009 2010 2011 2012*** (%) (2012) Television 4,024.15 4,282.36 4,221.27 3,467.52 -17.9% 41.6% Radio 558.66 598.92 565.81 525.49 -7.1% 6.3% Publishing 2,794.10 2,762.68 2,649.16 2,143.24 -19.1% 25.7% - Daily 1,500.67 1,410.80 1,358.55 1,141.37 -16.0% 13.7% newspapers - 1,293.43 1,351.88 1,290.61 1,001.87 -22.4% 12.0% Magazines* Advertising 655.00 502.81 281.02 224.816 -20.0% 2.7% annuals Cinema 57.6 68.1 51.20 41.6256 -18.7% 0.5% External 492 481 428.00 374.5 -12.5% 4.5% Internet** 817.52 1,177.29 1,407.52 1,552.59 10.3% 18.6% TOTAL 9,399.03 9,873.16 9,603.98 8,329.79 -13.3% 100.0% *In 2010, certain operators reallocated certain advertising revenues (the weekly editions attached to the daily newspapers) from newspapers to magazines. Therefore this figure cannot be directly compared with those of previous years. **Source: IAB and IAB Europe data for the period 2005-2008, processed by Agcom using company data for the following period. *** Estimated values. Source: processed by the Authority using company and sundry data
Thus going on to examine the amounts invested in advertising in the Advertising communications media, a series of phenomena, indicated below, emerge (Figure investments 1.25). In the period 2005-2012, as mentioned, there was progressive growth in online advertising, establishing itself in second place in terms of advertising revenues. A similar evolution, albeit at a decidedly lower rate, occurred for radio advertising, the weight of which grew constantly, although, as mentioned above, it sustained heavy losses as of 2011. For all the other media - including television - there was a reduction in their share of advertising revenues out of the total value (daily newspapers in particular decreased from 18% in 2005 to 14% in 2012, therefore dropping about 4 percentage points).
164
Figure 1.25. Development of advertising shares divided by medium on classic media and via the Internet
Source: processed by the Authority using company and sundry data
The trend of the share of television advertising sales until and including 2011 showed no significant change in the period examined, but only fluctuates in respect of a long term value rather stable over time, corresponding to about 43% of the advertising sales of the entire advertising sector. In 2012, this share fell to 41.6%, highlighting an unprecedented decline in television advertising revenues, the nature of which can be appreciated only if considered over a longer period. In other words, the advertising sector as a whole, as well as the economic crisis, already mentioned several times, shows the effects of two other phenomena which reflect on the quantity and composition of total investments: digitalisation and the consequent development of advertising on the Internet, and the parallel structural crisis of the classic component, particularly publishing (newspapers, magazines and advertising annuals). It will be necessary to verify the net effect of these phenomena on advertising revenues of the classic media which will only become evident in the long term, when it is possible to observe the structural trend of the sector. At present, however, it is worth noting that also based on 2012 estimates the national advertising sector still features strong concentration of resources in television and the small number of operators of this medium.
Advertising demand Of the elements which contribute to determining advertising investment choices, firstly the strong sector component, as already underlined by the
165
Authority both in the 2012 annual report and in the Observatory on advertising (consult documents for more detail), is confirmed. Together with the specific sector elements, the decision regarding the Determining different advertising activities is also conditioned by other important features of factors of the advertiser company which influence the inclination whether to invest in advertising advertising and which media to favour: the size of the company (in terms of investments (*) employees or sales), the age of the company, the ownership (national or multinational), the geographic target (local or national) and the customer target (business to consumer or business to business). The level of correlation between the above-mentioned factors and the investment in the various advertising media was studied by means of the use of econometric tools, the results of which are given in Table 1.71.
Table 1.71. Determining factors for advertising investments (*) Geographic Media/ Age of Ownership Clientèle Dimensi target Media Determining compa (multinatio target ons (local/natio centre factor ny nal) (BtC) nal) Above the
line TV + ko + ko + + General TV + - Internet + - + - ko + Daily + ko ko ko ko + newspapers Magazines + ko ko ko ko + Radio + ko ko + ko + Posters + ko ko + + ko Advertising + ko - + ko ko annuals (*) Effects deriving from econometric estimates (with STATA) with “censored” models (tobit): “+” significant and positive effect; “-“ significant and negative effect; “ko” non- significant effect. Source: statistical processing using data from market survey carried out by GfK Eurisko for Agcom
A first relevant figure emerging from the table concerns the size of the company, in view of the significant and positive relationship compared to the advertising investment regardless of the medium used. It is therefore confirmed that both medium and large companies advertise via the media, although, as will be seen later, considerable differences can be found between the various communication means. In any case, the larger the company, the more likely it is to invest in advertising via all communications media. Another element which can condition investment choices as regards advertising on the part of companies is the age of the advertiser company. The
166
younger the company is, the more inclined it will be to invest in digital communications means. If the advertiser belongs to a large international corporate group, this will also influence the inclination towards specific communications media, although for very different reasons. Multinational groups mainly invest in television, since it can reach a wide and generalised public of consumers on a national basis, thus lending itself to advertising campaigns for widely consumed products produced (prevalently) by the multinationals. The Internet is also often used for the advertising campaigns of companies belonging to international groups, since the web, more than other media, lends itself to the use of the same advertising "concept" also in various countries. The only negative relationship of the "(multinational) ownership" is found in the case of advertising annuals, in view of the mainly "local" nature of this communication means. The geographic target of reference to which the company's product is addressed determines the type of advertising campaign (national or local) and consequently the choice from the various advertising communications media. If the advertiser wishes to reach consumers potentially localised in limited geographic areas it will tend to use communications means which are mainly "local" such as posters, annuals or radio (positive and significant relationship with the local target component), favouring them rather than television and the Internet, used instead for national advertising campaigns. Similarly, advertisers whose company target is represented by consumers (BTC) rather than other companies (BTB) will prefer communications tools which can reach a wider and more generalised public (television, posters both positively and significantly linked with the BTC target component). Lastly, the final determining factor is the level of intermediation. It can be observed, in fact, that the media centres tend to have a positive link with advertising investments (although it is not possible to verify a causal relationship, in this case, but only a link) especially in above-the-line advertising, where the only exceptions are obviously posters and annuals, for which communications means brokerage is rarely (if ever) involved. In the light of the observations made previously, confirmed by the data in Particular the table, certain specific features emerge regarding the different features of the communications tools represented below. individual media Television, especially general national television, is a means used by a few very large investors (often multinationals) which annually invest considerable budgets (on average over Euro 300,000 in general television and almost Euro 100,000 all together in both national and local television). The capacity of television (especially generalist television) to reach, with high audience levels, a huge and general public gives this tool doubtless qualities, making the purchase of the relative advertising space non-replaceable or even indispensable, for the execution of efficient advertising planning aimed at a wider target as regards both socio-demographic and geographic features. Such types of consumers (with less specific features) often correspond to the company target of the larger sized advertisers which sell directly to the consumers (mass consumption). Television
167
as a whole is also a very immediate communication tool, which is used by both national and local advertisers, while generalist television is an exclusively national means. With regard to radio, there are similarities with television (both for access threshold and for sector specialisation) with the significant exception of being also used by advertisers who wish to reach a local target. Going on to the publishing market (newspapers, magazines, annuals), from an advertising viewpoint (for threshold, geographic and sector target, intermediation level), there are intermediate features with a high penetration among the advertisers (even 40% for annuals), which have reduced sizes and very contained investment budgets (below Euro 10,000 a year). There are also high levels of sector specialisation for magazines (considering investors' inclination to exploit the specialised nature of specific magazines) as well as territorial specialisation, both for newspapers (above all local newspapers) and for annuals. However, as regards intermediation, appreciable levels can only be seen in the case of national newspapers and magazines, since the role of the media centre refers only to the national public (in the local field, investors with reduced budgets tend to deal directly with the brokers). While the low intermediation level of newspapers is connected to the fact that a great many are more local than national, for magazines, instead, it is due to the existence of an important fringe of specialist publishers which do not fall within the advertising programming of the larger national investors which resort to agent intermediation. The advertising medium with the lowest access threshold is therefore represented by annuals, which are rarely used by international advertisers (negative and significant relationship with the multinational components) confirming the "local" nature of the same, in virtue of the features of this particular form of advertising which makes it particularly suitable for advertising products and services of companies which operate in a local context.64 The Internet seems to be a medium, in its present state, more similar to publishing in respect of the features of the demand: many companies, generally of small dimensions and with very limited budgets, invest in this advertising media. This feature, i.e. the (low) cost of access to the advertising platform, is one of the main strong points of the means which, however, is distinguished from publishing for its notably "national" character which allows for the execution of small or large advertising campaigns in terms of investment which can reach subjects without being geographically limited. In other words, the possibility of carrying out advertising campaigns on the web with a minimum
64 This form of advertising is distinguished from that transmitted by other media because the message implies the need for the active behaviour of the consumer towards products and services which he/she already intends to buy (at a later time); for the widespread distribution to the citizen's home and the annual duration of the content transmitted. In most cases, advertising annuals are the only form of advertising and the main method for an organisation to inform the local community of its products and services, also in consideration of the high circulation of the advertising media. For further information, see Annex A to resolution no. 551/12/CONS.
168
investment much lower than other media, allows small advertisers to prepare advertising campaigns, also at a national level, using mass communications. In addition, as already noted, the Internet is the only means in which start-ups in particular invest. Also for posters, there are intermediate features which render this means similar to the other hardcopy publishing products, although this medium is more widely used by (local) advertisers who wish to reach consumers directly.
Table 1.72. Type of investors by advertising media
% out of total % out of total Average annual
enterprises investors investment (€) Above the line Television 0.9 3.5 92,005 General TV 0.1 0.6 321,668 Internet 5.7 22.7 3,939 Daily newspapers 4.1 16.5 7,209 Magazines 4.6 18.5 6,326 Radio 1.3 5.1 10,628 Posters 4.7 19.1 2,500 Cinema 0.3 1.0 5,347 Advertising annuals 9.9 39.9 798 TOTAL 25.0 100.0 16,000 Source: processed using data from market survey carried out by GfK Eurisko for Agcom
Intermediation between advertising demand and offer The media centre, on the advertising side, represents an intermediary between two groups with which it maintains business relations: the advertising customers and the advertising brokers. The advertisers use the media centre to Forms of obtain optimal management of their advertising investments, by the purchase of intermediation advertising space according to organised planning, in general, on several communications media. The buying service is often accompanied by complementary activities, both before (definition of the strategy, planning) and after (management of the advertising campaign, assessment of effectiveness). For the advertising brokers, the media centre carries out the function of an aggregator of the advertising demand, which becomes all the more important the larger its customer portfolio. However, as briefly illustrated below, this (triangular) structure of the advertising system can lead to market failure, due both to conflicts that can arise between the interests of the various players involved and to situations of particular concentration in each market phase and in particular in that of advertising intermediation. a) The demographic structure
169
The economic and commercial relations which distinguish the agreements between media centre and advertiser are always formalised by contracts. These contracts have a rather similar and consolidated structure - especially within a single corporate group - which includes the express provision, with a considerable degree of detail, of various contractual elements (services performed, duration, remuneration, negotiating rights, protective mechanisms for both parties, and executive processes). Within the single media centre- customer agreement, the aforesaid contractual aspects are therefore specified in a considerably differentiated manner, in order to answer the specific needs of the counterparties. In this sense, such agreements, beside the flexibility aimed at satisfying the needs of the parties to the contract, are highly detailed as regards the elements disciplined by the same and by the variety of content deriving from the features of the services performed: the remuneration; the calculation criteria and the transfer to the end customer of the end-of-year bonuses (or overcommission, MVD); the executive aspects of the performance; the duration of the contract; the specific clauses protecting the rights of the parties (responsibilities, exclusive rights and confidentiality). With regard to business relations between media centres and advertising Business brokers, according to the aforesaid analysis, two important interrelated issues relations between can be seen which characterise this contractual relationship: the first regards media centres the negotiation process and the purchase of advertising space on behalf of the and advertising customers; the second, instead, regards the definition of a system of economic brokers incentives - end-of-year bonuses (contractual rights, volume discounts, overcommission) - aimed at increasing the broker's revenues in terms of both total sales and the advertising expenditure of the individual customers. With regard to the first issue, there is, on one side, an absence of standard contracts to discipline the sale of advertising space; on the other, there is a lack of transparency in the pricing system of advertisements on the various media platforms. Generally, in fact, the process of the negotiation of advertising spaces and of pricing is a dynamic one, involving a series of contacts, also informal, repeated over time with the broker without the use of standard forms except in only a few cases. Within this process, a series of factors come into play, which are both internal and external to the negotiation process and which vary widely according to the broker, the medium, and the periods of reference, which cannot be identified by the customer in advance. Furthermore, it has also been observed that the listed prices - which do not even exist in the case of some brokers - represent only an indicative value, often entirely symbolic, within the negotiating sphere. Consequently, there is an initial evident lack of balance as regards information in the advertiser-media centre relationship, to the extent to which the customer, once it has conferred the mandate on the media centre, often cannot control the actual work of the said operator nor, therefore, the various steps of the business negotiation, nor the factors that have contributed to the definition of the final price, having only the power of approval of the advertising
170
campaigns and the single orders. In addition to the information problem, the market also features the almost total exploitation of price discrimination strategies, according to which the broker defines the price on the specific features of the customer (including the discount applied in a previous period) and the volume (past, present and future) of the investment. With regard to the contractual relationship between media centres and brokers, above all, it has been found that this is regulated by framework agreements, in some cases in the form of private deeds, which have as their main aim that of increasing the sales of the advertising broker on an annual or longer term basis, by reaching penetration quotas, both on the total volume managed by the media centre and on that of the single advertisers. The service performed by the media centre is remunerated by a payment (the end-of-year bonus, or negotiation fees, or lastly overcommission) which is invoiced by the media centre and is established according to a scale (or incremental) mechanism which, although dependant on the basis of many factors, nevertheless has a very similar structure in the case of all the various contracts, featuring sales thresholds (i.e. increases of the same, expressed in percentage values) at which increasing percentages are paid. The percentage is thus calculated on sales increases attributable to the action of the media centre (so-called intermediate sales) calculated net of VAT, discounts and agency commissions. It is therefore clear that the negotiating right is therefore fostered, i.e. this form of remuneration is defined by the broker to encourage the media centre to operate in the former's interest. In addition, the percentages of the negotiation fees and, more in general, the structure of the brokers' sales growth incentives, appear to be differentiated on the basis of many factors (media, broker, market trend, the advertiser's nature, etc.) However, certain common features can be seen, including that which appears to be more important, namely the existence of a proportional inverse relationship between the broker's market power and the incidence of the negotiating fee. Lastly, in spite of the fact that the contracts between media centre and advertisers contemplate mechanisms for the "return" of the negotiating rights, it has been found that such mechanisms are not effective. Rather than the "reversal" or "return" of the negotiating fee to the advertiser, it would be more correct to speak of a volume effect of the investments which flow towards a specific broker which can, to a certain extent, be reflected in purchase conditions which are more advantageous for the customer or for the media centre customer bracket. In the three-way relationship between the above-mentioned subjects, it is therefore clear that the media centres have an information advantage of their customers. In particular, the customers cannot assess the "suitability" of the negotiation fees recognised, values which, for that matter, usually involve a modification of the amounts due by the advertiser to the media centre. The possibility of exercising this control would presumably require, in fact, the knowledge on the part of the advertiser of the critical mass of transversal
171
information, i.e. relative to all the customers of the media centre itself and of the contracts signed with the various brokers and the ways in which the rights accrued translate into advantageous buying conditions for the various customers. All the above mentioned elements - asymmetric information, lack of transparency, triangular contractual structure, the existence of a form of incentives recognised to the media centre by the broker - inevitably lead of market failure in the advertising sector, in its various stages, which in turn lead to the role recently assumed by the media auditing companies. The media auditing services arose precisely because of the inability of advertisers' of precisely monitoring the work of the media centres, in a context of clearly misaligned interests, and they carry out together a rather articulated and complex control activity. In detail, the auditor essentially carries out three kinds of checks for the customer - the actual output of the advertisements, correspondence between the price agreed and the services performed, correspondence in the wider sense of the economic advantage obtained by the customer in exchange for the contractual rights received - and in this respect it can also control the tender procedures for the assignment of the customer's advertising budget. However, the auditor's control of overcommissions is subject to certain objective limits (cf. fact-finding survey, cit., pp. 40-42) which make the production of a real and genuine certification of the contractual rights improbable and, in this sense, the auditing activity does not seem able, alone, to lead the system towards an effective-market situation.
b) Market structure The offer of advertising intermediation services has featured a process of industrial acquisition and concentration undertaken at international level, but The with very similar developments also at national level, which has resulted in the intermediation concentration of the activities on the part of a few multinational groups. services offer Therefore, this has consequently led to the development of a national market structure of concentrated advertising intermediation which is, in fact, even more concentrated than the most important international markets, at present composed of 6 international corporate groups (Aegis, Havas, Interpublic, WPP, Publicis, Omnicom) which operate through several media centres and a limited number of independent media centres of minor dimensions active only in Italy. Following the Merger Guidelines of the European Commission65 and of the United States Department of Justice/Federal Trade Commission66, the table below
65 Cf. Orientamenti relativi alla valutazione delle concentrazioni orizzontali a norma del regolamento del Consiglio relativo al controllo delle concentrazioni tra imprese [Guidelines for the assessment of horizontal concentrations pursuant to the Council regulation on control of concentrations among companies], 2004/C 31/03, in the ECOJ of 5 February 2004. 66 Cf. Horizontal Merger Guidelines of the US Department of Justice and the Federal Trade Commission, , 19 August 2010.
172
classifies the structures of these markets according to the value of the concentration index (see, instead, Table 1.73 for the precise HHI values).
Table 1.73. The advertising brokerage market structure in Italy and abroad(*)
Italy France Germany Spain UK USA
Not Market Very Moderately Moderately Moderately Moderately concentrat structure concentrated concentrated concentrated concentrated concentrated ed (*) Methodological note: following the criteria fixed by the European Commission and by the US DoJ/FTC, the markets are classified as follows: “Not concentrated”: with HHI below 1,500 points; “Moderately concentrated”: with HHI between 1,500 and 2,500 points; “Very concentrated”: with HHI above 2,500 points. Source: The Authority
As clearly emerges from Table 1.73, Italy is the only country with a very concentrated market, compared to a general trend (except for France) towards moderate concentration. This means that the presence of economies of scale and range may have contributed to increasing the general level of concentration in all countries. In this context it is clear that the high concentration of the national market places Italy in an entirely unusual position compared to the international structures. It has also been found that in recent years a fringe of smaller independent operators has left the market, in addition to the gradual disappearance of the intra-group competition dynamics (i.e. between agencies of the same group), which had remained after the consolidation of the media centres into large conglomerate groups (cf. fact finding survey, cit., pp 60 and following). It is also necessary to point out that the Authority estimates that about three quarters of national advertising investments are managed by the media centres. Therefore, except for a small section (one quarter) of physical national advertising investments managed directly by the customers - prevalently linked to the cost of advertising on more local and specialist media, or to investments of a minor entity which do not fall within a comprehensive advertising programming - intermediation represents an (almost) obligatory step for the definition of an advertising campaign and for the purchase of the relative spaces by a broker.
173
2.4. Postal services
In 2012 the postal services sector - including the activities of the universal The value of postal service (including the services exclusively entrusted to Poste Italiane and postal services mass mailing) and the express courier services - invoiced together about Euro 7.7 billion, representing a loss on 2011 of about Euro 200 million (Table 1.74). Active operators in Italy on the postal services market have therefore registered a fall in income, in nominal terms, equal to 3%, which corresponds to a reduction, in real terms, of about 5%. This result depends on two opposite trends: on one hand, the income generated by services which fall within the universal postal service and by the services entrusted exclusively to Poste Italiane, has fallen by a total amount of about Euro 300 million; on the other hand, sales from express courier services have grown by about Euro 100 million. Therefore, as will be further demonstrated below, of all the postal services, the express courier segment is more dynamic and, not by chance, has grown, unlike other segments which, instead, show a decrease in profits.
Table 1.74. The postal services sector – Revenues (2011-2012, millions of Euro) absolute % 2011 2012 change change Universal postal service (including exclusive 4,110 3,802 -308 -8% services) Corriere espresso 3,810 3,909 99 3% TOTAL 7,920 7,711 -209 -3% Source: processed and estimated by the Authority using company data
In any case, the revenue trend is the result of the competitive dynamics Competitive which accompany the sector's development. In particular, the Italian postal- dynamics in the services sector displays two features - common, for that matter, to several postal services European countries - which influence the market structure. sector Firstly, there are no large suppliers, apart from the historic Poste Italiane and its main competitor TNT Post Italia, a company of the Dutch group TNT Post. The market situation is also partly explained by the decline in revenues generated by correspondence services, mainly due to the reduction in volumes exchanged. Another reason is the existence of high fixed costs, in some cases irreversible (i.e. sunk costs), necessary for the creation and maintenance of the commercial network necessary to supply the service, especially at a national level. The combination of reduced income and of the size of long-term
174
investments, compared to demand prospects, favour the entry onto the market of small and medium sized companies with a prevalently local business model. Secondly, the evolution of the market can follow various paths, in consideration of the present liberalisation of the sector and in the wake of the choices taken so far by the operators. In fact, there are two business models which co-exist side by side. the infrastructure model, in which the operator favours end-to-end competition and assumes that the competitor of Poste Italiane independently provides for the entire production chain of the postal services - i.e. the collection, transport, sorting and distribution of correspondence - without taking avail of wholesale services provided by the main operator; the resale model (downstream access) in which the operator focuses on certain steps of the production chain, for example collection in certain geographic areas, and utilises certain elements of the main operator's network in order to complete the series of inputs necessary for proposition of the sale offer to the final users. With this framework, the structure of the sector in the near future will depend on the concrete choices adopted by the operators on the basis of the specific market conditions. The express courier segment is worth mentioning separately: as said above, this segment is the most dynamic and features the best growth prospects. The said segment benefits, on one hand, from competitiveness which has developed according to an infrastructure model. On the other, it is positively influenced by the popularity of the Internet as a sales platform which favours the transaction of goods and services between companies and consumers. In this segment, revenues between 2011 and 2012 show an increase of about 3%, reaching about Euro 4 billion. It is possible that this figure is influenced, to a certain extent, by the development of e-commerce platforms, as reported in several surveys, also relative to the Italian market. Overall, the express courier segment seems to be more competitive, as shown by the distribution of the market shares between the relative operators. Sector In any case, for all the postal services markets there are certain questions development of an economic and technical nature which influence the competitive balance. scenarios There are, for example, de-materialisation processes in progress, in Italy as in the rest of the world, the development of which will influence the traffic managed by the postal service operators. In this sphere, it can be seen that the companies which produce advertising campaigns are adopting diversified strategies as regards the composition of electronic and physical communications. At times, however, they seek a mix of the two transmission means, whereas at other times there is pressure for the complete and rapid substitution of letters sent by post. Nevertheless, as regards postal operators and, in particular, the management systems of the wide range of correspondence services, technological innovations trigger off processes of improvement - already partly achieved - in various fields, such as customer relationship management, invoicing and administrative management. The trend of progress is therefore directed towards an improvement in the quality and quantity of the services provided.
175
Given this fact, the main trends registered through the year in the sphere of the universal postal services are illustrated below, including the services entrusted exclusively to Poste Italiane and the mass mailing and express courier services. In particular, the values shown in the tables and graphs below derive from the data supplied by the main companies of the postal sector (about 20), including postal operators, consolidators and express couriers.
The universal postal service The activities included in the universal postal service – namely collection, transport, sorting and distribution of letters and packets up to 2 kg and packages up to 20 kg, the services relative to registered and insured letters and packages and mass mailing, as well as the services entrusted exclusively to Poste Italiane – have generated sales in 2012 which can be estimated at more than Euro 3.8 billion, representing 8% less than in 2011. The Poste Italiane group continues to largely hold a monopoly, in virtue of The value of the the fact that it receives about 88% of the economic resources of this market, universal postal although the position of the main operator has declined slightly compared to service 2011 (about -2%). Competitive operators, the most important of which is TNT Post, hold about 12% of the market in 2012, showing an increase of about 2% on 2011. Therefore, the erosion of the market share of the Poste Italiane Group derives mainly from the competitive pressure exercised by rivals, above all TNT Post which has based its own business model on an infrastructure-based competition model. The above comments can also be understood from the following graph which shows that the major market share is held by Poste Italiane (Figure 1.26), although it is decreasing (Table 1.75).
Figure 1.26. Universal postal service activities, including the services entrusted exclusively to Poste Italiane - Market shares (2012, % of total revenues)
Source: processed and estimated by the Authority using company data
176
Table 1.75. Universal postal service activities, including the services entrusted exclusively to Poste Italiane - market shares (2011-2012, % of revenues)
2011 2012 % change Poste Italiane Group 89.5% 87.9% -1.7% Other companies 10.5% 12.1% 1.7% Total 100% 100% Source: processed and estimated by the Authority using company data
With regard, in particular, to mass mailing services (Figure 1.27 and Table 1.76), in 2012 Poste Italiane continues to hold over 80% of revenues, although this is slightly below 2011 figures (-2.3%). All the other operators have about 17%, with TNT Post holding about 10% of the market in 2012. Considering the market as a whole, there has been a decrease in total sales of about 4% between 2011 and 2012.
Figure 1.27. Mass mailing services - Market shares (2012, % of total revenues)
Source: processed and estimated by the Authority using company data
Table 1.76. Mass mailing services - market shares (2011-2012, % of revenues)
2011 2012 % change Poste Italiane Group 85.2% 82.9% -2.3% TNT Post 8.2% 10.4% 2.2% Other companies 6.6% 6.6% 0.1% Total 100% 100% Source: processed and estimated by the Authority using company data
177
The express courier market The express courier market is that in which there is the highest competition between operators (Figure 1.28). The total of revenues of the The express express courier market has remained more or less stable between 2011 and courier market 2013, showing an increase of about 3%, reaching just under Euro 4 billion in 2012. For that matter, the market shares of the operators have also remained stable between 2011 and 2012. The first operator, BRT, holds a 25% share, followed by DHL Express Italy with 16% of the market, TNT Global Express (15%), UPS (13%) and GLS (12%). SDA, of the Poste Italiane group, holds less than 10%. The positive trend of the express-courier segment seems to be fuelled, among other things, by the fact that the e-commerce services appear to be in continuous growth and in turn they have a positive influence on courier revenues. For that matter, this trend also appears in the postal services at a global level, as already mentioned in paragraph 1.2 of this report.
Figure 1.28. Express courier services - Market shares (2012, % of total revenues)
Source: processed and estimated by the Authority using company data
178