The Italian Communications Regulatory Authority
Annual Report on Performed and Scheduled Activities
The Communications Regulatory Authority
President Corrado Calabrò
Members Nicola D'Angelo Giancarlo Innocenzi Botti Michele Lauria Gianluigi Magri Stefano Mannoni Roberto Napoli Enzo Savarese Sebastiano Sortino
Secretary General Vice Secretary General Roberto Viola Antonio Perrucci
Head of the Secretarial Division Guido Stazi Annual Report on Performed and Scheduled Activities
2009
1 The Communications System 1.1. International Framework 1.1.1. Telecommunications
General framework
The worldwide market of telecommunications services is still characterized by a significant dynamism. In 2008, in spite of the recessionary effects of the financial crisis, the dynamics of the sector shows moderate growth levels, thus creating significant advantages for users. In particular, with an increase by 4.2%, compared to 6% of the previous three-year period (figure 1.1), the worldwide telecommunications market is worth 9971 billion euro (figure 1.2).
Once again, this positive trend is due to mobile services (+8%), thanks to the data component, but in 2008, Internet and fixed network data services equal such performance (over 8% of annual growth rate); whereas, in traditional services, the fixed network shows again a more marked decline in revenues compared to the past (-5%).
Figure 1.1. Worldwide market of telecommunications services (2005-08 turnover in %)
Average Fixed telephone services Internet and data Mobile telephone services Source: processing by AGCOM on Idate data
Figure 1.2. Market of telecommunications services worldwide (billion €)
1 Data concerning telecommunications (as well as the audiovisual market) in section 1.1 of the report, simply due to the adjustment the euro/dollar exchange rate occurred in 2008 are not comparable to those specified last year. Moreover, it is outlined how the last year taken into consideration (2008 for this report), has been assessed by Idate, and therefore it is subject to variations, that in some cases may be relevant, in the final analysis. This explains, for 2007, the difference between data specified in figure 1.1 of the Annual Report for 2008 with data specified in figure 1.2 of this Report.
__Mobile telephone services __Internet and data __ Fixed telephone services Source: processing by AGCOM on Idate data In relative terms, sector revenues are distributed among 268 billion euro (equal to 27%) coming from fixed telephone services, 187 billion from Internet and data services (19%) and, above all, 542 billion (54%) of mobile telephone services. In dynamic terms, it is pointed that, from 2004 to date, the value of traditional fixed telephone services decreased by more than ten percentage points (from 39% to 27%), whereas a significant increase has been recorded for Internet services (from 16% to 19%) and, above all, for mobile telephone services (from 44% to 54%). As already mentioned, the latter is the segment showing the highest increase and that, starting from 2005, accounts for more than 50% of the sector’s total. Such development is the result of two opposite trends: on the one hand, the significant increase in volumes continues, to which data traffic is to be added, with a customer base that, at the end of 2008, reached 3.82 billion users, with an increase by 17% compared to 2007 and on the other hand, the competitive pressure influenced the decline in prices and therefore in the average revenues per user, with the ARPU (average revenue per user) of voice services recording a sharp drop reaching in 2008 a monthly average of about 13.17 euro (Idate estimate), even if, with significant differences in the various geographical areas. As clearly outlined in figure 1.3, this decreasing trend is destined to continue, especially in mature markets. In a scenario in which in many countries the customer base reached saturation, the main reason of this growth is a strong competitive trend which reduced average prices and increased consumption, in terms of talk time, of SMS exchange, as well as of bundled services. A significant contribution to this trend is due also to the expansion of 3G and 3.5G mobile services. According to estimates, only in Europe, at the end of 2008, the customer base of 3G and 3.5G mobile operators exceeded 1003 million units, equal to 10% of the total number of mobile users (mainly in the Western area). In particular, data services in mobility were significantly boosted by the development of new mobile broadband technologies which improved the use of the end users, both in terms of quality and variety.
Figure 1.3 Voice services monthly ARPU in the European market (euro)
2 Source: Idate estimates for 2009. 3 Source: Idate estimates for 2009.
Western Europe Eastern and Central Europe Source: Informa Telecoms & Media The other growth driver of the whole sector – Internet access from fixed workstation – during 2008, produced additional revenues for 15 billion euro. The broadband is the real engine of the services from fixed workstation: in 2008, customers of broadband services increased by nearly 20%, thus reaching in the aggregate 4154 million users worldwide. This trend, is counterbalanced by the quick and structural drop in voice services that, if in 2004 accounted for 70% of the fixed network revenues, now are at 58%. On the whole, in spite of the growth of the broadband, fixed telecommunications have lost market shares, accounting now for 46% of the total telecommunications market worldwide, against 56% of five years ago. From a geographical viewpoint, growth trends (figure 1.4) continue not to be uniform, with areas where the market is fully mature and the growth is close to zero and developing areas, where the growth rate still reaches a two-figure percentage. On the whole, worldwide countries of the Asia-Pacific area - in particular China and India (figure 1.4) - are still the driving force for the sector’s growth worldwide. Among the mature markets, Europe has the highest development rate (+2% in 2008), whereas the United States record a sharp slowdown (+1.4%, against 3.9% in the previous year) and Japan marks time, recording, for the second year in a row, a drop in the sector of about 3% (in 2007 there was a 0.2% reduction).
Figure 1.4 Market of telecommunications services worldwide (% variation)
United States Europe China India Japan Other countries Average
4 Source: Idate estimates for 2009.
Source: processing by AGCOM on Idate data In spite of the evolution over the last few years, the geography of the sector remains essentially the same (figure 1.5): industrialized countries with about two-thirds of the market (63.6%), continue to dominate telecommunications services worldwide, even if the weight of the Chinese market is increasingly important (7.2%), even posing a threat to Japan’s position (8.3%). In the United States, where usually international and national calls from fixed workstation are not included in the flat rate offers, the drop in the volumes of voice traffic on fixed networks is mainly due to a combined use of the mobile service for short calls and of VoIP for international and national calls. On the whole, advanced markets which recorded to a lesser extent a drop in voice traffic volumes on fixed network are those markets in which operators adopted more diffusely flat pricing, with offers including an unlimited use of the telephone. Therefore, it is increasingly evident the general trend by fixed operators to pursue pricing strategies which include an unlimited use of calls in order to face the growing migration of their users to competitors’ services either mobile and/or on the Internet. Still as far as traditional fixed networks are concerned, they find extraordinary competitors not only in mobile operators but also and mainly in cable operators that updated their infrastructure (through the DOCSIS 3.0 standard supporting the advanced IPv6 standard and extremely high connection speeds), with reference to the offer of traditional broadband and especially high-capacity broadband services. In this regard, the US market and in Europe, the British, Spanish and Dutch markets, are benefitting from an infrastructure competition due to the historical presence of cable networks. With regard to mobile services, the voice segment has now reached saturation in every countries of the economically advanced areas; therefore, the development of the market depends essentially on the trend of last generation services, which account for up to one-third of the customer base. Moreover, operators that cannot rely any longer on a significant increase in terms of new users, are now aiming at increasing consumption of the existing customer base, by means of targeted marketing and price strategies. In this regard, Japan is an interesting case study: this country is characterized by a mobile segment in a position of world leadership, being the only one, among the economically advanced countries, that recorded since 2005 already, voice traffic volumes on mobile networks higher than those on fixed networks. However, starting from 2007, a decrease in such volumes has been recorded, as a result of a growing migration to the use of other types of mobile services available, such as instant messaging and e-mail, and because of an increase of the use of VoIP from fixed network. In this regard, the Japanese market seems to show a double turning passage: first, from fixed to mobile, then, a subsequent partial return, to last generation fixed services. The analysis of the emergent markets shows that these markets are gaining constantly market shares worldwide, with a increase from 20% of the world turnover in 2002, to 33% in 2008. This area concentrates 85% of growth, in value, of telecommunications services. Five countries – China, Brazil, Mexico, India and Russia – account for more than half of the overall value assigned to emergent markets; a fourth of the revenues in these regions is concentrated in China only. In terms of subscribers’ base, they account now for 60% of the worldwide fixed network market and for more than 70% of the mobile one. With regard to broadband, the spreading of these services is still limited, with an average penetration of 3 broadband customers per 100 inhabitants, against the more than 22 in the industrialized countries, a difference that tends also to increase. In this case as well, China alone covers more than half of the overall broadband customers, with a growth, in absolute value, higher than that in the United States. At the end of 2008, other emergent markets are showing an interesting growth in the broadband: Brazil, with 10.5 million customers, and Russia with 6.3 million, Mexico and Turkey with nearly 6 million and India with 5.5 million.
Figure 1.5. Telecommunications services worldwide by geographical area (% 2008)
Source: processing by AGCOM on Idate data
Europe (32.9), Japan (8.3), United States 22.4), India (1.8), China (7.2), South Korea (2.3), Other countries (25.2) - Total 997 billion euro In consideration of the information specified so far, the Asia-Pacific area is to be further investigated. In absolute value, in 2008, the Asian market of telecommunications services is worth 261 billion euro, namely more than one-fourth of worldwide turnover, with an increase by 4.6% compared to the previous year. China and Japan together account for more than 60% of the market value for this area, but with opposite trends: whereas, over the last five years, Japan’s share decreased dramatically: from 42% to 32%, China’s share increased significantly: from 23.5% to 28%. South Korea is the third larger power in the area, but its position is threatened by India’s growth. The main growth factor in telecommunications, in this area, is represented by the use of mobile services that, in 2008, account for 60% of the world growth of mobile telephony. In particular, India and China grow, in volume, at a rate of 18.8% and 44.9%, respectively with a total of nearly 970 million subscribers. The analysis of the worldwide trend of the telecommunications services offer continues with a series of analysis of a general nature (the strengthening of the markets and the competitive dynamics) or of a more specific one, with regard to the markets of fixed telephone services (new generation networks, VoIP and broadband) and of mobile ones (MVNO, 3G and data services in mobility). The Sector’s Strengthening and Competitive Dynamics The sector’s evolution is characterized by the continuation of trends which have already been observed in the previous years. First of all the market consolidation process. In the United States, for instance, in spite of the financial crisis, the merger & acquisition which, in 2008, entailed the acquisition of Alltel by Verizon continues. The competitive scenario is completed by cable operators that, having alternative access networks, can exert significant competitive pressure on the incumbents of the sector. The method to measure such competitive pressure and the remedies that could derive from it caused a long legal dispute between cable operators’ associations and the Federal Communications Commission. Secondly, the trend, which was already pointed out in last year Report, continued for a return to the specialization of the communication operators in core business activities. In particular, the development of the Internet traffic, the success of social network websites such as Facebook and YouTube, the symmetrical nature of the peering are having a significant impact on the general ecosystem. In this new market scenario, telecoms operators tend to increase co-operation with content provider and search engines, rather than to the competition which characterized such relation in the past. This is proven, even if indirectly, by the fact that recently the debate on net neutrality is dwindling. In the changed technological and market scenario, companies in the sector are focusing again on the core business. This is due to the fact that considering transmission capacity as most important competitive leverage, network operators are more inclined to adopt strategies targeted at strengthening their infrastructure and at updating it, rather than to invest, especially in the current financial insecurity, in areas in which they do not have specific know-how. Next Generation Network (NGN) The topic of Next Generation Networks is not new, just like the differences in the approach adopted worldwide last year. However, there is an increasing awareness, especially in a period like this one, of the role that governments can play in triggering a process to relaunch the sector by investing in ultra broadband infrastructure; as outlined in the recent working document by the OECD “The Role of Communication Infrastructure Investments in Economic Recovery”. In any case, on this topic which is taken into consideration by every government worldwide, there are currently great differences both in terms of approach and performance. Asia is the area which undoubtedly is more active with regard to NGNs. With Japan (14.4 million), China (19 million) and South Korea (6.7 million)5, this region has by far the largest number of super-fast broadband connections on fibre optics technologies (41 million), accounting for 85% of the worldwide market. In Europe, the differences among national markets in terms of penetration of new networks and of coverage of the corresponding services are considerably marked, the reason for this is to be ascribed mainly to the structure and the quality of the demand, to the population characteristics, to the morphologic complexities, to the presence or not of infrastructure alternative to the copper one and to the policies adopted by central and local governments to stimulate the development of infrastructure and/or of the demand. First of all, the population distribution and the rate of IT literacy of households are the factors which mostly influence the strategies of private operators since the achievement of economies of scale and of density necessary to recovery of investments depend on them. Another important factor is linked to the country’s morphology, the structure of the existing networks (for instance in terms of average distance between the exchange and the end user) and to the widespread coverage of their extension. Moreover, it is to be considered that with the new standards (DOCSIS 3.0), the cost to update and digitize the cable network can be more accessible compared to the overall replacement of a copper network. In some instances, the sale of some exchanges can amortize the investments on the network, as it was the case in the Netherlands. In any case, civil works, particularly, the digging for the fibre laying affect significantly the overall costs for the deployment of a new generation infrastructure. In this regard, a strong cutting down of costs is possible, when - as occurred in France - in major urban centres (Paris) city cable ducts and sewage systems are used. This leads to the role played by public institutions in supporting the development of new networks. The actual intervention of policy makers goes from direct and indirect forms of public financing by central governments (Asia) or local ones (Northern Europe), to forbearance systems aiming at encouraging private investments against the temporary or final exemption from rules to protect sector’s competitive framework (United States)6. In the Asian countries the role played by Governments is mostly that of direct investors in the deployment of fibre-optic networks. In particular, in Japan, the roll-out of FTTB/H technology networks was greatly widespread thanks to the crucial intervention by the central government within a project (u- Japan) aimed at the creation of an infrastructure widely present in the whole country; new networks are deployed not only by the incumbent NTT, but also by direct competitors, such as electric companies, cable operators, content providers and by a number of regional, local and public Administrations.
5 Source: Point Topic. 6 Germany too approved the regulations introducing a forbearance system, but according to the European Commission such law was in contrast with the EC regulatory framework.
It is important to point out that, even if initially this country implemented a series of fairly strict regulatory obligations concerning the unbundling of fibre-optic networks, for the further developments of the network it was clearly specified that investments would be charged to the operators interested in entering the market. In Europe, governments adopted a more fence-sitting position, because of a careful cost-benefit analysis for any public intervention. In 2008, the analysis of a development plan of the broadband carried out by the consultant Francesco Caio7, on behalf of the UK Government, is an example of the initiatives started in the Member States of the European Community in order to define a policy aimed at the progressive transition to next generation networks. Voice over IP VoIP is a service that allows voice traffic over Internet protocol, typically marketed at rates considerably cheaper than the traditional ones, offered on the switched network (PSTN). It is difficult to carry out a careful analysis of the development of this new service since information on VoIP traffic is available in part and only with regard to the traffic generated by the Internet and terminated on PSTN or mobile networks; this depends on the impossibility to measure traffic volumes between PCs, through the so-called “PC to PC” calls (as is the case of Skype, Google and other VoIP services). Even starting from this assumption, although incomplete, in any case, data available are showing how, in 2008, the replacement process of traditional voice services on fixed network with VoIP continued. Calls originated on IP protocol, on average, account for 8% of the traffic of fixed telephone services in Europe, even if with some significant differences. France and the Netherlands record the highest percentage of users for this service: the Netherlands has a leadership role with 32% of VoIP calls out of the total of fixed calls, followed by France with 27%. Comparatively, behind the still limited use of such service in other European countries it emerges the scarce awareness of consumers of the economic advantages of VoIP, as well as the limited incentive to its use connected with the low spreading of broadband and super-fast broadband networks. Mobile Virtual Operators (MNVO) Over the last few months a further change in the market structure of mobile telephone services took place, also as a consequence of the entry of new MVNOs (mobile virtual network operators)8 and operators known as re-sellers. As it will be described in detail in the following paragraphs, it is as such, for instance, the evolution of the Italian scenario which witnessed, over the last few months, the entry and the success of new virtual operators. In many respects, this case can indicate a maturity stage of the market that attempts to expand in new areas, through the development of low-cost offers directed to the mass-market or tailored on specific market segments. The fact that MVNOs do not physically own their own infrastructure entails that their main, if any, factors of success depend on the focusing of their expertise/resources on the segmentation of the demand (specific user profiles) or on commercial and distribution innovations. However, their range of activities changes significantly according to the geographical area, in the same way as their presence which continues to evolve over time, being more limited in scenarios of mature market and more deep- rooted if linked to the development of new services (also bundle) and products. In all the markets in which MVNOs have been present for some time, especially in Northern Europe and in Japan, the main factor of success is represented by the specialization linked to specific market niches, referred to a specific type of customers or with special requirements of the users. For
7 For further details reference is to be made to the document “Delivering super-fast broadband in UK” on the website of the British Authority OFCOM. 8 These mobile operators do not own their own infrastructure and frequencies and therefore in order to offer their services to the public, they make use of the access to networks of operators having their own infrastructure (MNO, mobile network operator). instance, in the Netherlands, having the highest number of MVNOs and re-sellers, these operators focus on niche segments, areas of the demand generally composed of residential customers with different ethnic group, wealth and social class. Among the most widespread commercial offers, there are packages of low-cost international calls for foreign users having their family in the country of origin. In other instances, as it is the case of the United Kingdom, offers were proposed to customer segments belonging to a specific age group to which a large volume of free calls and SMS was offered in exchange for advertisements; this innovative business model was successfully proposed by the MVNO Blyk, enabling it to increase its customer base of 200,000 units. In Japan, on the contrary, the reference target of virtual offers is represented mainly by business customers. However, these agreements to access mobile networks by virtual operators are not always successful. This is due to the fact that these companies often enter the market when the same is mature, and the penetration rate is very high already. This market dynamics contributed to worsen the causes of the limited development of virtual operators causing, sometimes, their premature exit from the market. In the United States, for instance, the virtual operator launched by ESPN, a Disney subsidiary, did not produce the expected results. Likewise, in France the market shares owned by MVNOs did not have the hoped-for development; in this scenario some virtual operators – Debitel and TEN –, focusing mainly on the pre-paid segment and on specific market niches, have been forced to exit the market due to the non fulfilment of their sales targets. Broadband Services Broadband on fixed network The worldwide market of broadband on fixed network continues its growth according to different times and ways which vary from one country to another and above all with development rates showing a reversal of trend compared to the past. In 2008, the main European countries still play a leadership role in terms of penetration of broadband services; however, there is a strong slow-down in the growth rate and the success of the Asian area as the largest market, as to customer base. As a matter of fact, out of the 411 million users in the world (figure 1.6), nearly a third equal to 130 million (figure 1.8) are concentrated in only three Asian countries (China, Japan and South Korea), with a customer base, exceeding by 50 million users that of the United States. In this regard, the foregoing policies for the spreading of the super-fast broadband networks and services seem to have achieved relevant results in Asia. This is the geographical area having the highest spreading of the fibre-optic transmission technology: in the three above-mentioned Asian countries a third of the accesses equal to 41 million (figure 1.8) are in the fibre, a value that, as previously specified, accounts for 85% of connections worldwide for this technology. Also in Europe a high concentration of accesses is recorded. At the end of 2008, there were 132 million customers, of which more than 85% in Western Europe. Penetration continues to growth, with an increase by 17% compared to the previous year. However, this trend seems to show the first signs of slowdown: for the first time, new accesses grow at a lower rate compared to the previous year (16% against 27% in 2007). Denmark and the Netherlands are the dynamic markets in Europe with a penetration of 35%. In any case, as many as 9 countries of the European Union, have a penetration rate higher than the US one, that is 26%.
Figure 1.6. Broadband accesses worldwide (2008 in million)
2004 2005 2006 2007 2008 __Other technologies __DSL Source: AGCOM processing on Point Topic data More than three quarters of broadband lines in the world have a speed between 2 and 10 Mbit/s, a speed that can support a large range of communication services, even if sometimes it is not able to convey new multimedia services. This evolution follows the trend concerning the different ways to carry out Internet connections. In particular, with 266 million accesses (figure 1.6), the most widespread connectivity mode in the world is the one using the old copper-based access infrastructure, strengthened by the use of DSL digital transmission technologies.
Figure 1.7. Broadband accesses worldwide by technology (% 2008)
Cable 20.5; FTTx 12.4; Other 2.4; DSL 64.8 Source: AGCOM processing on Point Topic data About two-thirds (65%) of broadband accesses worldwide are carried out using this mode (figure 1.7). From a dynamic viewpoint, it is pointed out that DSL accesses have a different trend based on the geographical areas: on the one hand, there is a strong migration to fibre-optic technologies in the countries of the Asia-Pacific area (Japan, South Korea above all); whereas, on the other hand, the consolidation stage of this technology continues in the European area in addition to a strong growth in the developing countries (among which China, India, some South American and Eastern European countries stand out). Europe is characterized by the almost total predominance of DSL technology. In Europe, the copper network of national incumbents is still used as the main tool to convey broadband services, with percentages coming close to 100% of broadband connections (for Germany, France and Italy such percentages are equal to or higher than 95%) and that, however, are almost never below 70% (Spain 79%, United Kingdom 78%). Also the Asian area shows on average a predominance of DSL technology; however, as already pointed out, China, South Korea e Japan have unrivalled performance in fibre optics, with a weight of this type of connection on the total of accesses ranging from 23% in China to 48% in Japan. The 41 million subscribers in fibre optics9 of these three countries account for 85% of the overall 50.8 million subscriptions in the world (third transmission mode with 12.4% of world broadband connections – figure 1.7).
Figure 1.8. Customer base by technology worldwide (2008 in million)
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
Italy Germany France Brazil United Kingdom United States Japan China South Korea
DSL Cable Fttx Source: AGCOM processing on Point Topic data Cable is the second transmission technology of broadband services in the world, with 84.2 million subscriptions equal to 20.5% of total accesses (figure 1.7). North America is market leader in cable broadband accesses (with a penetration of 53% and 38 million users); this is due to the historical presence of operators which, over time, developed cable TV networks subsequently converted also to the offer of telecommunications services. From a general viewpoint, it is interesting to observe that alternative operators show a better performance in acquiring new accesses (+15%) compared to incumbents (+13%). Furthermore, very high-speed connections, structurally limited to fibre optics technologies and partly to cable ones, are at present 9% of Internet accesses in the world, thus limiting the development of multimedia services which require higher speeds than those supported by traditional copper networks. Broadband on mobile network Compared to second generation technologies, 3G mobile technologies enable the use of high- speed data services in mobility and support many multimedia applications. The difference with 2G services is based essentially on the data connection speed.
9 Fibre optics is referred to also with the British achronim FTTx, which means fibre to (fiber to the x): the customer’s house (FTTH, fiber to the home), the user’s building (FTTB, fiber to the building), or to the street cabinet (FTTC, fiber to the cabinet).
In tune with data provided by the national regulatory authorities, it is estimated that in Europe, in 2008, users of 3G and 3.5G mobile services exceeded 100 million (10-12% of the mobile customer base). The highest penetration rate is in Italy, Austria, Sweden and in the United Kingdom where penetration involves nearly 20% of the total mobile customers. In spite of this trend, some traditional services continue to appeal greatly end users. The SMS service, in particular, represents a significant revenue source for mobile operators (11% of the total revenues from mobile services). In various European countries a lively growth in volumes of SMS services continues, that, in part, offsets the reductions of unit prices of the voice service. While the SMS unit price remains substantially unchanged, in general, operators tend to market volume packages in which the unit price of SMS may become extremely advantageous, but ensuring to operator the economic return thanks to the consumption of the entire ceiling of services sold. In 2008, competitive pressure between mobile and fixed services emerged, in terms both of price and speed of broadband connections. Increasingly advantageous premium charges proposed by mobile operators can encourage the fixed-mobile replacement, especially in a recessionary period. With the need to control the family budget, households are more willing to eliminate fixed phones than to limit the length of their mobile telephone calls, therefore, low premium mobile rates favour this choice. In some respects, this situation of the market can contribute to put increased competitive pressure on fixed telephone services. To that it is to be added that some operators have changed their price strategies some time ago, offering data services in mobility with time-based charges. This new pricing forms improved the consumers’ perception of the service transparency and increased, therefore its propensity to consume, boosting significantly their spreading and use. At the end of 2008, there were nearly 50 million users accessing the broadband mobile network (HSPDA). The unexpected evolution of the use of mobile broadband services (the estimated European penetration is of 13%10) due to the quick spreading of data-cards, USB pen drives and compatible phones, is progressively increasing competitive pressure on fixed network broadband services, even if broadband technologies in mobility do not guarantee the same performance as technologies on fixed network. The sector of mobile services suffers almost everywhere from an increase of competitive pressure, especially by MVNOs in the pre-paid sector. This factor fits into a worldwide economic recessionary scenario, in addition to the widespread trend of the reduction of termination charges, namely a significant revenue source. In order to face the progressive reduction of the average revenue per user (ARPU) on voice services, mobile operators are adopting strategies in which mobile broadband is included among the main tools to recover profitability. According to a study by Juniper Research, in 2014 mobile operators will be able to generate revenues for more than 50 billion euro from mobile broadband services. North America, Western Europe, Asia Pacific are the areas having the highest profitability, with and overall market share around 90%. HSPDA (high speed downlink packet access), the mobile communication standard that improves UMTS capacities, enables a data download speed up to 28 Mbit/s and represents the bridge to 100 Mbit/s of LTE (long term evolution), is already in use in many countries. The demand of broadband services in mobility is growing progressively, supported also by the arrival of new generation phones, designed mainly to make it possible the use of the Internet in mobility and hence to have access to a series of web-based applications. However in order to use all the services available, the infrastructure must rely on the synergic co-operation of a number of players, namely infrastructure providers, telecommunications operators and mobile phone manufacturers. Synergies are essential: the development of high-capacity fixed networks must be carried out in synergy with that of mobile networks. Fibre is the connecting infrastructure.
10 Source: IT Media Consulting: “Broadband, media and advertising: the future is mobile”, 2008.
On the whole, at the end of 2008, in Europe, accesses11 to the Internet using a mobile phone are 24 million. These traffic volumes generated revenues for 5 billion euro from mobile access. In perspective, it is estimated that in the coming years they could generate 12% of the total revenues in the sector. The three main drivers that could contribute to the success of Internet services in mobility are as follows: 1. High-speed connectivity. The availability of a HSPDA network can improve the perception of the end user as to the quality of the service, by means of the improvement of the navigation, the use of streaming video or data downloading, increasing the level of satisfaction and the frequency of use; 2. Improvement of the features of the phones. The recent launch of phones such as I-Phone can prove the importance that the features offered by the phone can have in guiding the consumer’s choice. The consumer chooses his mobile phone according to its user friendliness and to the positive experience he had in using complex services such as Internet surfing, the viewing of streaming programmes etc.; 3. Pricing strategies. The major players in the mobile sector introduced flat rates, which contributed significantly to increase the use of Internet services; similar prices have been applied also to mobile TV services. In this scenario, the deployment of HSPDA technology networks plays therefore a major role, having equalized mobile services to low speed broadband fixed network. In the period under examination, in Europe, the two German mobile operators, T-Mobile and O2, announced the completion of the network upgrade. However, in all likelihood, the major change is related to the spreading of USB modem pen drives. By enabling the connectivity of laptops to the mobile network, this tool makes it possible to make use in mobility of the same services used from fixed workstations. The market of USB pen drives for mobility connection, in 2007, it is estimated to be equal to 5.8 million users in Western Europe only. 70% is concentrated in the United Kingdom, Germany, Italy and Austria. In particular, Italy plays a leadership role in Europe. In our country, “3”, TIM and Vodafone control a bit less than a third each of the mobile broadband market. In the aggregate, in 2008, the major Italian mobile operators recorded1.6 million high-speed accesses, nearly 1 million more than Germany. France follows with slightly more than 300,000 HSPDA connections12. Various operators in other national markets are recording significant results. Another interesting experience is the Austrian one, showing how a good supporting technology, the perception of the high quality of the service and the replacement of pricing conditions based on volume with flat rates, can lead to the gradual replacement of services on fixed telephony with similar services provided in mobility mode. Today, in Austria, out of the total number of broadband connections active in the country, 75% are activated on mobile network. Still with regard to product innovations, 16 market operators, among players and system integrators, have recently announced their intention to promote a mobile phone always connected to the network. In marketing only companies are investing more than 700 million euro on this new equipment. Therefore, it is reasonable to expect that new features of the phones may contribute to help the use of the services hence the spreading and the loyalty of the customer to this mode. In particular, in the United Kingdom, even if the penetration of smart phones is low, there is considerably high consumption of Internet connections and mobile services, partly due to the high practicality of the phone and partly to the advantageous flat rates. With regard to the use of new services converging on mobile network, while mobile TV has difficulty in taking off13, there is a widespread use of audio-video contents on mobile phones, a use which is generally upon request, or in streaming on UMTS network, namely more recently, surfing the Internet
11 Source: IT Media Consulting. 12 IT Media Consulting: “Broadband, media and advertising: the future is mobile”, 2008. 13 For further details on the market of mobile TV please refer to the following section on the audiovisual sector. by means of mobile broadband connection. Download services are increasingly widespread thanks also to the contribution of content providers. Therefore, in view of a progressive decrease of ARPU of traditional mobile telecommunication services, especially in highly competitive markets characterized by a strong saturation of mobile demand, the growth of ARPU of not traditional mobile services is (more than) offsetting the decline of the first component. However, there are various barriers to the expansion of this type of services that prevent consumers to understand the advantages; among them the most important ones are the scarce knowledge of the offers and the limited transparency of the corresponding prices. Potential demand for the services exists and is real. In line with some surveys carried out on the subject, consumers show great interest in the use of such services, but according to them the price is still far from their expectations. This could mean that, if in the past operators made substantial investments in infrastructure to improve the quality of the service, in future it could be necessary to improve their processes concerning the communication, the sale and the distribution of services to the public. In view of the fact that the main obstacle to the spreading of these services is their price, operators can opt for a return in two directions, in which costs are partly financed through the advertising revenue. Advertising on mobile is the tool which is potentially more suitable for attracting the attention of end users and building their loyalty on a specific brand throughout the day and on every occasion; however, in order to be effective it is necessary for advertising to be creative, relevant and not intrusive. From a survey carried out on the user segment from 16 to 34 years of age, it emerged that consumers would be willing to receive advertisements in exchange for free contents or services which they are specifically interest in. Advertising on mobile phones enables to address and segment the message according to customers, geographical location, which can be reached at any time. In such case, it would be necessary to differentiate the approach on the advertising market, to get a benefit from the possibility to access multiple channels of delivery, including SMS, MMS, e-mail, search activities on the Internet, services diversified by location. However, considering the prevailing personal use of their phones by users of mobile services, it is necessary to take into account also the problems concerning privacy protection. Network Neutrality In 2008, the debate on network neutrality14, intended essentially as principle of non discrimination of the network traffic developed further15 and concerned at last all the most important aspects of the sector (new generation networks and not only), with a double important extension: commodity, to mobile networks, and territorial, to the European framework16. Indeed, until now, European institutions had adopted quite a low-profile position, but with the current review of the EC regulatory framework the debate on net neutrality became topical. A first aspect, which is of great value especially in the European scenario, concerns the relationship between network neutrality and access regulations17. According to some experts obligations in the openness of fixed networks (the so-called open access) can solve the problems concerning net neutrality, since they guarantee a competitive structure in the provision of connectivity to users and content providers that would avoid practices in contrast with the right to competition. Vice versa, other experts pointed out that, even if the presence of a competitive segment of the access may mitigate some of the concerns underlying the network neutrality principle, the latter would not be guaranteed at all in absence of further remedies. In particular, these positions outline that in absence of rules for the net neutrality the obligations of open access alone do not prevent negative repercussions on the level of
14 For the definition please refer to Internet Governance Project, Internet neutrality as global principle for Internet governance, November 2007. 15 For a complete and updated review please refer to WIK, Network Neutrality, December 2008. 16 Cf. Cave M., and Crocioni P. (2007), Does Europe Need Network Neutrality Rules?, in International Journal of Communication, vol. 1. 17 For a debate please refer to Hogendorn C. (2007), Broadband Internet: Net Neutrality versus Open Access, International Economics and Economic Policy, 4. innovation that so far characterized the Internet development nor on the degree of pluralism and access to information reached, thanks also to the Internet, by mature democracies. This debate is strictly connected with that concerning the development of new generation networks (NGN; see above). As a matter of fact, most of the reasons underlying the overcoming of the network neutrality principle, and the ensuing application of strategies of price discrimination by the carriers, are linked to the fact that in current networks there are bottlenecks of transmission capacity, especially in the event of growing use of services and applications which require band (the example that is often mentioned is that of the spreading of the IPlayer equipment recently developed by BBC in the United Kingdom). A solution to these problems could be found in the deployment of super-fast NGN infrastructure, which guarantee a capacity capable of solving any transmission bottlenecks. This is especially true in the event the State would contribute – at least in part – to the carrying out of these works. In such case, indeed, it would be considerably less complicated to combine the current obligations imposed on carriers, regarding interconnection among networks and open access (in the case of dominant subjects) with the non discrimination obligations underlying net neutrality. If such aspects concern fixed networks, the recent evolution of the use of broadband services – as previously described – extended the debate also to the mobile segment. Currently in this area a more critical state seems to emerge compared to fixed networks. In particular, US experts pointed out the presence of additional problems18 which cannot all be applied to the European framework. They include the discriminating limit of equipment enabled by mobile operators on their networks, restriction that would interest also some features of the phones; the lack of development of some innovations that are available and interesting for the consumer, but that mobile operators do not consider as strategic; the presence of high barriers to the entry for independent developers of mobile applications, due to limitations imposed by mobile operators. Therefore, it seems that the future evolution of the network neutrality debate will focus on three key aspects of the electronic communications system: the control of the access, the deployment of the new generation infrastructure, as well as the development of broadband networks and mobile services. Recently the debate focused on the conditions to protect the copyright on the Internet. Especially in France, in order to stem the phenomenon of illegal download from the Internet of audiovisual works protected by copyright with the bill of 19 May 2009, no. 81, the so-called “three strikes” system has been recently introduced. The system is based on two warnings before cutting the Internet connection for connection owners caught in such illegal activity; the enforcement of such law envisages the setting up of a specific Authority (High Authority for the Distribution of Works and the Protection of the (Copy)Rights on the Internet, HADOPI) responsible for the imposition of the envisaged sanctions. Even if the foregoing French Bill was rejected by the National Constitutional Court (with its decision of 10 June 2009, no. 580) because of the violation of the principle of the freedom of thought, in any case, such debate will have significant consequences also at national level, in the event the Italian law-maker would deem as appropriate the introduction in our legislation of measures similar to those adopted in France. Indeed, it cannot be denied that under the competences of surveillance and sanction that law no. 633 of 22 April 1941, and amendments thereto (known as the law on copyright), under article 182-bis, has already assigned to SIAE and to AGCOM, the latter could be the “natural” institutional candidate to carry out a guarantee role similar to that of the French HADOPI. 1.1.2. The Audiovisual Sector Overview The evolution of the audiovisual sector is increasingly characterized by two elements which, for some years, have been responsible for the competitive dynamics: the success of a variety of transmission platforms, often competing among them and the arrangement of different modes and types of contents offer to the public. To date, worldwide, over-the-air is still the prevailing platform in the distribution of radio- television services: about 1.1 billion households (43% of households having a TV set) are reached
18 Cf. Tim Wu (2007), Wireless Carterfone, in International Journal of Communication, vol. 1. through terrestrial broadcasting, followed by cable (38%) and satellite (17%) with growing and significant penetration. Whereas transmission through IP protocol still accounts for a marginal share (2%). In this framework, the digitisation of the networks is transforming the sector, promoting the success of new networks, operators, contents and services. In the world, one-third of households with TV sets are using digital TV services regardless of transmission platforms adopted, namely satellite, digital terrestrial, cable and DSL. On the whole, more than two-thirds of this market are covered by the United States, Japan and Europe. Digital TV is spreading with a growth rate that, in 2008, reached 25%19, even if in different ways in the various geographical areas. In North America, about 75%20 of TV households already have digital signal receiving equipment; followed by Japan (with a digitisation rate of 72%) and Europe, with the United Kingdom (with 91%)21, France and Spain (with 77% and 74% respectively) in the lead. It goes without saying that the situation of the developing countries is completely different. In Latin America, only 8.5% of the households use the digital service; in China and in India cable networks are still mostly analogue. It’s obvious, as it will be described in the following paragraphs, that the development of the digital terrestrial platform is contributing significantly to the spreading and to the completion of network digitisation process. In Europe, some countries have already completed the migration from the analogue terrestrial platform (the Netherlands, Germany, Finland, Sweden and Switzerland), whereas other countries have already started the process which is scheduled to be completed by 2012. In spite of the large spreading of data services in mobility, mainly in the United States and in Western Europe, video offers available through the mobile TV do not seem to have received a favourable response from the market; except for some markets of the Asian area and, partly, the Italian market. The same is true for IPTV having an evolution not in line with the optimist estimates at the beginning of this decade (however, in this case as well, there are geographical areas, such as France, where the service is rapidly developing). To this process corresponds the explosion of the use of audiovisual contents on the web (the so- called web TV), by means of operators such as YouTube. In essence, the use of classic TV services (mainly of linear type) seems to be connected to traditional transmission platforms (first of all terrestrial, but also cable and satellite), whereas emergent platforms (Internet and mobile telephone services) seem linked to a new mode of use of audiovisual contents by the public. Still with reference to the evolution of radio-television services by users, the importance of pay contents is on the rise. At present nearly 50% of users access such services, whereas, at the same time, in many markets the reduction of advertising receipts is a critical figure which is influencing the strategic choices of TV operators, with a gradual passage of resources and contents from free-to-air television to the pay one. The Trend of the Markets For 2008, the worldwide TV market has been estimated in 272 billion euro (figure 1.9), with an overall growth of 5.4% compared to the previous year. The most developed countries – Europe, United States e Japan – together account for about 80% of the market, even if, on the whole, their share is slowly shrinking to the advantage of emergent countries, but only with a percentage of 2% per year. Totalling about 102 billion euro revenues, the United States keep the leadership with 37%, followed by Europe, with 87 billion equal to 32% (the first three markets – United Kingdom, Germany and France – account for about 45% of the European area). The most industrialized countries are also those which suffered more from the crisis of the world finance and economy. Among them Japan is the country with the lowest growth rate in the audiovisual
19 Source: Idate, 2009. 20 Source: Idate, 2009. 21 Source: Idate, 2009. sector in 2008. However, it is to be pointed out that these absolute and relative trends are considerably less marked compared to those recorded in the telecommunications sector, where trends are more definite and less homogeneous among the different geographical areas.
Figure 1.9. TV services by geographical areas (2008 in billion €)
2007 2008
Europe United States Japan India China Other Countries Source: processing by AGCOM on Idate data Asia-Pacific accounts for only 22% of the world turnover, in spite of the highest concentration of families having TV sets (TV households). This situation is mainly due to the limited spreading of pay TV in China, having one of the largest user base (with 384 million families having TV sets), where nearly two-thirds of the households use only free TV services and where the average revenue per user on pay TV services is among the lowest in the world (on average 2 euro per month per user)22. In Latin America, Brazil is the largest TV market, collecting more than 38% of the revenues in the South American area.
Figure 1.10. TV services in the world by type of resource (% 2008)
Advertising 48.8 Pay TV 41.5 Subscription Fee 9.7 Total 271.5 billion Source: AGCOM processing on Idate data
22 Source: Idate 2009. The breakdown of the television revenues among the different sources of revenues for the operators (figure 1.10), shows how advertising is still the prevailing one (with 49% of the total). However the advertising share is suffering from a structural and cyclical reduction - the latter due to the worldwide economic slump which influences mainly the advertising revenue – to the advantage of the revenues from pay television, which are still growing significantly reaching 42% of the world turnover in the television sector. With regard to the subscription fee to finance the radio-television public service, its weight was further reduced over the last few years, going below 10% as shown in the figure above. However, it is to be pointed out that, in 2008, in some countries, the measures adopted to support the conversion to the digital terrestrial assumed the form of incentive to the industry of the sector (not only to broadcasters, but also to equipment manufacturers) and in particular to public broadcasters. As already specified at the beginning of this chapter, at world level (figure 1.11) about 1.1 billion households have TV sets (TV households or TV families), of which more than 43% as users of terrestrial transmission platforms and 38% using cable. More than half of the users subscribe pay services, mainly on cable transmission platforms, even if satellite is becoming more and more popular among end users.
Figure 1.11. TV households by geographical area (million)
2007 2008
Other Countries, Europe, United States, Japan, India, China Source: AGCOM processing on Idate data With regard to the geographical distribution of the users of television services, more than 55% of households with TV sets, equal to 619 million, live in the Asia-Pacific region; once more China alone has more than a third (equal to 384 million households) of the users worldwide (figure 1.11). Considering now the market from the viewpoint of the more widespread transmission platforms, the terrestrial platform - analogue and digital – still remains, as already mentioned, the most widespread worldwide (figure 1.12), with nearly 43% accesses in 2008 equal to 477 million users. There is a progressive and gradual reduction of the analogue quota in both absolute and relative value in favour of other transmission media: satellite, cable and digital terrestrial.
Figure 1.12. TV households by geographical area/technology (% 2008)
China, India, Japan, United States, Europe, Other countries
Terrestrial Satellite Cable ADSL Source: AGCOM processing on Idate data As a consequence of the success of new emergent digital platforms, the decrease of over-the-air transmissions is becoming marked in the United States, in Europe (where terrestrial reception from 60% in 2000 is 38% in 2008) and in the Asia-Pacific area (where in the same period decreased from 66% to 45%). Vice versa, Latin America is still almost entirely served on terrestrial platform (with a penetration exceeding 80%). Cable transmission is historically the second most widespread transmission mode, following the over-the-air, covering, in 2008, 38% of the users worldwide. The overtaking of the terrestrial by the cable is envisaged for 2011, except for North America, where cable penetration reaches already 58% of households, followed by Asia and Europe (especially Germany) with 40% and 35% respectively. As far as satellite transmission is concerned, it is envisaged that, at the end of 2008, it will reach nearly 17% of users worldwide. This type of television signal distribution platform is still having a lively growth, in line with previous years, recording, in 2008, a value of 7%. Finally, TV broadcast on IP protocol with a customer base of 19 million, is the mode which recorded the highest growth rate in volume (59% compared to 2007); however, IPTV is still of minor importance if we consider that such services are used only by 2% of users worldwide. Except for France, where, following a series of extremely advantageous offers by telecoms operators, IPTV became popular reaching today 14.4% households. Considering its development over the last few years, a closer examination is deserved by the pay TV segment. With regard to this area of the market, in 2008, it is estimated that the customer base has reached 550 million subscribers (table 1.1) with an increase by 5.9% compared to last year, and in all likelihood, it will overtake free TV during this year already.
Table 1.1. Pay TV Spreading (TV households in million) 2007 2008 % Var. ‘08/’07 North America 107.3 111.4 3.8 Europe 129.7 140.4 8.2 Asia Pacific 259.8 273.8 5.4 Latin America 19.3 20.8 7.8 Total 516.1 546.4 5.9 Source: AGCOM processing on Idate data With 425 million subscribers (78% of the total of pay customers worldwide), cable is by far the main platform for the purposes of the arrangement of pay offers. In this connection, it is interesting to point out that, in the last three-year period, 2005-2008, whereas in some markets cable penetration was close to saturation – as showed by the reduced growth of cable subscribers in the United States (-1.1%) – in others – Europe and Latin America – on the contrary, the growth is still considerable (30.3% and 22.3% respectively). Satellite has a more limited penetration (17.7%, equal to 97 million subscribers) but it is dramatically rising, whilst, as already mentioned, telecommunication networks find it difficult to impose themselves as medium for the distribution of TV on the Internet, at least in its more traditional forms (IPTV). With regard to 2008, Europe and South America remain the areas with the highest growth of the “pay” sector with 8.2% and 7.8% respectively. However, considering the demographic features of the different areas, Asia has by far the highest number of subscribers (274 million), that is half of the customers of pay services worldwide. Once the differences in the different geographical areas have been examined, a closer analysis of the main TV markets is given below (China, India, Japan, United States and Europe). The Chinese Market Thanks to both its geographical size and population development, China has the largest TV viewers base in the world (62% of the total users of the Asia-Pacific area, 35% of world users). Even though analogue terrestrial broadcast is still the main access mode to TV services (covering about two- thirds of the households), especially in the major metropolitan areas cable broadcast is quickly gaining ground. The digitisation is encountering a number of obstacles and delays. For 2008, the Digital TV penetration rate in China was estimated at 16% (figure 1.13). This is essentially due to some factors: the high spreading of cable and terrestrial platforms, both still largely in analogue technology; the lack of particularly attractive digital contents and that can be distributed on the emergent platforms; the exorbitant price, with regard to the structure of the domestic demand of the pay TV offers and of the corresponding signal decoding equipment. In short, digital cable is meeting with great success only in areas with high population density and an adequate per capita income.
Figure 1.13. Digitisation of the Asia-Pacific area in 2008 (% TV Households)
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 Japan 74.0; Asia-Pacific 22.0; China 18.0; India 12.0 Source: AGCOM processing on Idate data The development of TV on the Internet, that in the past was limited by the pressing regulatory restrictions imposed by the sector’s Authority (SARFT - State Administration of Radio Film and Television), in favour of cable operators, has recently become more lively, recording, at the end of 2008, in Hong Kong alone, a customer base of 930,000 users. Even if the planned coverage of IPTV services is still limited to some areas, they could acquire a significant role in competing with cable transmissions in many urban centres. However, as it happens with cable, for IPTV as well users are giving their preference to basic offers, instead of premium packages, with ensuing negative consequences on the operators’ profitability and on the return on investment. With very few exceptions, satellite television is still forbidden in China. For a limited number of users, such platform is used mainly for the broadcasting of foreign channels. These restrictions are mainly responsible for the large number of illegally installed satellite dishes. The Indian Market Together with the Chinese market, the Indian television market appears as the most dynamic of the Asian area, even if the average revenue per user is still very low (5 euro per month). In spite of Government interventions aiming at boosting its development, the digitisation of the country is lagging behind (at present 11% of penetration). This is mainly due to the huge availability (nearly 100 channels) of pay television services on analogue cable with very advantageous subscription fees. With regard to multichannel offers on other transmission media, the development of the satellite platform, introduced in 1991, favoured by the “must offer” obligations imposed by the Indian Authority to the main national broadcasters, made it possible for India to become in a very short time the largest Asian Pay TV satellite market (5.3 million subscribers equal to 27% of the overall subscribers in the Asian area on this technology), outstripping even Japan (3.6 million subscribers). With the launch of five satellite channel bundles in only two years and more than 500 channels, the spreading of this platform was very quick (+152% users over the last two years). In spite of this, cable remains the most widespread technology in India, also for the use of pay services, covering over two-thirds of Indian households having a TV set. In the Asian area, India ranks second, following China, with 27% of the subscribers of cable pay television services. The Japanese Market The Japanese TV industry is the most innovative of the Asian area. In value, Japan accounts for 40% of the revenues generated in the Asia-Pacific area, and it is still the leader of the audiovisual market with a fairly good margin compared to the other local bases. The sector is essentially split among two groups of broadcasters: on the one hand, terrestrial television channels, that over the last few years are focusing on diversification accessing to satellite technologies or transmitting their terrestrial signal also in high definition (HDTV) and mobile; on the other hand, some new entrants which entered the market by proposing Pay TV offers, through the cable, satellite or TLC networks. Pay offers include a satellite channel bundle, 570 cable TV operators, as well as 2 premium offers, available on both cable and satellite. In the IPTV area, services were launched by a large number of telecoms operators (such as NTT and KDDI); however, the customer base reached by the service is still very limited. In this regard, it is to be pointed out that, in the past, IPTV growth was hindered by the presence of must-offer obligations for historical broadcasters, which were able to limit the spreading of the emergent networks by impeding the broadcast of their programmes on other platforms. Japan is in the forefront in the offer of digital terrestrial services. The first testing started in 1997, whereas the real commercial launch took place in 2003 in the three major urban areas of the country. At present, the penetration of digital terrestrial platform exceeds 18% of the households, with a total digitisation rate of 72%. The switch-off from analogue to digital terrestrial has been planned for 2011. The US Market Confirming its leadership on the worldwide market, the US reached an overall turnover of 102 billion euro in 2008. The shrinkage of the advertising sector influenced considerably the growth of the sector, worsened by the crisis at world level which interested every sector of the economy. Therefore, in 2008, it was the expansion of pay TV services which boosted the growth of the sector. From the viewpoint of transmission media, cable is historically a widely spread technology in the country, with a customer base of 65 million subscribers. To avoid the declining trend started in 2002, cable operators introduced different strategies: after a number of mergers and acquisitions in the sector, they are increasing their offers focusing on new audiovisual contents (offered also on PVR, VoD mode) and TV channels, the bundling offer of TLC services (broadband access in particular) in addition to the investment of nearly 7 billion euro per year in the digitisation of their infrastructure. The passage to digital technologies (currently 41 million cable subscribers passed from analogue to digital) was driven also by the offer of high definition channels. Satellite is the second pay platform as to the spreading of the service, characterized by the presence of two operators, Dish and Direct TV, reaching together 33 million subscribers. Free transmissions on terrestrial networks continue to hold a significant place in the preferences of US people even if it is considerably more limited compared to Europe. The audience figures of these broadcasters are still high, even if they are experiencing a steady and slow decrease. In this regard, the transition of terrestrial transmissions from analogue to digital started much earlier than in Europe: in 1998 already, 42 TV stations broadcast in digital terrestrial technique. At present, there are as many as 1,655 TV stations which broadcast with digital terrestrial signal, in over 210 local markets (with an estimated coverage equal to 99% of the households)23. The final switch off is planned for June 2009. The European Market According to estimates, the European market has 255 million TV users (figure 1.14) with an overall turnover, in 2008, totalling 87 billion euro (figure 1.9). During the last year, the growth in value of the market was equal to 4.6%, essentially confirming the trend of the previous year. Compared with the US, in Europe the weight of advertising is even stronger than revenues from Pay TV, whereas the radio-television subscription fee absorbs a considerable percentage of the resources. At a first general reading some data already emerge which outline the different situations in Europe and in the US, also contrary to what happens in telecommunications. Actually, whereas in Europe the telecommunications sector is much more developed in terms of industry compared to the US one, (figure 1.5 of the previous paragraph), in the audiovisual sector the US leadership is still undisputed. This points out, amongst other things, the importance that the common approach in terms of policy had for Europe, and in particular, the regulatory approach on electronic communication, against a fragmentation of the national interventions in the audiovisual sector. Moreover, still in comparison with the US, in Europe pay TV development rate is lower as well as the advertising revenue per capita, but the revenue from the subscription fee for the public service financing is higher, a component that in some markets, such as the German one, still ranks first in terms of TV revenues (35%). However, the importance of the public service goes over the financial component and concerns also cultural, social and innovation aspects. In the United Kingdom, for instance, the public television service is the main driver for the development of digital terrestrial TV, the launch of thematic channels and the introduction of high definition TV.
23 Source: National Broadcasting Association.
Figure 1.14. Distribution of TV networks users in Europe (% 2008)
Others 26.5 France 13.6 Germany 17.7 United Kingdom 21.2 Italy 12.6 Spain 8.3 Source: AGCOM processing on Idate data Since 2007, the European scenario of the sector remained essentially unchanged: the breakdown of the financial resources among the different National markets sees (figure 1.15) the United Kingdom in a leadership position, accounting for 21% of the European television market in 2008 (equal to a total amount of 16 billion euro revenues); followed by Germany, with 18% of the market (14 billion euro), France with 14% (10.3 billion euro) and then Italy with 13% (24).
Figure 1.15. Distribution of TV revenues in Europe (2008 in %)
Others 31.1; France 11.7; Germany 15.9; United Kingdom 18.0; Italy 11.2; Spain 6.9; Russia 5.2 Source: AGCOM processing on Idate data In Europe as well, the signal digitisation process is significantly moving forward: in 2008, it is estimated that European accesses to digital television services (on every platform) are 118 million, with a penetration percentage close to 50%. Also in this case, the United Kingdom plays a leadership role with nearly 24 million digital customers, and a coverage of the service reaching 91% of TV households; followed by France (19 million), Italy (14.7 million) and Spain (11 million). In particular, the digital terrestrial TV operators, in Europe can be classified according to four basic categories:
24 Data referred to the Italian market are not homogeneous with those specified in table 1.37 and following ones, since they make reference to different calculation methods. Moreover, for 2008, data provided by Idate make reference – at international level – to “preliminary” balance-sheet data.
1. Traditional private or public broadcasters that are already active on digital terrestrial TV; 2. National TV operators that are already present on other platforms (cable, satellite) before the launch of digital terrestrial TV; 3. National broadcasting companies having a prevailing activity in other media sectors (for instance radio-telephony or paper publishing industry); 4. Foreign broadcasting companies. Such approach allows to examine two financial and competitive phenomena particularly significant in Europe which are characterizing the transition to the new transmission technique: - historical broadcasters, coming from the analogue TV, play a central role also in the digital terrestrial transmission platform. Traditional operators broadcast about two-thirds of the channels on the digital terrestrial for free distributed in total in the four countries; - however, thanks to the increase of the channels available, the digital platform enabled the entry into the national TV market of operators not belonging to the sector or coming from other countries, with positive effects in terms of competition and information pluralism. The United Kingdom is characterized by the highest number of players and by their greater “heterogeneity”. Alongside the channels broadcast by the four traditional operators (BBC, ITV, Channel4 and Five) there are many players belonging to other media sectors (6 in total, among which Media Trust, Ideal Shopping Direct and the GemsTV Group) as well as international operators such as MTV Networks, Turner Broadcasting System Europe and Liberty Media. The switch-off of the analogue signal in the United Kingdom was started progressively by areas and its completion is envisaged for 2012. The United Kingdom is followed - still in the digital terrestrial - by Italy, for both revenues and number of broadcasters having a prevailing activity in other media sectors and foreign broadcasters. In addition to the five traditional operators (Rai, Mediaset, Telecom Italia Media, MTV Networks Europe and the new entrant L’Espresso Group), three operators coming from other media sectors (Anica Flash, Class Editori and CEI-Sat2000) appear on this platform and as many as five foreign operators (BBC, Holland Interactive Group, Turner Broadcasting System Europe, TF1 and France Télévisions and the Swedish Air Touch). In Spain, alongside the five traditional operators there are foreign broadcasters such as Sony Entertainment and Disney Group. The latter entered the Spanish market in the digital terrestrial sector thanks to partnerships established with Veo Television (Unidad Editorial group) and with the Vocento Group respectively. Unlike the other countries, Spain did not follow the principle of zoning by regions for its "scheduling”, but it started with less populated areas to end with major urban centres by 2012. Finally, as far as France is concerned, in 2008, the penetration of the digital terrestrial platform is nearly 33%, corresponding to about 8.4 million households, thanks also to Canal + and its offer made up of a bundle of 5 premium channels. Moreover, France is characterized by the absence of foreign operators on the digital terrestrial, but by a significant presence of players that traditionally do not belong to the national audiovisual sector. Among them, there are the Nrj Group and Nextradio TV, both having a prevailing activity in the radio sector, the Lagardère group and the Parliament with LCP channel. In December 2008, the Conseil Supérieur de l’Audiovisuel (CSA) published its switch-off completion plan; the switch off for the remaining 1600 geographical areas identified started in January 2009, with November 2011 as completion date. For the digital terrestrial TV operators, the launch of satellite offers can be an important factor to complete the coverage in areas which are technically difficult to reach through terrestrial relay stations (for example mountain areas or borderlands) and, more in general, to limit transmission costs which are difficult to recover in thinly populated areas. In Europe, TV satellite offers/bundles - both complementary and competing - compared with the digital terrestrial platform, are now already available in many countries among which the United Kingdom and France, with Italy and Spain ready to launch, new free offers in the forthcoming months. In the United Kingdom, in the free satellite TV segment, on the one hand, the main pay TV operator BSkyB, and, on the other hand, the major broadcasters of free TV are converging. With the launch, in October 2004, of Freesat From Sky, BSkyB was the first operator to start a free satellite offer. The service, which today includes 240 digital channels, aims at attracting the interest of the users being less willing to purchase pay services, with the purpose to convince them to subscribe pay packages. In May 2008, the two most important British free-to-air operators, BBC and ITV, responded by launching, in joint venture, the free satellite service Freesat, complementary to the Freeview digital terrestrial offer. In addition to offering the digital terrestrial TV channels, Freesat allows the free access to other 100 radio and TV channels (some of them in High Definition). Since June 2007, in France, it is available TNTSat broadcast by Canal +. Its launch was to comply with provisions set forth by the law passed in May 2007, envisaging the starting of a free satellite service with a coverage at least equivalent to that of uncoded analogue services. Finally, in Spain, the Government has recently approved a law-decree that, among others, obliges all the national digital terrestrial broadcasters to make available their channels through at least one satellite operator. Therefore, the progress achieved in Europe in 2008 is related mainly to the migration of users from the analogue platform to the digital terrestrial one (+7 million), followed by the increase of cable accesses (+ 3.9 million), by satellite platform (+3.7 million) and by IPTV (+3 million). In the three main European markets (the United Kingdom, Germany and France), digital television is mainly distributed through the digital terrestrial platform (with a penetration rate on the total of TV users equal to 40.1% in the United Kingdom, to 29% in Germany and to 36.4% in France respectively) and through the satellite platform (penetration of 38.2%, 30.1% and 21.3%, respectively). While satellite is characterized by the channel bundles mainly on payment (even if as previously pointed out, in some countries new free offers are being launched) the digital terrestrial is gaining ground as medium for the offer of free TV programmes. However, some pay offers (linked mainly to sports and cinema contents) are now available also on the digital terrestrial in markets such as France, the United Kingdom and Italy (for further details on the Italian market please refer to the subsequent paragraphs).
Figure 1.16. Distribution of TV networks in Europe by platform (% 2008)
France Germany Italy Russia Spain UK Europe DSL Satellite Cable Terrestrial Source: processing by AGCOM on Idate data The strong presence of the cable (widespread especially in Germany, where it covers about 60% of accesses – figure 1.16) is confirmed also for this year. This is the main technology for the offer of pay contents, with a customer base that continues to grow, even if with development rates that are diminishing significantly. In the aggregate, at the end of 2008, European subscribers to cable services reached 90 million. On this platform, a consolidation process of national cable operators has taken place in countries such as France, Spain and the United Kingdom. Such consolidation process follows after some years the process which involved the satellite platform, in countries such as Italy, Spain and France. 1.2. In Italy 1.2.1. The Development of the Regulatory Framework in Italy In the reference period (1st May 2008-30 April 2009) the following legislative interventions in the difference sectors falling under AGCOM’s competence, have been carried out. Audiovisual Sector Digital Terrestrial With decree of the Ministry of Economic Development of 10 September 2008, no. 33827, concerning “Definition of a calendar for the final transition to the digital terrestrial TV transmission, with indication of the territorial areas concerned and of the corresponding deadlines”, issued for the implementation of provisions set forth in article 8 novies, paragraph 5, of law-decree no. 59 of 8 April 2008, converted with amendments into law no. 101 of 6 June 2008, the calendar for the switch-off from analogue TV to digital one was defined. The final deadline for the switch off to the digital terrestrial technology is scheduled for 31 December 2012. National Frequency Allocation Plan It is pointed out the decree of the Ministry of Economic Development no. 34589 of 13 November 2008, which approved the national frequency allocation plan between 0 and 1,000 GHz. Licences /Frequency Trading /Sanctions / Advertising breaks Particularly important are the provisions passed by the Parliament with law no. 101 of 6 June 2008 to convert law-decree no. 59 of 8 April 2008, concerning “Urgent provisions for the implementation of EC obligations and the enforcement of judgements of the Court of Justice of the European Communities”, to cure the objections raised by the European Commission in the infringement procedure no. 2005/5086. Article 8 novies modifies article 15, paragraph 1 of Radio-television consolidation act, as per legislative decree no. 177 of 31 July 2005 and also paragraph 12 of article 25 of law no. 112 of 3 May 2004, (so-called Gasparri law) was repealed. According to which until the expiry of the date provided for by the law for the full conversion of transmission into digital technique, for the activity of network operator, the individual license regime was still to be applied. According to article 8 novies, paragraph 1, provisions for the activity of network operator on terrestrial frequencies are submitted to the regime of general authorization, in compliance with article 25 of the communications code. Specific criteria and procedures for the granting of the rights of use of radiofrequencies for audio and television broadcast provided for in the aforementioned code shall not be affected in consideration of the objectives of pluralism protection and others of general interest. Furthermore, under the second paragraph of the same article, individual licenses already issued in compliance with AGCOM resolution no. 435/01/CONS are to be converted into digital technique upon initiative by the Ministry of Economic Development, within sixty days from the date of coming into force of the law. Moreover, under the third paragraph of article 8 novies the transfer of frequencies among two operators having a general authorization is to be carried out in compliance with article 14 of the Electronic Communications Code. With article 8 decies of the same law, the law-maker cured the community infringement procedures no. 2007/2110, 2005/2240 and 2004/4303 concerning advertising breaks, by eliminating the second and the third sentences of article 37, paragraph 3, of the Radio-television consolidation act. Finally article 8 decies of the aforementioned law no. 101/2008, amending article 51, paragraph 2 of the Radio-television consolidation act, intervenes to regulate in a different way the sanctionative system, abolishing a stage which was originally envisaged, namely that of the previous warning with term to abide, with the ensuing result of greater immediacy and effectiveness of the corresponding enforcement. Furthermore, the aforementioned provision introduces a significant tightening of financial penalties that AGCOM is entitled to inflict for the non-fulfilment of the obligations concerning programme schedule, advertising and radio-television contents, eliminating, at the same time, the advantage of a reduced payment (the so-called “cash settlement”) for sanctions inflicted in the above fields, generally provided for by article 16 of law no. 689 of 24 November 1981. Tax on Pornography In the same sector, it is to be mentioned the decree of the President of the Council of Ministers no. 37090 of 13 March 2009, concerning “Definition of pornographic material and of transmissions aiming at stirring popular credulity, as well as the corresponding fiscal provisions”. Under article 1, paragraph 1 of this decree, “pornographic material” is to be intended as any newspaper or magazine, with related supplementary supports, as well as any play, literary work, movie, audiovisual or multimedia work, also on IT or electronic medium, that shows images or scenes containing explicit sex acts and not simulated between consenting adults. Whereas “transmissions aiming at stirring popular credulity” are all those transmissions (which can be accesses through pay telephone services or in which it is envisaged, to the charge of the user, any other economic contribution in relation to “services”) based on fortune-tellers, clairvoyants, thaumaturgists and mediums, or in any case individuals making reference to magic, astrological, divinatory or similar beliefs. According to this decree, those who perform the activity of production, distribution, sale and performance of pornographic material as specified under paragraph 1, must pay a surcharge to the corporate business income tax. Finally, in order to implement the provision it is envisaged the possibility to sign co-operation agreements between the Revenue Office (Agenzia delle entrate) and the Department of Information and Publishing, the General Directorate for Cinema and the General Directorate for live performance of the Ministry of Cultural Heritage and Activities, the Ministry of Economic Development – communications sector and the Communications Regulatory Authority. Publishing Industry Regulations on the legal ownership of publishing firms of dailies and magazines, as set forth under article 1 of law no. 416 of 5 August 1981, were amended by article 41 bis, paragraph 2, of the law-decree no. 207 of 30 December 2008, converted into law no. 14 of 27 February 2009 concerning “Extension of the time limits envisaged by urgent financial and legislative provisions”. The new regulations provide for the possibility that, for the business of the publishing firms of dailies, voting shares or capital shares can be registered in the name of joint stock companies or limited liability companies, not only when the controlling interest of such firms is registered in the name of natural persons or companies directly controlled by natural persons (as provided for in the previous regulations), ma also when the controlling interest is registered in the name of companies which are only indirectly controlled by natural persons. Moreover, article 41 bis sets forth that, in the event the controlling interest is registered in the name of trust companies, the requirement of the direct or indirect control by natural persons is to be referred to the settlers, as parties who are the actual holders of shares or interest. In this latter case, the trust company is obliged to inform the Authority as to the names of the settlers for the purposes of the keeping of the Register of Communications Operators. Finally, article 44 of law no. 133 of 6 August 20 8, as amended by article 41 bis, paragraph 3, of law-decree n. 207, of 30 December 2008, sets forth the rules for the simplification and the reorganization of the regulations concerning contributions to the publishing industry, by empowering the Government to adopt a regulation of legislative consolidation (delegificazione), to be issued within sixty days from the date of coming into force of the law decree. The reorganization is to be carried out in compliance with two directive principles concerning the simplification of the documentation necessary to access contributions and the streamlining of the procedure for the allocation of contributions.
Development of TLC infrastructure It is pointed out law no. 133 of 6 August 2008, “Turning into law, with amendments, of the law- decree no. 112 of 25 June 2008, concerning urgent provisions for the economic development, the simplification, the competitiveness, the stabilization of public finance and the equality of taxation”, article 2, paragraph 1 of which sets forth that works for the installation of fibre-optic networks can be carried out by simply submitting a statement at the beginning of the activity to the single information point (sportello unico) of the competent Local Administration. Moreover, article 2, paragraph 2, of the same law provides for the possibility for communications operators to use, without any charge, for the laying of fibre optics in the cable ducts, civil infrastructure already existing being, on whatever basis, of public property or owned by public concessionaires. Paragraph 3 of the foregoing article 2 safeguards AGCOM regulatory power concerning co-location and sharing of electronic communications infrastructure, as well as with regard to the installation of backbone networks. Under article 6 quinquies starting from 2009, in the budget estimates of the Ministry of Economic Development a fund is set up for the financing of interventions aimed at strengthening the infrastructure network at national level (including telecommunications and energy networks). Still with a view to favouring investments for the development of the broadband, in compliance with article 10, the infrastructure concerning the energy sector and of telecommunications networks, identified on the basis of programmes prepared by Ministry of Economic Development, are included among the investment projects considered as priority for the identification of interventions included in the financing using the revolving fund in support of companies and research investments. 1.2.2. Telecommunications In 2008, the telecommunications sector essentially confirmed the long-term financial and competitive trend, already highlighted in past years. To this, it is to be added a strong and negative cyclical dynamics, due to the general economic recessive scenario which is currently characterizing the International and Italian economy. In brief, the main factors which characterized the recent evolution of the Italian telecoms markets are summarized below: i) a confirmation of the slowdown which is taking place in the sector, that for the first time, in 2008, experienced a slight setback of the overall final expense of households and companies; ii) a drop in infrastructure investments, in both fixed and mobile network, the evolution of which, in 2008, was particularly unfavourable; iii) further enrichment of the competitive environment, with a reduction of the level of concentration of all the markets and the entry of new operators (such as, for example, in the fixed sector, companies working in WiMax technology, in the mobile sector, virtual operators); iv) an extension of the range of offers to the public, with a significant improvement of the quality of services provided (for instance in terms of transmission capacity offered in both the fixed and mobile service); v) finally, a further confirmation of the structural trend for the reduction of prices to end users. Such scenario, characterized by both positive and negative aspects, interested also each single segment of the sector: vi) in the fixed network, the slow decline of traditional services continues, whereas the spreading of the broadband went on, even if with territorial differences (digital divide) that, however, tend slowly to reduce and above all with a dynamics having hindrances and limits compared to the situation in the other developed markets; vii) also on the mobile network, in an environment of maturity of the voice service market, broadband applications represent, especially in perspective, the main growth factor, with significant consequences on other economic sectors linked to the chain of information and audio and video contents. Therefore, in this scenario, a major role is played by the passage of the system to a new development course necessarily linked to the provision of new broadband services and, hence, to the roll- out of technologically suitable transmission infrastructure. Overview First of all, it is necessary to point out that, also in this Report, unless otherwise stated, data concerning telecommunications on fixed and mobile networks have been processed based on the collection of detailed information concerning the major companies in the sector25. With reference to the overall resources of the sector, in 2008, the reduction of the gross proceeds, already pointed out in 2007 (-1.8% against -1.4%) became more marked, but it is to be pointed out that, whereas in the past the decrease interested the fixed network only, last year it involved the mobile sector as well (table 1.2)26.
Table 1.2. Mobile and fixed telecommunications - gross proceeds (billion €) 2007 2008 % Var. ‘08/’07 Fixed network 22.17 21.75 -1.9 Mobile network 23.97 23.56 -1.7 Total 46.14 45.31 -1.8 Source: corporate data processed by AGCOM However, such reduction is to be examined in the light of the different dynamics which characterizes the two elements of revenue: the part concerning the final expense of households and companies (revenues from “end” services) and the part concerning relations among telecommunications operators (revenues from “wholesale” services). As mentioned above, with reference to the expense of households and companies a reduction in absolute value of the overall expense is recorded27, a decrease that was only partly lessened by a small growth of the mobile sector, increasing, in this way, the “scissors” with revenues in the fixed telephone services (table 1.3). Such differential has now reached almost 2 billion euro.
Table 1.3. Final expense of residential and business users (billion €) 2007 2008 %Var. ‘08/’07 Fixed network 17.05 16.68 -2.2
Mobile network 18.35 18.47 0.7 Total 35.40 35.15 -0.7 Source: corporate data processed by AGCOM
25 Companies taken into account are: BT Italia, Cable & Wireless, Colt, Eutelia, Fastweb, H3G, Infracom Italia, Opitel (former Tele2), Orange Business Italy, Retelit, Telecom Italia, Teleunit, Tiscali, Verizon Italia, Vodafone NV (with reference to the activities offering both fixed and mobile services), Welcome Italia and Wind. For the purposes of a complete representation of the market, revenue data of companies for which detailed information was not available were estimated. For the fixed sector, based on information gathered following a specific analysis carried out on the statutory financial statements for the year 2007 of about 65 companies. For the mobile sector, the financial data of the following virtual operators: Carrefour Mobile Italia, Coop Italia, Conad Insim and Poste Mobile have been taken into account. 26 With reference to 2007, both for this table and the following ones, it is pointed that data are not perfectly homogeneous and thus not directly comparable with values specified in the previous report. This is due to the fact that some companies made integrations and reclassifications due to changes and integrations in the calculation methods adopted and, in some cases to changes in the range of the corporate economic activities carried out. Therefore, this gave rise to adjustments in the economic amounts in some case even for significant amounts. Furthermore, in the following tables, in the case of data expressed as value, for reasons of numerical rounding only, the sums of the decimal points concerning each addend could differ from the one concerning the result. 27 Last year, against a reduction of the end revenues of the fixed network, a growth for almost the same amount, was recorded in mobile network services. With regard to revenues from the provision of wholesale services, also for the effects produced by the regulatory measures adopted by AGCOM within the first cycle of market analysis of electronic communication markets, which were followed by a number of supplementary measures, even to a slightly lesser extent compared to 200728 figures, the declining trend for this type of revenues, with almost equivalent amounts, for fixed and mobile networks (about 5.1 billion euro) (table 1.4)29 is confirmed. Table 1.4. Revenues from intermediate services supplied to other operators (billion €) 2007 2008 % Var. ‘08/’07 Fixed network 5.13 5.08 -1.0 Mobile network 5.62 5.09 -9.4 Total 10.75 10.17 -5.4 Source: corporate data processed by AGCOM From the analysis of the revenues from end services divided by user category it clearly emerges - to a more marked extent compared to data available last year - the trend of a progressive reduction of the revenues component of residential customers, whereas there is an increase, even if very limited, of the overall revenues (fixed and mobile) from business customers (table 1.5). These results, which are certainly influenced also by the difficult economic situation, in terms of trend of absolute values, confirm the effects of the competitive pressure on both the offer on fixed network and, above all, on those linked to solutions on broadband mobile network whereas, with regard to the weight related to market targets, they show a movement towards non residential users.
Table 1.5. Final expense by customer category (billion €)
2007 2008 % Var. ‘08/’07 Fixed network 17.05 16.68 -2.2 Residential 8.06 7.86 -2.5 Business 8.98 8.81 -1.9 Mobile network 18.35 18.47 0.7 Residential 15.00 14.91 -0.6 Business 3.35 3.56 6.2 Fixed and mobile network 35.40 35.15 -0.7 Residential 23.06 22.77 -1.2 Business 12.33 12.37 0.3 Source: corporate data processed by AGCOM Nevertheless, based on the level of residential expense for mobile telephone services, the overall situation of the breakdown of end resources by type of network and users confirms that residential customers are still the large majority of the demand component, accounting for 65% of the overall receipts for the sector in 2008 (figure 1.17).
28 On average -5.4% against -5.7% of the previous year. 29 Cf. resolution no. 3/06/CONS, “Market of voice call termination on single mobile networks”, resolution no. 4/06/CONS, “Unbundled access (including shared accesses) to metal networks and sub-networks for voice and broadband services”, resolution no. 34/06/CONS, “Market of wholesale broadband access”, resolution no. 45/06/CONS, “Markets of terminal segments of leased lines and of segments of leased lines on long distance circuits”, resolution no. 417/06/CONS, “Call collection, termination and transit in the public switched telephone network”, resolution no. 251/08/CONS, “Amendments to article 40 of resolution no. 417/06/CONS, following the implementation of the model for the calculation of termination costs for an effective alternative operator”, resolution no. 628/07/CONS “Market of the termination of voice calls on single mobile networks (market no. 16 among those identified by the EU recommendation no. 2003/311/EC): assessment under article 15, paragraph 4, of resolution no. 3/06/CONS, concerning the imposition of the obligations for the operator H3G under article 50 of the Electronic Communications Code” and resolution no. 446/08/CONS (“Integration of resolution no. 628/07/CONS concerning the imposition of obligations to operator H3G under article 50 of the Electronic Communications Code”).
Figure. 1.17 End expense by type of network/customer (% in 2008)
Mobile network – residential 42.4 Mobile network – business 10.1 Fixed network – residential 22.4 Fixed network –business 25.1 Source: corporate data processed by AGCOM The evolution of the company profile of the most important companies on the Italian market did not show in 2008, significant changes, apart from the gradual integration between Opitel (former Tele2) and Vodafone, following the acquisition of the fixed network company by the mobile operator which took place at the end of 2007. Moreover, Tiscali seems to have defined a consolidation process of its activities that, by means of the sale of Tiscali Uk to Carphone Warehouse Group, announced by the operator in May this year, should enable the company to have the resources necessary to focus effectively on the national market. The evolution of the investments showed a profile on the whole disappointing, with an average reduction, in 2008, around 8% (table 1.6). Table 1.6. Investments in fixed assets (million €) 2007 2008 % Var.
‘08/’07 Fixed network 3,895 3,549 -8.9 of which OLO (*) 1,291 1,237 -4.2 OLO % 33.2 34.9 Mobile network 3,268 3,046 -6.8 Total 7,163 6,595 -7.9 % fixed network 54.4 53.8 % mobile network 45.6 46.2 (*) OLO = Other Licensed Operators Source: corporate data processed by AGCOM This result, according to which the decrease of the fixed network is higher than the one in the mobile sector, is due to a number of factors both of a general nature, connected with the financial situation and specific of the sector. Indeed, in addition to the difficult financial situation, in the case of the fixed network, it is to be taken into account also the reduced profitability of Telecom Italia that, together with the objective to limit the overall level of indebtedness, contributed to cause a decline in investments around 9 %. Likewise, the improved profitability of competing operators, target that in 2008 enabled at least some of the major operators in competition with Telecom Italia30 to get significant results, contributed to the considerable reduction of the overall levels of investment. With regard to the employment, the rationalization process currently under way in the sector, caused a significant reduction of the number of employees (about 3,500), in both the fixed and the mobile networks: in this way, at year’s end, the total number of the employed in the Italian telecommunications amounts to slightly more than 91,000 employees (table 1.7)31.
Table 1.7. Employment in telecommunications (thousands of employees) 2007 2008 Fixed network 69.1 66.7 Mobile network 25.6 24.7 Total 94.7 91.4 Source: corporate data processed by AGCOM Finally examining - as usual - the monitoring of the movement of prices, also in 2008, the shrinkage in prices of services of both fixed and mobile networks continued (-0.1%), even if in a more limited way compared to the past, this contributed significantly to the overall containment of inflation as well as of public utilities charges (figure 1.18). In particular, public utilities, especially by virtue of the trend of energy rates, recorded an average growth of 7.4%, that, excluding telephone services32, would bring the corresponding value to 10.3% (table 1.8). Figure 1.18. Trend of consumer prices and public utilities charges (N.I. 1995=100)
Public Services (excluding telephone services); Telephone services; Public Services (including telephone services); Consumer prices of the entire community
30 With regard to the financial year 2008, the indication is referred to the gross return (Ebitda, Earning Before Interests, Taxes, Depreciation and Amortization), according to information included in the financial statements available on the corporate websites of Tiscali, Wind and Fastweb, whereas with reference to the year 2007, and to the sector as a whole from the analysis of the financial statements of more than 60 fixed network alternative operators, it emerges – correspondingly – a gross operating income going up from 900 to 1,100 million between 2006 and 2007. 31 Data refer only to companies which a specific request for information was submitted to in the preparation of this annual report. 32 Its value within the basket of consumer prices and services increased from 1.99% in 2008 to 2.13% in 2009.
Source: Istat data processed by AGCOM
Table 1.8. Dynamics of prices of regulated services
March 2008 % Basket of Index consumer prices 1995 = 100 Index (2008) Drinking water 202.0 0.65 Electricity 133.2 1.24 Gas 175.5 2.30 Motorway tolls 141.2 0.28 Railway transports 139.4 0.35 Urban transports 150.4 0.49 Postal services 135.0 0.15 TV Subscription fee 133.7 0.23 Telephone services 83.1 2.13 Total/Average (telephone services excl.) 160.5 5.68 Total/Average (telephone services incl.) 139.4 7.81 Source: corporate data processed by AGCOM As it is known, given the large range and the heterogeneity of the offers of fixed and mobile network services on the market, it is quite difficult to assess the trend of prices on the market, also in consideration of the quick spreading of bundle offers of broadband data and voice services both on fixed and mobile network, which make, within the total consumption of telecommunication services, progressively less representative the traditional switched telephony. To this end, AGCOM prepared a further measurement of the prices of the sector based on the trend of unit average revenues (table 1.9): voice telephony services only record an average reduction of more than 7%, exceeding 10% for the mobile network, for which, in particular, prices went down, due to the natural competitive dynamics more and more focused on bundle voice-data solutions, but also as a result of the effects of the regulatory measures as aforesaid33.
Table 1.9. Unit revenues in voice telephone services (euro cent/minute) % Var. ‘08/’07 Residential Business Res+Bus ‘08/’07 34 Fixed network -7.7 -7.9 -7.8 35 Mobile network -10.6 -11.4 -10.8 36 Media -7.4 -7.8 -7.5
Source: corporate data processed by AGCOM
Fixed network In 2008, not only in Italy but more in general in all the advanced markets, even if in a more limited way compared to last year, it was confirmed the trend of a reduction in the revenues from the sale of services and products to end users. The various revenue components show extremely different trends, with traditional services on switched network decreasing by 8.7%, and an increase exceeding 13% of broadband revenues (table 1.10).
33 The difference with the indications provided by Istat in this regard and previously specified with regard to “telephone services”, is explained by the different methods adopted and also by the different product areas of reference. 34 Values are calculated by making reference only to data of companies for which detailed information is available, and they refer to voice telephone services on switched network for international, national and local types of traffic of fixed network, and to mobile networks. Public telephone services are excluded. 35 Revenues and minutes of voice traffic concerning calls to mobile network (off net and on net), national fixed network and international networks have been considered. With regard to 2007, the component concerning top-up costs for pre-paid lines is net of the share estimated as pertaining to data services. 36 Weighted value for the corresponding unit revenues per minute of traffic of voice telephony. Table 1.10. Fixed network: expense of users by type of services (billion €) 2007 2008 % Var. ‘08/’07 Final services on 12.85 12.45 -3.1 Switched network* 9.61 8.77 -8.7 Broadband networks ** 3.24 3.68 13.3 Other data services ** 0.68 0.75 11.1 Other revenues ** 3.52 3.48 -1.3 Total 17.05 16.68 -2.2
*Revenues (in terms of expense/user) on switched network include: access services, telephone revenues (local, national, international, fixed-to-mobile), Internet dial up, net revenues from services with non-geographical numbers and public telephone services. **Revenues from broadband networks include fees and “pay per use” services, the “other data services” are represented by switched services of data transmission and direct circuits leased to end users (except for OLOs). The remaining “other revenues” are activities related to the sale/rental of equipment, phones and accessories and to all the other type of revenues which are not expressly specified above. Source: corporate data processed by AGCOM The gradual spreading of the broadband – which will be discussed in more detail further on – is effecting a profound change in the consumption of telecommunications services, with a gradual but progressive migration from contracts based on “pay per use” billing to “flat”37 ones. As a matter of fact, in the switched network, the drop in revenues from access, that is considerably lower than the value referred to traffic only, seems to evidence the migration of subscribers to broadband services offered by the same operator, with “flat” contractual terms, that at the end of 2008, are close to 80% of subscribers in x-DSL technology. Moreover, for the total revenues from broadband services, a reduction of the “pay per use” component is noticed, with a concurring significant growth of revenues from “subscription fees”, linked mainly to “all inclusive” offers: a proof of the growing success of the flat formula among the public. Such situation is summarized by the trend of the structure of overall direct accesses by type of contract, which shows a growth of nearly 10 percentage points of “flat” contracts, that, at the end of 2008, largely exceeded 60% of the total (table 1.11). Table 1.11. Contract types of broadband services (*) (%)
2007 2008 Flat 54.0 63.0 Semiflat 17.9 14.3 “Consumption” 28.1 22.7 Total 100.0 100.0 (*)OLO accesses and the incumbent’s DSL accesses are included. Source: corporate data processed by AGCOM Migration processes to mobile networks, but, above all, the gradual replacement with broadband subscriptions accelerate the process of contraction of voice services on switched network (table 1.12). In a scenario of general reduction of traffic minutes, of further restriction of public telephone services, which has now reached negligible values, as well as of structural reduction of the traffic to the Internet in narrowband38, even if in a limited way, the national type of traffic of traditional services is the only one increasing the traffic volume; this is due mainly to the spreading of pricing modes with single billing system for all calls (local, national and long-distance) on fixed network. Table 1.12. Traffic on switched fixed network by type (billion/minutes)
37 Types of offers in which the price is not set based on the volumes of traffic carried out. 38 With reference to 2007, the considerable difference noticeable with data correspondingly included in the previous report, is due to different calculation methods adopted by Telecom Italia to provide a homogeneous comparison with 2008.
2007 2008 % Var. ‘08/’07 Local 52.0 50.0 -3.8 Internet dial up 17.4 12.4 -28.8 National 29.5 30.1 2.1 International 4.7 4.7 - 0.5 Mobile networks 15.8 14.9 -5.9 Public telephone services 0.3 0.2 -35.2 Total 119.7 112.2 -6.2 Source: corporate data processed by AGCOM However, it is pointed out how this dynamics differs for residential and business customers. The first one reduces its own traffic on the whole by 7%, whereas, the business component has a decrease below 5%. This could mean that in 2008 the number of residential customers adopting broadband services was much higher than in the business segment. In this scenario, the spreading of accesses to broadband fixed network continued with a growth that remained unchanged compared to 2007 (figure 1.19). Figure 1.19. Broadband accesses on fixed network
BB Lines - million (left scale) (*) % Var (right scale) Source: corporate data processed by AGCOM At the end of 2008, overall accesses reached 11.3 million with 400,000 new accesses to be added for the first quarter of 2009. Such trend is essentially in line with the growth recorded last year in homogeneous terms with regard to the first quarter of the year (table 1.13). Table 1.13. Activated broadband accesses (million) Activations in the Yearly activations 1st quarter 2004 2.3 0.59 2005 2.1 0.41 2006 1.7 0.43 2007 1.7 0.55 2008 1.4 0.40 2009 - 0.40
Source: corporate data processed by AGCOM As far as transmission platforms are concerned, x-DSL technology, accounting for 97% of the overall accesses, confirms its position as largely predominant infrastructure. Also in the above scenario in which overall investments decreased significantly, it is to point out the growth of services offered, with over 70% of current accesses with a declared transmission capacity above 2 Mbit/s, value that in March 2008 was 52% (table 1.14)39. The dependence of broadband on the copper network makes the offers of access services available in Italy more limited compared to those available in other markets with a greater presence of alternative infrastructure, such as cable and, above all, fibre optics (see above).
Table 1.14. Broadband accesses by speed class (% March 2009)
New Overall accesses Entrants (TI+OLO) (xDSL) DSL lines Total access lines >144K<2 Mbps 11.5 28.4 28.2 >2Mbps <10Mbps 84.8 65.5 63.2 > 10 Mbps 3.7 6.1 8.6 Total 100.0 100.0 100.0 Source: corporate data processed by AGCOM Moreover, the absence of alternative broadband infrastructure to that of Telecom Italia created a structural asymmetry in the competitive positioning of the companies, with the historical operator that continues to have - even if to an extent structurally in decline – a significant share of the market, that at the end of March 2009 was close to 59% (figure 1.20)40 with reference to the total number of access lines. Figure 1.20. Trend of Telecom Italia broadband market shares (%)
DSL lines BB lines fixed network (*) Source: corporate data processed by AGCOM This last consideration introduces the topic of broadband and high-capacity broadband infrastructure. In 2008, in Italy the gradual territorial coverage of broadband networks continued,
39 Cf. table 1.15 of the 2008 Annual Report. 40 Data make reference to those required for the update of the European reporting on the broadband, whose product area is not completely homogeneous with figures in the following tables 15-18 with regard to the territorial spreading of overall accesses and accesses to the broadband, including only the main forms of access, not taking into consideration for instance, permanent virtual circuits, leased lines, etc. Therefore, the value of Telecom Italia market share for broadband accesses on fixed network (58.7% in March 2009) is slightly different from the corresponding national average value (58.4%) shown in table 19 below, concerning the regional breakdown of broadband accesses, since the two figures make reference to product area which are not completely homogeneous. through the modernization of the copper infrastructure. Alongside the almost complete coverage of this access network in urban areas (with nearly 100% of the population), in 2008 the coverage of suburban areas increased from 93% to 94%, whereas in rural areas the corresponding value passed from 75% to 82%. At the same time, the creation of infrastructure by OLOs went up with a further increase from 56% to over 58% of the population that can potentially receive broadband services in ULL mode (unbundling local loop)41. As a consequence of such investments, the population that is currently in a situation of “infrastructural digital divide”, namely that cannot access, not even potentially, “first generation” broadband services (that is capable of having accesses with up to 2 Mbps speed) totals 2.7 million individuals, with a decrease by nearly 2 percentage points compared to 2007. With regard to the overall physical accesses, Telecom Italia share continues to decrease, totalling 80% at the end of March 2009 (table 1.15), whereas full ULL accesses provided by alternative operators are now close to 4 million. On the whole, direct accesses, using the different modes (full ULL, shared access and fibre), of competing operators reached 4.3 million.
42 Table 1.15. Physical accesses to fixed network (thousand) Dec 07 Dec 08 Mar 09 Telecom Italia accesses 19,221 17,274 16,759 OLO accesses 3,440 4,174 4,374 Full unbundling 2,929 3,664 3,872 Shared access 244 202 190 Fibre 267 308 312 Total accesses 22,417 21,346 20,943 Telecom Italia share (%) 85.7 81.3 80.0 (*) Net of shared access, already included in Telecom Italia accesses. Source: corporate data processed by AGCOM The spreading of fixed network accesses and the development of broadband services at territorial level have profiles with some elements of heterogeneity, due to several factors connected, inter alia, with economic, demographic and also orographic peculiarities as well as with the topography itself of the network. Based on such elements, in this report the analysis of the sector was studied in depth with reference to both regional and the major municipalities in Italy43. In particular, the in-depth study focused on the competitive structure, with reference to overall access and to broadband only. Results are shown in the following tables (1.16-1.20). First of all, against a national average value of about 70%44, at regional level, the penetration of overall accesses from fixed network among households is very varied and this seems to be connected mainly with economic factors. In Regions of Northern and Central Italy, penetration is around 70-75% (with a maximum value of 77% in Liguria), whereas in Southern Italy the level goes down to 55-60%, with a negative peak of 55.7% in Calabria (table 1.16). The average values of the main municipalities in Italy, also in connection with the concentration of the unbundling in such areas, are obviously much higher (over 80%). This proves the existence of some scale and density factors affecting broadband spreading.
41 Source: Between. 42 Starting from 1st March 2008 Telecom Italia changed the system to record ULL lines and shared access. Values specified in the table are consistent among them. 43 Municipalities with resident population – at the end of 2007 – exceeding 300,000 citizens (Turin, Milan, Genoa, Bologna, Florence, Rome, Naples, Bari, Palermo and Catania). 44 Telecom Italia physical accesses, full ULL accesses of OLOs and fibre-optic accesses are included. Data concerning residential accesses could be slightly underestimated due to the presence, in the business segment, of a micro enterprise component in which the reference to the VAT number and the actual domicile of the holder and of the subscriber coincide. Therefore, in this way a quota – even if negligible – of business users should be considered as residential, with a tendential growth of the accesses/households ratio.
Table 1.16. Penetration of accesses to fixed network, March 2009 (% of households) Piedmont 67.9 Abruzzo 66.1 Valle d’Aosta 63.2 Molise 61.4 Lombardy 74.3 Campania 70.6 Trentino-Alto Adige 64.3 Puglia 64.8 Veneto 68.0 Basilicata 60.5 Friuli-Venezia Giulia 70.9 Calabria 55.0 Liguria 77.7 Sicily 64.3 Emilia-Romagna 70.9 Sardinia 59.4 Tuscany 74.2 ITALY 69.7 Umbria 65.8 North 71.2 Marche 67.1 Centre 73.9 Lazio 76.8 South 64.7 Source: AGCOM processing and evaluations on corporate and Istat data Secondly, also the analysis of the competitive structure of the accesses points out some heterogeneity factors at geographical level. However it emerges clearly that some national factors prevail thus enabling Telecom Italia to reach in every region shares exceeding 50%. With respect to a share on a national basis of 80%, the weight of Telecom Italia varies both with reference to the different regions (from 94% of Calabria to less than 70% of Lazio) and, above all, with reference to the Italian main municipalities where, on average, its market share is around 55% and where Fastweb reaches about 30% in the Milan area, whereas Wind is close to 20% in Rome (table 1.17). Therefore, the main competitors (first of all Fastweb and Wind) show a concentration of their activities in specific regions such as Lombardy, Liguria, Lazio, Campania Puglia and Sicily with shares around 10% whereas, as expected, in Sardinia, Tiscali has a particularly high market share (around 14%)45. Table 1.17. Overall accesses to fixed network – market shares as at 30 March 2009 (%) Telecom Fastweb Wind BT Tiscali Opitel Others Total Italia Italia Vodafone Piedmont 79.7 6.5 9.3 0.3 0.9 3.3 0.2 100.0 Valle d’Aosta 91.3 3.8 2.6 0.0 0.0 2.2 0.1 100.0 Lombardy 76.8 9.3 8.2 0.2 1.3 4.0 0.2 100.0 Trentino A.A. 92.4 2.1 2.7 0.1 0.0 2.7 0.1 100.0 Veneto 88.2 2.4 5.2 0.1 0.5 3.6 0.1 100.0 Friuli V.G. 87.4 3.1 6.1 0.0 0.2 2.9 0.1 100.0 Liguria 72.3 12.1 9.6 0.1 1.0 4.7 0.2 100.0 Emilia-R. 83.0 6.1 6.8 0.3 0.8 2.9 0.1 100.0 Tuscany 86.3 3.8 5.3 0.1 0.9 3.5 0.1 100.0 Umbria 89.8 4.1 3.4 0.0 0.1 2.5 0.1 100.0 Marche 88.9 3.1 3.4 0.0 0.4 4.0 0.1 100.0 Lazio 69.2 10.1 13.3 0.4 2.1 4.6 0.2 100.0 Abruzzo 84.0 5.4 4.8 0.2 0.5 5.0 0.2 100.0 Molise 90.5 0.6 3.9 0.0 0.0 4.8 0.1 100.0 Campania 72.9 7.6 14.0 0.1 0.6 4.5 0.2 100.0 Apulia 78.4 4.2 11.4 0.1 0.2 5.5 0.2 100.0 Basilicata 94.6 1.9 0.8 0.0 0.0 2.6 0.1 100.0 Calabria 93.9 0.0 2.8 0.0 0.8 2.5 0.1 100.0 Sicily 80.0 2.7 10.9 0.1 0.8 5.3 0.2 100.0 Sardinia 78.7 0.9 4.7 0.0 14.0 1.5 0.2 100.0 ITALY 80.0 6.1 8.4 0.2 1.2 3.9 0.2 100.0 North 80.9 6.9 7.4 0.2 0.9 3.6 0.2 100.0
45 Shares are calculated in terms of physical accesses and include lines for the physical access of Telecom Italia and, full ULL, shared, Xdsl bitstream and fibre accesses for OLOs.
Centre 78.3 6.9 9.0 0.2 1.4 4.0 0.2 100.0 South 79.6 4.1 9.9 0.1 1.7 4.5 0.2 100.0 Source: Source: AGCOM processing and evaluations on corporate data From the analysis of the territorial distribution of OLOs accesses it emerges that 50% are still concentrated in the Italian main municipalities, confirming that competition is tough in the main urban centres; the regional figure further confirms the effects exerted by density factors: at regional level, the presence of new entrants is essentially proportional (with the partial exclusion of Southern Italy) to the quota of families on the territory (table 1.18). In any case, as specified above, the presence of Telecom Italia in accesses is still high and highlights features of transversal nature throughout Italy.
Table 1.18. Distribution of OLO accesses and families by macro-area (March 2009 %) OLO accesses Resident families (46) North 49.1 47.8 Centre 23.5 20.1 South 27.4 32.1 Italy 100.0 100.0 Source: Source: AGCOM processing and evaluations on companies and Istat data The geographical analysis of the spreading of broadband points out that the penetration among families - on average around 41%47 - has rather different figures at regional level (table 1.19), with Lombardy and Lazio having penetration rates above 45%, whereas in some regions of Southern Italy (Molise, Basilicata, Calabria and Sardinia) the spreading of the broadband is close to 30% and in some cases even below such percentage. Also in this case it is clear the role played by some socio-economic factors in determining the penetration of new communications services among Italian families. Table 1.19. Penetration of broadband accesses, March 2009 (families %) Piedmont 36.5 Abruzzo 36.4 Valle d’Aosta 33.1 Molise 25.5 Lombardy 45.0 Campania 44.6 Trentino-Alto Adige 36.4 Apulia 36.4 Veneto 36.6 Basilicata 30.0 Friuli-Venezia Giulia 38.8 Calabria 29.7 Liguria 41.9 Sicily 36.8 Emilia-Romagna 40.5 Sardinia 34.2 Tuscany 42.3 ITALY 40.3 Umbria 34.4 North 40.6 Marche 39.7 Centre 44.3 Lazio 48.3 South 37.5 Source: AGCOM processing and evaluations on corporate and Istat data With reference to the spreading of the broadband in companies, it is pointed out the complexity to have reliable estimates, due to the difficulty to collect homogeneous data from operators and to have detailed data at regional level. With regard to the first aspect, the classification in a single “business” category of extremely varied firms including also organizations with “micro-business” profile – as it the case of small-sized professional firms – may hide the professional and residential nature of the subscriber that coincide, thus contributing to “overestimate” the business segment of the market.
46 Values referred to 2007. 47 Accesses to broadband include Telecom Italia xdsl accesses and, for OLOs, data unbundling, virtual unbundling, shared access, bitstream and fibre accesses. At the same time, a factor that, on the contrary, may produce an “underestimate” of the broadband penetration in the business segment is connected with the definition adopted by Istat about the numerousness of companies at local level48. Therefore, according to the method adopted by the National Institute of Statistics (ISTAT), to a “business customer” considered by one operator it may correspond a plurality of “local units of enterprise” belonging, however, to a single company. Based on these assumptions, at the end of March 2009, broadband penetration for business users49 is estimated on average above 42% on a national basis, with a limited variability at regional level and with values around 50% in major cities. In the following table 1.20, the previous activity of geographical unbundling of the access market, is proposed again for the broadband, showing regional shares divided among the main operators. In this instance as well, in spite of the presence of some geographical differences, national factors appear as prevailing and still influence the market of broadband services as a whole.
Table 1.20. Market shares in broadband accesses (March 2009 in %)50 Telecom Fastweb Wind BT Tiscali Opitel+ Other Total Italia Italia Vodafone Piedmont 57.5 14.4 13.9 1.2 4.0 7.2 1.9 100.0 Val d’Aosta 69.7 11.3 6.6 0.6 3.6 7.1 1.1 100.0 Lombardy 53.8 18.4 11.6 1.4 5.0 8.1 1.9 100.0 Trentino A.A. 75.0 5.8 5.8 1.1 1.9 9.5 1.0 100.0 Veneto 67.5 6.9 10.4 1.3 3.3 9.3 1.3 100.0 Friuli V.G. 68.7 7.7 11.2 0.8 2.1 8.1 1.4 100.0 Liguria 49.3 23.8 12.9 1.0 3.5 7.2 2.3 100.0 Emilia-Rom. 61.4 14.2 10.8 1.1 3.5 7.4 1.6 100.0 Tuscany 65.5 9.1 9.6 1.4 4.7 8.3 1.4 100.0 Umbria 66.7 10.0 8.4 0.8 2.8 9.9 1.3 100.0 Marche 69.2 7.6 7.3 1.2 2.8 10.6 1.2 100.0 Lazio 48.0 17.8 17.4 0.9 6.1 7.4 2.3 100.0 Abruzzo 60.6 13.2 9.9 1.3 3.4 10.0 1.7 100.0 Molise 65.6 5.6 10.2 1.1 2.4 13.5 1.5 100.0 Campania 56.9 13.3 17.8 0.6 2.4 6.9 2.1 100.0 Apulia 58.9 10.2 16.9 0.8 2.2 9.1 2.0 100.0 Basilicata 73.5 5.7 4.5 0.9 4.3 10.1 1.0 100.0 Calabria 75.6 0.4 8.1 0.8 5.0 9.1 1.0 100.0 Sicily 61.9 7.7 15.6 0.9 4.3 7.7 1.8 100.0 Sardinia 43.8 2.8 6.6 0.9 40.3 3.5 2.2 100.0 ITALY 58.7 12.9 12.8 1.1 4.9 8.0 1.8 100.0 North 58.8 14.8 11.5 1.2 4.0 8.0 1.7 100.0 Centre 56.9 13.5 13.3 1.1 5.1 8.2 1.9 100.0
48 In this regard, data at regional and municipality levels were used concerning “Local units of enterprises” (Struttura e dimensioni delle unità locali delle imprese (anno 2006), Ed. 12 March 2009, Registro ASIA-Unità Locali “Structure and size of local units of enterprises”). They are defined in compliance with “….Council Regulation No. 696 of 15 March 1993, according to which a local unit is an enterprise or part thereof situated in a geographically identified place. At or from this place one or more persons (working also only part-time) carry out economic activities on behalf of the same enterprise. Based on this definition, local units include the following types of enterprises provided that at least one person is present: agency, hotel, consulting room, bar, pit, store, garage, laboratory, warehouse, mine, shop, workshop, hospital, restaurant, school, factory, professional firm, office, etc. Therefore, the pluri-localized enterprise, is an enterprise which carries out its activities in different places, each one of them forming a local unit. 49 Ratio between number of business subscribers reported by the companies and number of “local units of enterprise” according to the definition adopted by Istat. 50 In compliance with the method adopted in the European reporting system concerning the spreading of the broadband, lines having a capacity > 144 kbt/s are included. “Xdsl retail” accesses of Telecom Italia are included and for OLOs “Full ULL data” accesses, “shared access”, “wholesale bitstream” accesses and fibre accesses (FTTH) are included. The national average value (58.4%) diverges slightly from the value shown in figure 1.20 (58.7%) firstly because aggregates are not completely homogeneous, because in the first case (that is based on the European reporting system) some types of access which are numerically negligible are included (such as, for instance, leased lines) that in the survey at regional level are not taken into consideration, whereas, at the same time, regional data provided ad hoc by the companies showing – once consolidated at national level – some discrepancies with those given for the update of the European reporting are not included.
South 59.7 9.2 14.5 0.8 6.1 7.8 1.8 100.0 Source: AGCOM processing and evaluations on corporate data
Against an average market share of 59% – according to data as at March 2009 – Telecom Italia presence is stronger in regions such as Trentino Alto Adige, Basilicata and Calabria, in which its share may exceed 75%, whereas in other regions – Liguria and, above all, Sardinia, in which the only competitor is Tiscali – its share goes below 50%. In conclusion, from the analysis of national and regional data it seems to emerge still the market strength of the vertically integrated historical operator and the presence of a limited number of alternative operators capable of exerting competitive pressure on the national territory as a whole. With reference to the European framework, Italy is characterized by a market share of the incumbent higher than that recorded in the leading European countries by former monopolists (figure 1.21). Figure 1.21 Market shares of the main European incumbents in 2008 (%)
Germany Spain France Italy United Kingdom Source: European Commission, XIV Report At the same time, the penetration of the broadband among the Italian population is lower than the penetration that can be noticed in the main European partners, and also compared to the total continental average (EU27) (figure 1.22)51. Components affecting broadband penetration among Italian households concern both the offer in its different features (availability of the service, price level, quality, bundle with other communications services, offer of services by the Public Administration), and structural elements of the demand, including economic factors (such as disposable income), as well as socio-demographic factors that contribute significantly to determine the size of “potential market”.
51 The value shown in figure 6 – concerning resident population – cannot be compared with the value shown in table 18, referred to families, an aggregate that is considered more representative of the physical spreading of accesses in the country. At European level, in order to avoid any lack of homogeneity, among the various European countries, population is considered in the definition of “family”.
Figure 1.22 Broadband accesses on fixed network in Europe in 2008 (% of population)
Germany Spain France Italy United Kingdom EU27 Source: European Commission, XIV Report Therefore, it is extremely interesting to provide in this respect data for a comparison with the main European countries, with reference to both the level of schooling and the demographic structure. These factors exert a strong influence on the propensity by the public to use information and communication technologies, in their different forms and applications. With reference to schooling, Italy is characterized by a schooling level on average lower – and in some case also significantly – than that of the main European countries (table 1.21), a feature which affects negatively the potential of the overall demand of residential market. Table 1.21. Schooling in the main European countries in 2007 (%)52 Italy 52.3 France 68.7 Germany 84.4 Spain 50.4 United Kingdom 73.6 Finland 80.5 Sweden 84.6 Source: Istat, “2008 Annual Report” The population structure by age group is a further significant component which plays a part in the demand of broadband services to define the short-term trends and above all to influence the trends in the medium and long term. Indeed, it can be identified by intuition a direct correlation between size of the brackets representative of the young segments of the population and the demand of advanced communications services spread also through the broadband, a relation that, on the contrary, is usually of opposite sign
52 Defined as the ratio between the population in the age bracket from 25 to 64 years who completed at least the higher secondary education and the overall population. The schooling gap between Italy and the other countries gets worse in the event age brackets over 64 years are considered. with reference to the “old” brackets, in which the disposition for technology “consumption” is definitely lower, also, but not only, due to income53 and schooling54 factors. In this connection, an analysis was carried out in order to quantify the potential market deficit related to the demographic component. In particular, the demographic structure of the main European countries was compared (table 1.22), and then, with reference to the values for Italy, the difference in absolute terms of people belonging to some age brackets was calculated (table 1.23). Table 1.22. Population by age bracket in 2007 (million) Age brackets 0 - 14 15 – 24 25 – 49 50 – 64 65 - 79 > 80 Total Italy 8.4 6.1 22.2 11.0 8.8 3.2 59.6 Germany 11.4 9.6 29.8 15.1 12.5 3.8 82.2 France 11.9 8.2 21.8 11.6 7.3 3.1 63.8 Spain 6.6 5.3 18.3 7.6 5.5 2.0 45.3 United Kingdom10.8 8.2 21.5 11.0 7.0 2.8 61.2 Source: Eurostat, 2009
Table 1.23. Population by age bracket: differences with Italy in 2007 (million) Age brackets Germany Spain France UK 0-14 3.0 -1.8 3.5 2.4 15-24 3.5 -0.8 2.1 2.1 Total - 0-24 6.6 -2.7 5.6 4.5 25-64 11.7 -7.2 0.2 -0.8 Over 65 4.4 -4.3 -1.5 -2.1 “Demographic deficit” -7.1 -6.6 Source: AGCOM processing on Istat and Eurostat data From this analysis extremely interesting findings emerge. Taking into account countries such as France and the United Kingdom, with a demographic size similar to that of Italy, it is observed how they are characterized by a population under 24 years of age exceeding the Italian one of 5 million people (5.6 million for France and 4.5 million for the United Kingdom), whereas, correspondingly, the older population bracket (aged over 64) is lower of about 2 million (1.5 million for France and 2.1 million for the United Kingdom respectively). Therefore, in Italy the demographic profile is characterized by a lower number of young people and, on the contrary, by a greater number of elderly people a real “demographic deficit”, which can be assessed in some million individuals, factor representing a great limit for Italy’s market potential. Alongside schooling levels and the demographic structure, which are undoubtedly factors that penalize the potential of the Italian broadband market, an additional element for the development of the broadband is represented by the role played by the Public Administration. Also in this case, the comparison with other advanced markets is not at all encouraging: last year, Italian Public Administration allocated fewer resources to the information technologies compared with the gross domestic product (GDP) (figure 1.23). Also from a dynamic viewpoint, the scenario is not promising: in the 2007-2008 period, the Italian Public Administration, instead of increasing its expense in information technologies, in its central and local offices, reduced it (figure 1.24). After the analysis - taking into account the features of offer and demand - of the general framework of telecommunications on fixed network in Italy, the following tables give further information on the competitive structure. From a general viewpoint, data available confirm the structural trend of reduction of the concentration level of the markets, but also a consolidation of the number of
53 In 2007, net family income in families in which the main earner is over 65 years of age is about 30% lower than the national average (Source: Istat, “Distribuzione del reddito e condizioni di vita in Italy”, [Distribution of income and living conditions in Italy] Dec. 2008). 54 85% of the Italian population over 65 years has a secondary school certificate, and 70% has a primary school certificate (Source: Istat, Annuario Statistico Italiano 2008, Tavola 7.14 [Italian Statistical Yearbook 2008. Table 7.14]). competitors. On the one hand, it seems that the regulatory measures adopted continue to produce positive results in all the stages of the production chain of the sector (access to broadband). On the other hand, considering the features of the market (with the presence of considerable costs), competition seems to be naturally limited to few major operators, with a gradual and apparently unavoidable reduction of the importance of smaller companies. In 2008, starting from the distribution of the overall turnover of fixed telecommunications, Telecom Italia share is decreasing by more than two percentage points, reaching 66%. The analysis of the breakdown of the expense by type of customers points out a share for the residential segment (69.1%) considerably higher than the one of the business segment (63.0). Moreover, it is also to be pointed out the dynamism of some competitors – Fastweb and BT, in particular – whereas the entry of Vodafone55 into the market of fixed network has not yet produced significant results, at least in terms of market shares (table 1.24). Figure 1.23 Expense in Information Technologies in relation to GDP (% 2008)
Germany Spain France Italy United Kingdom EU27 Source: Assinform/NetConsulting Figure 1.24 Expense in Information Technologies (% var. on the previous year)
-2
--- Enterprises - - Central and Local PA - - - -Consumer Source: Assinform/NetConsulting
55 Data include Opitel, acquired by the British operator at the end of 2007, and activities on fixed network of Vodafone NV. Table 1.24. Users’ end expense by operator (%)56
- of which - of which User expense residential business 2007 2008 2007 2008 2007 2008 Telecom Italia 68.8 66.1 72.0 69.4 65.9 63.0 Wind 6.6 7.0 9.1 10.3 4.3 4.0 Fastweb 6.9 8.4 6.2 7.2 7.6 9.5 BT Italia 5.5 6.0 0.0 0.0 10.4 11.4 Vodafone Group 3.2 3.4 5.7 6.1 1.0 0.9 Tiscali 1.6 1.8 2.8 3.3 0.5 0.5 Other operators 7.4 7.4 4.1 3.7 10.3 10.7 Total % 100.0 100.0 100.0 100.0 100.0 100.0 Total (billion €) 17.05 16.68 8.07 7.87 8.98 8.81 Source: corporate data processed by AGCOM Based on the outlined market power of Telecom for the access, the situation changes, also significantly, if without considering the access fee to the network, only switched and broadband services are taken into account, in which the incumbent has a market share of 57%, in decline of more than due percentage points compared to 2007 (table 1.25).
Table 1.25. Distribution of revenues from end services on switched network and broadband (%) (*)
- of which - of which Total residential business 2007 2008 2007 2008 2007 2008 Telecom Italia 59.6 57.4 59.3 57.3 59.9 57.5 Wind 7.4 7.7 10.4 11.3 4.7 4.4 Fastweb 12.3 14.7 11.7 12.8 12.8 16.4 BT Italia 6.9 6.7 0.0 0.0 13.2 13.0 Vodafone Group 5.8 5.5 10.2 9.7 1.8 1.5 Tiscali 2.6 3.0 4.8 5.4 0.6 0.8 Total % 100.0 100.0 100.0 100.0 100.0 100.0 Total (billion €) 8.60 8.45 4.07 4.06 4.53 4.38 (*) Revenues from services on switched network include international, national, local voice traffic, Internet dial up, fixed-to-mobile and net revenues from calls to non-geographical numbering. Revenues from broadband services include subscription fees, and “pay per use” voice and data services. Access fees are excluded. Source: corporate data processed by AGCOM The importance of the weight of revenues from the access component emerges once again from the analysis of the revenues from telephone services and access (thus excluding broadband) where Telecom Italia has a share that in 2008 is slightly on the decrease, but still above 77% (table 1.26). Such market position is evidence of the different business model adopted by other operators, that are more focused on broadband services, where, on the contrary, in 2008, Telecom Italia share went down to less than 50%, losing 3% compared to 2007 (table 1.27).
56 Market shares concerning 2007 (as well as for values shown in tables 24 and 25 below), due to some changes in the calculation methods made by companies and also following the different structure of information asked by AGCOM, reclassifications and in other instances for a change in the activity areas, are not completely comparable with the corresponding values included in the previous Report to Parliament.
Table 1.26. Distribution of revenues from telephone services and access on switched network (%)
- of which - of which Total residential business 2007 2008 2007 2008 2007 2008 Telecom Italia 77.6 77.3 81.3 80.6 73.4 73.7 Wind 4.0 4.0 4.6 4.9 3.4 3.0 Fastweb 3.0 4 3.5 1.7 1.9 4.4 5.4 BT Italia 5.1 4.9 0.0 0.0 10.9 10.5 Vodafone Group 5.0 5.1 7.8 8.3 1.8 1.5 Tiscali 1.0 0.8 1.6 1.3 0.3 0.3 Others 4.3 4.3 3.0 3.0 5.9 5.7 Total % 100.0 100.0 100.0 100.0 100.0 100.0 Total (billion €) 9.52 8.71 5.04 4.59 4.48 4.12 Source: corporate data processed by AGCOM Among OLOs, in addition to the role played by Fastweb which is close to 30%, a gradual process of concentration among operators is emerging, which leaves - as already mentioned - less than 4% to small-sized companies.
Table 1.27. Distribution of revenues from end services on broadband network (%)
- of which - of which Total residential business 2007 2008 2007 2008 2007 2008 Telecom Italia 51.4 48.3 42.8 42.9 58.3 53.1 Wind 8.3 8.7 14.1 14.2 3.5 3.8 Fastweb 26.6 27.8 27.5 25.8 25.8 29.7 BT Italia 3.4 3.8 0.0 0.0 6.1 7.1 Vodafone Group 2.2 2.8 4.5 5.1 0.4 0. 8 Tiscali 4.1 4.8 8.1 9.2 0.8 0.9 Others 4.1 3.7 3.0 2.8 5.1 4.6 Total % 100.0 100.0 100.0 100.0 100.0 100.0 Total (billion €) 3.24 3.68 1.45 1.74 1.79 1.93 Source: corporate data processed by AGCOM Therefore, the profile of the competitive scenario of telephone services on fixed network seems to be characterized, on the one hand, by the extremely significant weight of the access network, enabling Telecom Italia to continue to have a market share around 75% in switched telephone services. On the other hand, a stronger level of competition in broadband services is observed; however, also in this case, because of the absence of alternative networks to the copper one of the historical operator, access network plays a key role. In this regard, in 2008, there were on the market the first commercial offers of some57 of the operators which have been granted the rights of use of “WiMax” (Worldwide Interoperability for Microwave Access) frequencies in the 3.5 GHz band, awarded in the competitive auction ended in the spring of 2008. WiMax technology was introduced to find a solution for some of the limits (geographical and also of other nature) of the access network on fixed network and it is still in a stage of technological “start up” which makes uncertain its actual capacity to replace (or at list to complement) the fixed infrastructure, in terms of services and related applications. Mobile network
57 In May commercial offers of Aria, Freemax, Linkem, Mandarin WiMax Sicilia and Retelit were available on the market. In 2008, the value of the Italian mobile market remained substantially unchanged compared to the previous year, as evidence of the maturity of the sector, that only thanks to the growth of the revenues from data services managed to record a positive sign (+0.7%) in the variation of the overall turnover (table 1.28)58.
Table 1.28. User expense by type of services59 2008 Var. % 2007 Bn € % Bn € % ‘08/’07 60 Voice services (1) 11.11 60.6 11.08 60.0 -0.3 Data services 3.87 21.1 4.29 23.2 10.8 Other revenues 3.36 18.3 3.10 16.8 -7.8 Total 18.35 100.0 18.47 100.0 0.7
(1) It includes revenues from calls on non-geographical numbers, by convention, considered in the “fixed network” type of traffic Source: corporate data processed by AGCOM First of all, it is observed how the slight decrease of revenues from voice services – that, in any case, still account for 60% of the overall receipts – took place in a situation of substantial stability of lines, which are still around 90 million, but in presence of a 11% growth of traffic volumes. The value of on-net calls is on the rise, which are now close to 60% of the overall traffic, as evidence of the strategies adopted by operators aiming at promoting – by means of specific pricing plans – the “community” effect of their subscribers, thus favouring communications on their network (table 1.29).
Table 1.29. Voice traffic in mobile services 2007 2008 Var. % Type of traffic Bn € % Bn € % ‘08/’07 Fixed network 13.5 13.8 14.1 12.8 4.0 Mobile on net 55.9 56.9 63.9 58.2 14.4 Mobile off net 21.7 22.1 23.2 21.2 7.1 Other destinations 7.1 7.2 8.6 7.8 20.5 Total 98.2 100.0 109.8 100.0 11.8
Source: corporate data processed by AGCOM Table 1.30 summarizes the weight - with regard only to revenues from voice communications and messages (SMS/MMS) – of the on net type of traffic. On the whole, such component is becoming increasingly important, reaching in 2008, nearly 60%.
58 Data referred to 2007 are not homogeneous with those specified in the previous annual report due to some changes in the calculation methods made by companies – also following the different structure of information asked for to companies for this report - with regard to the different types of proceeds taken into account. As far as revenues from data services are concerned, at the same time, they are not completely comparable with details given in the survey concerning “current and perspective competitive and market condition of SMS services (short message service), MMS (multimedia messaging service) and in general of data services in mobility” as set forth in resolution 251/09/CONS since aggregates and product areas used in the two surveys are different. 59 Revenues (in terms of users’ expense) from voice services include receipts from top-up services of pre-paid lines (for 2007 only), from voice calls to mobile on net and off net numbers as well as to fixed numbers, and from services with non-geographical numbering. Revenues from data services include SMS, MMS, video and mobile TV (DVB-H) services, and other data services which are not specified in detail. “Other revenues” include revenues from the sale/rental of phones, equipment, accessories and from all the other revenue categories not expressly included above. 60 For 2007, revenues received through the fixed fee paid to operators on recharging services, pertaining to both voice and data services, have been “divided” between the two components proportionally to the corresponding revenues declared by the companies.
Table 1.30. Component on net revenues for voice calls and SMS/MMS (% of the total) 2007 2008 Voice 59.0 60.1 SMS/MMS 56.5 58.5 Average 58.4 59.7 Source: corporate data processed by AGCOM Against an increase by 14% of the on net traffic, revenues go up correspondingly of 1.8% only, accounting for 44% of the receipts from voice services (table 1.31). It goes without saying that the different trend of volumes and values account for the strategies adopted by operators directed to reward this type of traffic, with extremely advantageous prices. Moreover, these business conducts aiming at increasing customer loyalty seem to be further confirmed by the slow but gradual success of subscription lines, recording, in 2008, on the whole, an increase of about 2 million, against a drop of prepaid lines equal to more than 1 million. Finally, the trend described in the previous Report to Parliament as to the “network specialization” in the consumption habit of voice telephony, where fixed network users tend to make calls to fixed numbers, and vice versa, users calling from mobile numbers tend to terminate calls on mobile numbers: in 2008, more than 80% of the traffic originated from fixed network was terminated on national fixed numbers61, whereas, correspondingly, traffic originated and terminated on mobile networks is close to 80%. Table 1.31. Revenues from voice service by type of traffic 2007 2008 Var. % Bn € % Bn € % ‘08/’07 Mobile network 8.15 73.3 8.15 73.5 0.0 - on net 4.81 43.3 4.90 44.2 1.8 - off net 3.34 30.0 3.25 29.3 -2.6 Fixed network 1.98 17.8 1.87 16.9 -5.8 International networks 0.98 8.9 1.07 9.6 8.2 Total 11.11 100.0 11.08 100.0 -0.3
Source: corporate data processed by AGCOM As already pointed out, data services are the most dynamic component of the sector. Among the revenues from such services, even with a percentage over 55%, traditional SMS show a significant reduction of their share compared to the corresponding value in 2007.Vice versa, it goes up the component concerning the consumption of other data services, among which, in particular, access to the Internet and value-added services62, with a growth exceeding 20% (table 1.32). Table 1.32. Revenues from data services by type 2007 2008 % Var. bn € % bn € % ‘08/’07 SMS 2.33 60.2 2.42 56.4 3.8 MMS and other data 1.54 39.8 1.87 43.6 21.3 Total (bn € and %) 3.87 100.0 4.29 100.0 10.8
Source: corporate data processed by AGCOM The development of the broadband on mobile services is pointed out by the significant increase of users that can use broadband services, now close to 30 million (figure 1.25).
61 Value calculated on national, local and Internet dial up calls. 62 For further details, see paragraph 2.2 below describing information gathered on the occasion of the survey “SMS/MMS and data in mobility” in compliance with resolution 251/09/CONS. It is interesting to point out how the strategies adopted by mobile operators focusing on customer loyalty include incentives for their customers to use data services and, in particular, to Internet access63. These goals can be achieved only through the spreading of high performance phones capable of supporting advanced services and applications (the recent marketing of the IPhone was an important step in this direction). This produced an additional significant growth of the broadband traffic, passed from 7,700 terabyte in 2007 to over 20,000 in 2008; for the first quarter of 2009, the growth was over 200% compared to the first three months of 2008.
Figure 1.25. UMTS/HSDPA users (million)
2004 2005 2006 2007 2008 Mar-09 Source: corporate data processed by AGCOM The development of data services was enabled by a quick fall in unit prices due to the gradual success of volume offers, with costs for customers which are less and less linked to actual consumption. This introduces the effect of the competitive environment on the offer of innovative services and on the pricing system for end customers. As far as this aspect is concerned, in the following tables the recent development of competition is analyzed in detail. In particular, table 1.33 shows market shares with reference to overall final expense. In 2008, a substantial stability of the shares is recorded, apart from the decrease by nearly one percentage point of H3G. From the analysis of the data by type of customer, some interesting changes can be pointed out such as, for instance, the considerable repositioning by Telecom Italia towards business users.
Table 1.33. Mobile services: market shares in final expense by customers (%)
Final expense - of which - of which residential business 2007 2008 2007 2008 2007 2008 TIM 44.3 44.2 42.7 41.8 51.3 54.1 Vodafone 33.6 34.0 34.0 34.9 31.6 30.0 Wind 14.5 15.2 16.3 17.3 6.6 6.5 H3G 7.6 6.7 7.0 6.0 10.5 9.3 Total % 100.0 100.0 100.0 100.0 100.0 100.0 Total (billion €) 18.35 18.47 15.00 14.91 3.35 3.56
Source: corporate data processed by AGCOM
63 In this connection, an example of this is the agreement entered into between Vodafone and Facebook for the offer of a service to access the Internet, aiming at improving the typical community effect of the social network.
From the analysis of the shares of each market segment (voice and data) two elements emerge: in voice services, the growth of Wind, and in data services, the increasing importance of Vodafone with more than 41% of the market, with the slippage of Telecom Italia and above all of H3G in both sectors (table 1.34).
Table 1.34. Market shares in revenues from voice and data services (%) (*) Voices Voice + data Services Data services 2007 2008 2007 2008 2007 2008 Telecom Italia 41.6 40.5 41.4 40.3 41.6 40.5 Vodafone 35.6 37.2 35.0 36.1 38.8 41.3 Wind 16.0 16.5 17.4 18.5 10.5 10.0 H3G 6.8 5.9 6.1 5.1 9.2 8.2 Total % 100.0 100.0 100.0 100.0 100.0 100.0 Total (billion €) 14.94 15.37 11.11 11.08 3.83 4.29 (*) Compared to the overall user expense (table 32), shares concerning only “core” services of mobile operators (voice and data) are specified, thus excluding the “other revenues” item, namely receipts from the sale of other services and products, such as equipment and other phones and accessories. Due to some changes in the calculation methods and to reclassifications made by companies, market shares concerning 2007 are not perfectly comparable with the corresponding values indicated in the previous Report to Parliament. Source: corporate data processed by AGCOM With regard to the trend of active lines, the overall share of Wind and H3G increased by nearly two percentage points, value that correspondingly grows of more than 5 percentage points in terms of 64 new activations (table 1.35) . This seems to point out a turnaround, at least in terms of volume, as to the short-term effects of the “Bersani law” that in 2007 placed minor operators at a disadvantage. Such operators, in order to cope with the reduced receipts due to the abolition of the fixed fee for the recharge of prepaid mobile services, had increased their prices thus jeopardising the competitiveness of their offers, producing a strong decrease of Wind and H3G share in terms of new activations. Table 1.35. Active SIM cards by operator Amount % Net activations % 2007 2008 2007 2008 Telecom Italia 40.5 38.5 44.3 39.1 Vodafone 33.0 33.3 32.2 31.9 Wind 17.4 18.7 15.5 19.3 H3G 9.1 9.5 8.1 9.8 Total 100.0 100.0 100.0 100.0
Source: corporate data processed by AGCOM In a mature market, with a number of active SIM cards in relation to population largely exceeding 150%, MNP (mobile number portability) is of strategic importance, especially in order to encourage the entry and the consolidation of new operators, both virtual and having their own infrastructure (see below). This tool, which enables users to pass from an operator to another, without losing their own telephone number, in March exceed 20 million of overall numbers moved (figure 1.26). This gives a further proof of the strength of the competitive process taking place.
64 This figure cannot be compared with data shown in the corresponding table 1.32 of the 2008 annual report, since for this year the value is calculated on acquisitions only, and not on the difference between assets at year’s end. This is due to the fact that, following adjustments of the traffic systems and the elimination of some promotions, Telecom Italia had recorded a slowdown in the total number of SIM cards and therefore, it would have been of no use to continue to rely on a composition ratio based on the difference of assets at year’s end only.
Figure 1.26. Mobile Number Portability: lines which have been moved (million)
22,0
Source: corporate data processed by AGCOM In this connection, it is to be pointed out the success of MNP in Italy, the regulatory framework of which started in 2001 bringing results that enabled Italy to reach a leading position at European level: as at October 2008, only in Spain the number of gross activations was higher than the one recorded in Italy65. The dynamics of MNP unbundled by single operator (table 1.36) confirms the situation previously described, with Wind and Vodafone recording positive results in 2008 to the detriment of H3G and Telecom Italia. In terms of overall stock, being the last operator with its own infrastructure to enter the market, H3G is the operator that benefitted more from this service, thus confirming MNP’s pro- competitive effect. Table 1.36. Mobile number portability – distribution among operators (%)
Donor Receiver Mar 08 Mar 09 Mar 08 Mar 09 H3G 10.5 12.0 20.7 19.2 Telecom Italia 37.0 37.1 31.8 30.8 Vodafone 28.0 27.6 29.6 31.6 Wind 24.5 23.3 17.9 18.4 Total 100.0 100.0 100.0 100.0 Source: corporate data processed by AGCOM To complete the competitive framework of mobile telephone services, it is to be pointed out that, starting from the second half of 2007, MVNOs (Mobile virtual network operator) entered the Italian market. Not having their own mobile network these operators provide the mobile telephone services using the infrastructure of mobile network operators (MNO). In 2008, companies providing such services66 continued their launch, with results that at present, in absence of a significant observation period, it is still too early to assess in detail. In any event, some preliminary data confirm an initial further competitive boost in the mobile market. At the end of 2008, active SIM cards of MVNO total 1.3 million going up to 1.5 million at the end of March, a value that, at the same date, accounts for about 1.6% of the total amount of MNOs (figure 1.27). With reference to revenues, it is undoubtedly Poste Mobile the virtual operator that in 2008 achieved the most significant results, accounting for about 60% of this market segment, that, however,
65 Source: European Commission, XIV Report. 66 Revenue data are accurately referred to Poste Mobile, Carrefour Italia Mobile, Conad Insim and Coop Italia, whereas as to lines the value includes also Fastweb data and an estimate of companies for which detailed information is not available. is still marginal (assessable in around 60 million euro) compared to the overall market of mobile telephone services (figure 1.28).
Figure 1.27. MVNO – subscribers by operator (march 2009 in %)
Poste Mobile 53.5, Others 6.5; Auchan 2.3; Carrefour Italia Mobile 9.5; Conad 4.0; Coop Italia 16.8; Fastweb 7.3 Source: corporate data processed by AGCOM
Figure 1.28. MVNO – revenues by operator (2008 in %)
Poste Mobile 59.8; Carrefour 6.6; Conad 1.5; Coop 20.7; Others 11.4 Source: corporate data processed by AGCOM Poste Mobile has definitely taken advantage of its historical brand, as well as of its widespread presence throughout Italy with 14,500 post offices. At present, the integration of the offer of mobile services with Poste Italiane portfolio of core services seems to win public approval more than services provided by the companies in the large-scale retail trade. In this connection, it is pointed out how the average revenue per line recorded by Poste Mobile during 2008 totalled about 140 euro, against slightly more than 100 euro of the average of MVNO belonging to large-scale retail trade. Moreover, Poste Mobile SIM cards produced a voice traffic of nearly 30% higher than the average of MVNOs67, as it is higher the incidence of revenues from data services68, as evidence of an increased use by Poste customers of the mobile services offered.
67 345 against 266 minutes per year. 68 17% against the average 14% of the sector. Over the last few months two more players entered the market of mobile virtual operators: Nòverca Italia, a company set up under the joint venture agreement of Acotel and the Intesa San Paolo Group. Nòverca – which entered into an agreement to access Telecom Italia mobile network – intends to combine Acotel’s know-how in the area of value added services and the planning of information services with the know-how related to financial services of the Intesa San Paolo Group. The last operator to enter the market is Erg Petroli, that, using Vodafone mobile network, will market its mobile telephone services in 2,000 sales points of its distribution network. 1.2.3. Television As described in the previous paragraphs, the TV sector has been undergoing significant and continuous changes. Over the next four years, in the Western European Countries, analogue television will be completely replaced by digital multichannel television. In Italy, this transition process has already started and will be completed in 2012 according to a plan envisaging the switch-off of the analogue signal which will be replaced by the digital one following a model by geographical areas. This process has already started for some years to have effects on the distribution of audience figures. The seven analogue terrestrial generalist channels – Rai 1, Rai 2, Rai 3, Canale 5, Italia 1, Rete 4 and La7 – recorded in 2008, a cumulative average share audience equal to 83.9% (figure referred to the average day out of the total TV universe), with a drop of 9 percentage points starting from 2000, that is more than one percentage point per year. At the same time, the audience share of “other channels” went up from 7.3% to 16.1%, including in the calculation the other terrestrial TV broadcasters (national, circuits and local) and only digital broadcasters through multichannel platforms (satellite, digital terrestrial and IP TV)69. Considering that audience of other analogue remained unchanged, if not even diminished, it appears as marked the process to redefine the market structure, starting from the TV consumption component. Audience trend affects also the distribution of resources among platforms and among operators. In 2007, out of the total revenues of the television system, the payment to access digital TV had a share of 29.3%; after one year, this item went up of more than two percentage points, reaching 31.5% of the overall revenues, becoming a resource that it is now as many as 12.5 percentage points above the revenues from the subscription fee to finance the radio-TV public service. As it is the case in other scenarios (see above), the evolution of resource allocation could generate a reversal of the current distribution of revenues and a predominance of receipts from the purchase of pay TV contents and services compared to those concerning the sale of advertising spaces. With regard to TV on the Internet (IP TV and also Web TV), at least on the short and medium term, in Italy, audiovisual consumption on this medium does not seem to affect the position of more traditional platforms. As a matter of fact, revenues generated by Internet-based audiovisual services are still marginal. Moreover, PGC (Producer Generated Content) is still to find its own market in a scenario in which UGC (User Generated Content) prevails. However, in the long term, the impact of the Internet can play a major role especially if the contents available will be suitable to attract more the general public and less a public focused on market niches. Overview In 2008, in Italy, the overall resources of the sector reached 8.4 billion euro, with a yearly growth of 4.1% (table 1.37). Based on such evolution, the trend of the various revenue components is extremely different: advertising sales decreased by -1%, and now account for 46.4% of total revenues, whereas the pay component experienced an increase by 2 percentage points reaching 12%, also revenues from the provision of contents to other broadcasting operators and mobile and fixed TLC operators, showed
69 Source: e-Media Institute © e-Media Research 2008 on Auditel data positive results, even if they are still limited accounting for 3.2% of overall revenues. Finally, it is to be pointed out the slight increase in revenues from the subscription fee of the radio-television public service (+2.3%).
Table 1.37. Revenues in the TV sector by type (billion €) million € % % % Var. 2007 2008 ‘07 ‘08 ‘08/’07 Subscription fee 1,567 1,603 19.3 18.9 2.3 Pay TV 2,384 2,671 29.3 31.5 12.0 Advertising 3,967 3,929 48.8 46.4 -1.0 Revenues from other operators 218 270 2.7 3.2 24.0 Total 8,136 8,473 100.0 100.0 4.1 Source: corporate data processed by AGCOM From the analysis of the distribution of resources in the different platforms it emerges that the traditional analogue transmission system still accounts for 64.1% of the total revenues (table 1.38), even if it is to be pointed out a further, significant reduction of its importance to the advantage of digital platforms.
Table 1.38. Total revenues (subscription fee, advertising and pay TV) by platform million € % % Var. % 2007 2008 ‘07 ‘08 ‘08/’07 Analogue terrestrial 5,294 5,255 66.8 64.1 -0.7 Satellite 2,403 2,645 30.4 32.2 10.1 DTT 146 222 1.8 2.7 52.4 TLC networks 75 80 0.9 1.0 7.3 Total 7,918 8,203 100,0 100,0 3.6
Source: corporate data processed by AGCOM From the breakdown of each revenue item it emerges that in 2008, the analogue platform with 93% continues to dominate the market of the sale of advertising spaces on TV (table 1.39), even if, on the whole, the decrease by 2% of spaces sold on this medium is partially offset by the success of new digital platforms. In particular, satellite confirms its good penetration capacity in TV audience, thus becoming more interesting for advertisers.
Table 1.39. Advertising revenues by platform
million € % % Var. % 2007 2008 ‘07 ‘08 ‘08/’07 Analogue terrestrial 3,727 3,652 94.0 93.0 -2.0 Satellite 208 239 5.2 6.1 14.9 DTT 8.8 11.6 0.2 0.3 31.6 TLC networks 23.4 26.5 0.6 0.7 13.3 Total 3,967 3,929 100.0 100.0 -1.0
Source: corporate data processed by AGCOM As already mentioned, pay TV offers increased by 12%, exceeding 2.6 billion euro (table 1.40). Analogue terrestrial confirms itself as the medium chosen for advertising revenues, and satellite is the prevailing platform for pay TV, with a growth rate that in 2008 was high (9.6%) but lower than digital terrestrial (53.7%). The development of the latter, seems to be able, also for the future, to exert growing competitive pressure on the satellite.
able 1.40. Pay TV revenues by platform
million € % % Var. % 2007 2008 ‘07 ‘08 ‘08/’07 Satellite 2,196 2,407 92.1 90.1 9.6 DTT 137 210 5.7 7.9 53.7 TLC networks 52 54 2.2 2.0 4.6 Total 2,384 2,671 e100.0 100.0 12.0 - of which subscription fees 2,123 2,344 89.0 87.8 10.4 - of which pay per view 262 327 11.0 12.2 24.9
Source: corporate data processed by AGCOM It is interesting to observe the different specialization of transmission platforms in pay offers: whereas satellite is increasingly connected with the subscription component, digital terrestrial is specialized in pay per view: out of the more than 320 million euro of revenues from such item, over 64% comes from DTT. Taking now into account the evolution of the position of each operator of the sector (table 1.41), Rai is confirmed as the main media company in Italy, with revenues exceeding 2.7 billion euro, even if with a slight decrease (0.2%) compared to 2007. The result is influenced by the significant decrease of advertising receipts (-3.6%), which took place above all starting from the fourth quarter of the year and as a consequence of the international financial crisis. On the contrary, receipts from subscription fee increased (+2.3%) due to the increase of the corresponding unit amount.
Table 1.41. Revenues by operator million € million € % Var. 2007 2008 ‘08/’07 RAI 2,729 2,723 0.2 Subscription fee 1,567 1,603 2.3 Advertising 1,137 1,096 -3.6 Revenues from other operators 25 24 -4.0 Sky Italia 2,422 2,640 9.0 Advertising 200 232 16.0 Pay offers 2,172 2,373 9.2 Revenues from other operators 49 34 -30.3 RTI 2,411 2,531 5.0 Advertising 2,172 2,165 -0.3 Pay offers 125 199 59.2 Revenues from other operators 114 167 46.5 Telecom Italia Media (La 7/MTV) 162 152 -6.2 Advertising 144 133 -7.7 Pay offers 12 11 -3.7 Revenues from other operators 5 7 27.6 Telecoms Operators 98 113 14.9 Advertising 20,9 23,8 13.9 Pay offers 74,9 87,6 16.9 Revenues from other operators 2,5 1,5 -39.5 Other Broadcasters 314 315 0.1 Advertising 292 278 -4.9 Revenues from other operators 22 37 Total revenues 8,136 8,473 4.1 Source: corporate data processed by AGCOM However, 2008 is characterized by the success achieved by Sky Italia that, exceeding 2.6 billion of total revenues (+9%), becomes the second TV operator in Italy. The analysis of the typical activities highlights an overall increase by 9.2% of the revenues from pay offers, due to a further significant increase of subscription and a substantial reduction of revenues from pay per view services (-12.8%). However, the most marked increase concerns the advertising component, going up to 16%; the latter result is considerably important especially in view of the fact that 2008 is extremely difficult for the advertising market. As a matter of fact, the RTI-Mediaset group that is traditionally linked to the advertising sector, managed to keep under control the consequences of the international crisis by strengthening considerably its offer of pay services on digital terrestrial platform, the revenues of which, in 2008, increased by nearly 60% coming close to 200 million euro. Likewise, the turnover from the sale of contents to other broadcasters and to fixed and mobile operators was on the rise (+53%). This positive results largely offset the no growth of revenues from advertising (-0.3%), making it possible for the group to have an overall growth of 5%. The trend of the market shares in the sector outlines the presence of an oligopolistic structure dominated by the presence – also symmetrical in terms of overall revenues - of the two historical operators RAI and RTI and of the “new entrant” Sky Italia. The other operators play a minor role, on the whole less than 7%, and even with a slight decline in 2008.
Table 1.42. Overall revenues in the TV sector: market shares (%) 2007 2008 Rai 33.5 32.1 Sky Italia 29.8 31.2 RTI 29.6 29.9 Telecom Italia Media 2.0 1.8 TLC Operators 1.2 1.3 Other companies 3.9 3.7 Total 100.0 100.0 Source: corporate data processed by AGCOM As opposed to the symmetry of the overall position of the three major operators there is the asymmetry of the corresponding expertise. RTI is leader in the advertising sector and a new competitor in pay offers, whereas, on the contrary, Sky Italia is leader in pay TV and it is emerging as new competitor in the advertising revenue. In this scenario, RAI expertise is more varied: having a significant position in advertising – even if this position is structurally tied by greater advertising limits – and taking the remaining resources from the subscription fee to finance the offer of public service. In particular, in 2008, in the market of advertising revenue (table 1.43) there is a reduction of the weight of RAI – even if to a limited extent – in favour of RTI, in a position of complete leadership (with a share exceeding 50%), and, above all, of Sky Italia, that accounts for nearly 6% of the market. Vice versa, in pay services (table 1.44) Sky Italia is the undisputed leader (88%), even if RTI growth, that in 2008, goes over 7% of the total of market revenues is to be pointed out. This brings about a drop in the concentration index, going below 8,000.
Table 1.43. Market shares in TV advertising revenue (%) 2007 2008 RTI 54.7 55.1 Rai 28.7 27.9 Sky Italia 5.1 5.9 Telecom Italia Media 3.6 3.4 Other companies 7.9 7.7 Total 100.0 100.0 Herfindahl-Hirschman Index 3,156 3,198 Source: corporate data processed by AGCOM
Table 1.44. Market shares in Pay TV offers (%) 2007 2008 Sky Italia 91.1 88.8 RTI 5.2 7.4 Telecom Italia Media 0.5 0.4 TLC Operators 3.1 3.3 Total 100.0 100.0 Herfindahl-Hirschman Index 8,340 7,959 Source: corporate data processed by AGCOM Digital Transition Process According to estimates published in the third report on digital terrestrial television in Europe and in Italy carried out by DGTVi (the Italian Association of Digital Terrestrial Broadcasters), at the end of 2008, the number of households having at least one digital terrestrial receiver reached 7.6 million units, equal to 34% of the total of TV households. Still according to such estimates, in 2008, the penetration of digital platforms (53%) outstripped the analogue one (47%), even if with reference to first accesses only, namely to the main TV set in each house. With regard to receivers, in Italy, in December 2008 only, 677,000 TV-sets with integrated set- top box and 207.000 external set-top boxes were sold, bringing to 12.2 million the total number of units for DDT reception sold so far, of which over 5 million during 2008 only70. The new broadcasting technology enabled to multiply by four – on average – the offer of national TV channels that can be received over the air. Table 1.45 shows a detailed list of the features of the new digital terrestrial offer, with regard to programmes and services offered in the 8 multiplexes having national coverage in operation in May 2009 for DVB-T broadcast (digital terrestrial in fixed station). Still according to the DGTVi report as aforementioned, prior to the switch-off, completed on 31 October 2008, Sardinia had 16 local TV broadcasters, one of them already in digital, and two using, in addition to the analogue network, also a numerical mux. Following the transition to the new transmission technique, in Sardinia there are now 18 multiplexes of local operators, for total of 64 TV programmes and 5 radio channels. In summary, the switch off increased significantly national and local programmes that TV viewers can receive as well as pluralism and competition in the sector. Sardinia is only the first stage of a programme according to which Italy will complete the transition process at the end of 2012. In particular, the Government, by means of the decree signed by the Ministry of Economic Development, announced the calendar for the final passage to digital terrestrial television. According to the decree the progressive transition will be carried out in 16 geographical areas (table 1.46). In the second half of 2009 already, the transition to digital terrestrial TV will take place in Lazio, Campania, Trentino Alto Adige and Piedmont; whereas Sicily and in Calabria are the last two regions to complete the passage to DTT at the end of 2012. In the next two years already, this programme will involve more than 70% of the Italian population: in 2009, about 14 million citizens will be involved, whereas in 2010 such number reaches 23 million.
Table 1.45. TV programmes broadcast by Mux with National coverage
National Channels which can be received also in New Pay per View Multiplex analogue terrestrial terrestrial channels Dfree Mediashopping Disney Channel Joi Mya Steel Joi + 1 Mya +1 Steel +1 MBone LA7 Dahlia Sport Rete 7 (Piedmont) Dahlia Xtreme Telequattro (Friuli) Dahlia Eros Primo Canale (Liguria) Dahlia Calcio 1 Dahlia Calcio 2
70 Source: GFK. Dahlia Calcio 3 Dahlia Calcio 4 Dahlia Adult 1 Dahlia Adult 2 Dahlia Promo Dahlia Activation TIMB 1 LA7 QOOB LA7 Cartapiù X MTV Italia Mediashopping LA7 Cartapiù Y Sportitalia Sportitalia24 Mediaset 1 Premium Menù Hiro Cartoon Network Playhouse Disney Disney Channel 1 Extra 1 Extra 2 Premium Calcio 24 Premium Calcio 1 Premium Calcio 2 Premium Calcio 3 Premium Calcio 4 Premium Calcio 5 Premium Calcio 6 Premium Calcio Activation Mediaset 2 Canale 5 Boing Rete 4 Iris Italia 1 Class News BBC World Coming Soon RAI - Mux A Rai Uno Rai 4 Rai Due Rai Tre RAI – Mux B Rainews 24 Rai Gulp RaiSportPiù Rai Storia SAT2000 Rete A All Music Repubblica TV France 24 Second TV
Table 1.46. Transition to digital – National Calendar
2008 II half Area 16 Sardinia 2009 I half Area 2 Valle d’Aosta II half Area 1 Western Piedmont Area 4 Trentino and Alto Adige (including the province of Belluno) Area 12 Lazio Area 13 Campania 2010 I half Area 3 Eastern Piedmont and Lombardy (including the province of Piacenza) II half Area 5 Emilia Romagna* Area 6 Veneto* (including the provinces of Mantova and Pordenone) Area 7 Friuli Venezia Giulia Area 8 Liguria 2011 I half Area 10 Marche* Area 11 Abruzzo and Molise* (including the province of Foggia) Area 14 Basilicata, Apulia (including the provinces of Cosenza and Crotone) 2012 I half Area 9 Tuscany e Umbria (including the provinces of La Spezia and Viterbo) II half Area 15 Sicily and Calabria Source: Ministry of Economic Development With a view to favouring this process and to increasing the pro-competitive and pluralistic effect, with resolution 181/09/CONS, AGCOM approved the criteria for the complete passage to digital of terrestrial TV networks (cf. paragraph 2.6).
1.2.4. Radio In 2008, after years of continuous growth, there is a reduction, even if to a limited extent, of the overall radio audience in the average day, estimated in 38.3 million listeners. The penetration rate of the radio is however very high, equal to 73.26% of the Italian population aged over eleven years (figure 1.29). The generic listening frequency over the seven days goes up, compared to 2007, totalling 46.28 million listeners (figure 1.30). Audiradio announced the first data for 2009, concerning the January-February period. There was a two-month delay in the presentation of the listening data due to the introduction of some new methods concerning the increase in the publication threshold of data from 24 to 30 cases in the average day and to the starting of a supplementary survey, as an experiment, carried out by means of panel diaries, based on 3,000 cases surveyed during the first six-month period, to which the same number will be added in the second period. In order to avoid any lack of homogeneity of data coming from the diaries with telephone ones, Audiradio adopted a single system of processing and publication, using the single planning tape in which the figure of the seven days, supplied by different sources, is made comparable by means an “injection” process that takes into account “listening behaviour” and socio-demographic parameters of the respondents.
Figure 1.29. Radio audience in the average day (2002-2008)
Penetration rate Source: Audiradio
Figure 1.30. Audience in the seven days (2002-2008 million)
Source: Audiradio In particular the extension of the result on 7, 14, 21 and 28 days by using panel diaries, for the fourteen national radio stations which participate in the new system, was welcomed by agencies since this extension will enable a potential development in the planning of advertising campaigns on the radio. Radio stations that have chosen the survey by means of panel diaries, are the three Radio Rai stations, R 101 of the Mondadori group, RDS, RTL 102.5 and the other three radio stations of the Finelco group, 105, RMC, and radio Virgin, the three networks of L’Espresso Publishing Group, Deejay, Capital and m2o, Radio 24 and Radio Margherita. Among the networks - at present - decided not to participate Radio Italia Solo Musica Italiana and Radio Kiss Kiss, both linked to Radio e Reti. Even though Audiradio itself specified that such figure cannot be compared with the one of the previous years, from the analysis of the two-month period it emerges that overall radio listeners are almost the same (38,453,000 in the average day and 47,887,000 in the 7 days based on a population of 53,483,000), whereas there is a slight overall decrease of all the most important stations (table 1.47).
Table 1.47. Listeners in average day yesterday and coverage in the 28 days Radio Stations Cati Basic Panel Diaries Supplementary Survey Research 1st part 2009 Radio stations Listeners Listeners Listeners Listeners Listeners AD yesterday in the 7 in the 14 in the 21 in the 28 days days days days Rai Radio1 6,284 14,838 16,670 17,662 18,307 Rai Radio2 3,937 11,916 13,928 15,035 15,804 Rai Radio3 1,899 5,767 6,767 7,295 7,627 Radio R101 1,965 6,215 7,629 8,419 8,954 RMC Radio Montecarlo 1,503 5,325 6,664 7,442 8,008 Radio Capital 1,441 5,077 6,128 6,725 7,147 Radio Deejay 5,037 13,067 15,110 16,038 16,625 Radio 105 4,628 10,107 11,803 12,697 13,289 RDS 100% Grandi successi 5,115 12,191 14,257 15,262 15,921 RTL 102.5 5,188 12,606 14,800 15,970 16,779 Radio 24 - Il Sole 24 Ore 1,901 4,822 5,511 5,862 6,095 m2o 1,303 2,508 2,930 3,130 3,263 Virgin Radio 1,643 3,345 3,859 4,152 4,366 Radio Margherita Musica 888 2,570 3,176 3,508 3,712 Italiana Source: Audiradio From the analysis of the panel diaries survey, the most interesting figure is represented by the listening curve of the main radio stations in the medium- long-term. Even if Radio Uno ranks first in the whole month with more than 18,000,000 contacts in the 28 days, its percentage quota decreases progressively compared to the overall value of the listening of radio stations participating in the survey, in the different periods under examination, whereas for Radio Due and Radio Tre the percentage of listeners in the 7, 14, 21 and 28 days remains unchanged. The different trend of listening in the 7, 14, 21 and 28 days emerges also for private radio stations as shown in figure 1.32. The yearly performance of the radio market remained essentially steady compared to the previous year, in terms of both listening and advertising revenues. The FCP71-Assoradio Monitoring Centre collected data on turnover: the progressive trend in the January-December period in 2008 compared to the same period in 2007 showed an increase by + 1%, with a volume slightly exceeding 400 million euro (net of the agency discount as well) with the trend to the progressive decrease of advertising revenues during the year, getting worse in the last quarter of 2008.
Figure 1.31. Listeners percentage trend in the 7, 14, 21 e 28 days - Radio RAI
AD - RAI RADIO 1 6,284; RAI RADIO 2 3,937; RAI RADIO 3 Source: Audiradio
Figure 1.32. Listeners percentage trend in the 7, 14, 21 e 28 days – Private radio stations
Source: Audiradio
71 FCP-Federazione concessionarie pubblicità (Federation of Advertising Agencies) brings together companies - both concessionaries and direct agents - that specialize in selling advertising space in newspapers, magazines and movies and on television, radio and the Internet.
The progressive trend of the January-March period in 2009 as against the corresponding period of 2008 showed a decrease by 20%, with a total volume below 80 million72. Such data, as it is the case in other sectors, are to be considered within the framework of the difficult general market situation. Indeed the change of the business cycle convinced many investors to reduce their expense budget and to postpone the launch of new products. With regard to business strategies, in 2008 the major publishing groups focused strongly on the development of multimedia activities, carried out in a synergic and complementary way to this medium. In this way, the leading groups were able to strengthen the role played by the most important radio stations on the new distribution platforms, reaching excellent results in areas such as web streaming73 and podcast74. The social networks of the main radio stations involve in their actives several thousand users every month thus enabling the exchange and the spreading of contents among the members of the Internet community. The activity on the mobile is still in steady growth and in further development, on the one hand, by increasing the offer of programmes which can be used on traditional mobile phones through podcasting and, on the other hand, by launching new applications for mobile phones that make it possible for users to interact with programmes on air and to look at digital contents connected to them. From this viewpoint, the radio proves to be the medium that more than others can overcame the one-way relation with the user, by integrating itself in other devices and being increasingly capable of using the potential offered by the multimedia and multi-platform development. This enables publishers to address their offer to specific listening targets. The integrated provision of contents, carried out through the digitisation of the same, represents an important opportunity that can help the radio sector to overcome the current economic crisis, that, as already described, involved to a greater extent traditional communications media. 1.2.5. Publishing As usual, in order to provide an exhaustive description of the publishing market, the main companies of the daily and magazine publishing sector have been asked to provide specific information regarding their financial and circulation data in the 2008 financial year. Companies included in the sample, to which detailed information have been asked concerning the main accounting and non-accounting items, can be representative of the whole sector (table 1.48). At aggregate level, companies taken into consideration, as to typical publishing activities, represent more than 63% of the value of the whole sector of daily and magazine press, as it was assessed, in homogeneous terms for 2007, within the enhancement of the integrated systems of communications carried out by AGCOM. Such share is diversified in the various segments, and in particular it exceeds 76% of daily publishing. This quota is different for the various segments, and in the case of daily publishing reaches 75% of the overall market estimate.
Table 1.48. Representativeness of the sample of publishing companies (% 2007) Media publishing 63.3 Daily publishing 75.6 Magazine publishing 57.7 Electronic publishing 28.7
72 Source: FCP-Assoradio. 73 Audio/video contents are initially compressed and saved on a server as files. A user may request to the server the sending of the audio/video contents: data received are decompressed and reproduced shortly after the beginning of the reception. 74 In order to use the podcasting it is necessary to install a free software and then to select the podcasts of interest. The software, with the frequency decided by the user, makes a connection to the Internet and controls which files have been published by the sites which the user is subscribed to: in the event new files are available, the software download them. A feed is the means used to give information on the publication of new editions.
Source: corporate data processed by AGCOM Overview The financial results for 2008 are to be considered within the severe economic crisis that, in particular, in the second half of the year, caused serious consequences also on the real economy and adversely affected, beyond expectations, advertising investments. The overall revenues of the companies taken into consideration (5.4 billion euro in 2008) show a significant decrease for both daily and magazine publishing compared to the previous year (table 1.49).
Table 1.49. Total revenues of the main publishing companies (million euro)
% Var 2007 2008 % ‘08 ‘08/’07 Daily publishing 2,609 2,432 45.0 -6.8 Magazine publishing 2,158 2,010 37.2 -6.9 - weekly publishing 1,403 1,235 22.8 -11.9 - monthly publishing 755 775 14.3 2.6 Electronic publishing 176 211 3.9 20.2 Other revenues 787 752 13.9 -4.6 Total 5,730 5,405 100.0 -5.7 Source: corporate data processed by AGCOM Net revenues total 5,405 million, with a -5.7% on a like for like basis, compared to 2007. The decrease is due primarily to the progressive and strong reduction of the advertising expense in the second part of the year, in addition to the drop in circulation, in the sales of collateral and collectable products, that interested the whole sector. The trend of electronic publishing that, however, makes up for only 3.9 % of overall revenues, shows a 20% increase. Such value seems to prove the importance of investments aiming at boosting, in every business area of the sector, the growth of revenues from the use of information in electronic format in both on net and off net mode. With regard to the analysis of the typical activities (table 1.50), advertising revenues go down from 2,473 to 2,413 million (-2.4%), but remain by far the main source of revenues for the publishing groups (51.8%). The revenues from the selling of copies go down from 1,681 million in 2007 to 1,627 million (-3% on a like for like basis). It is to be pointed out also the significant drop in the revenues from collateral and collectable products, due to the reduced number of launches during 2008 because of the economic crisis. Table 1.50. Revenues from typical activities (million €) % Var. 2007 2008 ’08 % ‘08/’07 Selling of copies 1,677 1,627 35.0 -3.0 Advertising 2,473 2,413 51.8 -2.4 Collateral products 708 528 11.3 -25.5 Other 84 86 1.9 2.1 Total 4,943 4,654 100.0 -5.8 Source: corporate data processed by AGCOM The competitive structure of the sector as a whole remain essentially unchanged (table 1.51). RCS is in the leading position, followed by L’Espresso Publishing Group and by the Mondadori Group, which loses few tenths of percentage point gained by Sole 24 Ore.
Table 1.51. Overall revenues by company (%) 2007 2008 RCS Mediagroup 21.3 21.3 L’Espresso Publishing Group 18.6 18.6 Arnoldo Mondadori 18.3 17.7 Il Sole 24 ore 10.0 10.6 Caltagirone 4.9 4.8 Others 26.9 27.1 Total 100.0 100.0 Source: corporate data processed by AGCOM The Daily Press As already mentioned, the sample of publishing companies of dailies under examination, accounts for nearly 90% of the whole sector of daily press in terms of revenues. The analysis of the sample points out a decrease in the volume of copies sold and a significant drop in the number of copies circulated free of charge (table 1.52). The sample of companies taken into account includes about 40 dailies representing – in both value and volume – as previously stated, about 75% of the scenario of daily publishing on paper.
Table 1.52. Copies circulated (million) 2007 2008 % Var. ‘08/’07 Daily publishing – copies sold in Italy 1,527 1,498 -1.9 Free press – copies circulated 396 376 -5.1 Source: corporate data processed by AGCOM In 2008, dailies with a circulation over 100,000 copies recorded a drop in the copies sold of 3.26% compared to 200775. The decrease involves all the dailies. We pass from 6,088,379 average daily copies sold in 2007 to 5,876,585 in 2008, with an overall decrease by 3.48%. In particular, national dailies suffered more severely from such reduction, also following the choice to change some marketing strategies. Regional and multiregional dailies had a less marked drop compared to 2007, while in specialized dailies there were different trends for the various newspapers. The analysis of data concerning revenues in the daily sector (table 1.53) points out how the reduced revenues caused by the decrease of copies sold are only in part offset by the receipts received for the offer on payment of in-depth examination inserts.
Table 1.53. Daily publishing by type of revenue (million euro) 2007 2008 % ’08 % Var. ‘08/’07 Selling of copies 909 893 36.7 -1.7 Advertising 1,354 1,269 52.2 -6.3 Collateral products 347 270 11.1 -22.1 Total 2,609 2,432 100.0 -6.8 Source: corporate data processed by AGCOM Data concerning the revenues from the sale of advertising spaces are to be considered within the difficult general scenario of the market. Indeed, the change of the business cycle convinced investors to reduce their expense budgets and to postpone the launch of new products. In particular, the segment of dailies on payment decreased by 7.0% compared to the same period in 2008, with a significant drop in the sector of national commercial advertising (-10.7%), whereas local commercial advertising remained substantially unchanged (-0.8%)76.
75 Source: ADS. 76 Source: Nielsen, progressive data in December. Collateral products record an additional significant decrease (-22%). This result is now to be considered as a structural figure, due to the substantial market saturation of products sold together with dailies but also to a situation of general reduction of consumption by the families entailing a minor propensity to buy “cultural” products.
The sale of collateral products cannot offset any longer the decrease in revenues due to the slow- down in copies sold and to the reduction of the demand of sale of advertising spaces, accounting for only 11% of the revenue items by typical activity. These data and the definitely negative trend of revenues in the first months of 2009, are illustrative of a general crisis of the press sector due to different factors. The drop in demand amplified the existing imbalances on the demand of costs and revenues of publishing companies. The need to adopt strategies that can increase the competitive capacity of the operators in the sector in the new media market - through the offer of multimedia communications products - is as a matter of fact prevented from the current financial situation that does not allow to bear the costs connected to the necessary transformation of the production cycle. In order to face the situation and the market prospects, cost cutting measures have been adopted concerning mainly the reduction of promotional activities and labour cost, with the start of company reorganization plans. In addition to these aspects, related to the production structure of the sector, structural shortcomings that affect the distribution structure of the printed media and that prevent the development of effective product delivery systems. The comparison of the ratio between daily circulation and adult population (table 1.54) in Italy and in the other countries indicates clearly the critical factors pointed out. In spite of the positive development of free press, that, over the last few years, enabled to attract on printed media the attention of segment of the population not used to reading newspapers, the copies circulated in Italy are 193.4 every 1,000 citizens, a value well below that of other industrialized countries. Due to the limited operation of the distribution circuit, the main sales channel remain news- stands with a quota of subscriptions among the less developed worldwide as shown in table 1.55.
Table 1.54. Copies of dailies - on payment and free of charge - circulated per 1,000 adult inhabitants (2007)
Countries Pay Free Total 2007 2007 2007 Japan 624.1 0.8 624.9 Norway 580.3 - 580.3 Finland 491.0 45.7 536.7 Sweden 449.0 152.5 601.5 Switzerland 354.6 221.3 575.9 Austria 344.8 83.4 428.2 United Kingdom 308.0 50.5 358.5 Luxemburg 304.8 53.5 358.3 Germany 290.5 1.7 292.2 Denmark 279.8 367.5 647.3 The Netherlands 267.9 129.5 397.4 Ireland 236.1 46.5 282.6 Estonia 244.5 78 322.5 USA 212.6 13.1 225.7 Slovenia 189.7 16.2 205.9 Czech Republic 189.8 78.6 268.4 Canada 173.3 58.3 231.6 Turkey 96.7 - 96.7
Belgium 161.3 28.2 189.5 Lithuania 201.6 36.4 238.0 France 153.9 51.6 205.5 Hungary 135.2 34.4 169.6 Poland 123.3 15.7 139.0 Latvia 120.3 101.9 222.2 Italy 112.4 81 193.4 Spain 109.5 120.2 229.7 Croatia 142.7 73.4 216.1 Slovakia 116.1 - 116.1 China 107.6 1.1 108.7 Portugal 74.7 62.7 137.4 Bulgaria 98.2 - 98.2 Romania 77.8 16.4 94.2 Source: FIEG on Wan data, World Press Trends 2008
Table 1.55. Daily publishing: Sale channels (2007 in %) Countries Subscription Sales Sales at news-stand Austria 67 33 Belgium 49 51 Brazil 52 48 Korea 94 6 Denmark 84 16 Estonia (2006) 60 40 Finland 88 12 France 31 69 Germany 65 35 Japan 95 5 Greece 3 97 Ireland 9 91 Italy 9 91 Latvia 58 42 Luxemburg 70 10 (20)* Norway 78 22 The Netherlands 90 8 (2)* Poland 19 79 (3)* Czech Republic 32 68 Slovakia (2006) 35 65 Spain 23 72 (5)* Sweden 76 19 (5)* Switzerland 90 10 United States 75 17 (8)* Turkey 23 77 Hungary 65 33 (2)* * Other sales channels Source: FIEG on Wan data, World Press Trends 2008 Over the last few year, the decreased number of copies sold was offset, at least for dailies, by a positive trend of reading indexes. Indeed the number of readers went up also in 2008 with reference to almost all age brackets, as shown in table 1.56.
Table 1.56. Readers of dailies by age brackets 2007 (II) 2008 (I) Age pop. (*) %var. Readers % var. % pop. (*) %var. Readers % var. % brackets (000) average penetr. (000) average day day (000) 14-17 2,135 -1.5 798 -4.4 37.4 2,257 5.7 891 11.7 39.5 18-24 4,594 1.2 2,277 3.8 49.6 4,380 -4.7 2,196 -3.6 50.1 25-34 8,563 -0.5 4,105 0.0 47.9 8,185 -4.4 3,958 -3.6 48.4 35-44 9,467 0.0 4,388 2.9 46.4 9,641 1.8 4,655 6.1 48.3 45-54 7,773 0.2 3,905 0.0 50.2 8,014 3.1 4,011 2.7 50.0 55-64 7,099 0.1 3,240 -2.3 45.6 7,155 0.8 3,299 1.8 46.1 64 and 11,411 -0.1 4,085 5.5 35.8 11,766 3.1 4,267 4.5 36.3 over Source: Audipress In view of the growing need for advertising agents to obtain quality information on the relation between readers and newspapers, Audipress, the company carrying out surveys on circulation and reading indexes for the press, changed, as an experiment, the questionnaire in order to include a part concerning the web and another one on the engagement (qualitative). The section devoted to the web establishes the duplication of readers reading the same newspaper both on paper and on line. The other qualitative section aims at measuring the relation existing between the reader and the newspaper, as well as at providing different information, such as the reasons that persuaded him to read the newspaper, the clarity of the language and the usefulness of the articles in expanding on specific subjects. Nowadays, almost all newspapers - both daily and magazine – are available also with an on-line edition on the Internet. The last report by Audiweb (June 2009) on the digital consumption of the Italian people, points out that among the news and information websites, those run by daily publishers are among the most visited. According to Audiweb data of April 2009, in the average day, the daily websites have 3.4 million contacts and over 36 million page views (table 1.57).
Table 1.57. Dailies - Internet accesses in the average day, April 2009 (thousand) Daily websites Single users Page views La Repubblica 915 12,606 Corriere della Sera 854 10,694 La Gazzetta dello Sport 468 3,830 Il Sole 24 Ore 254 1,951 Editrice La Stampa 203 1,929 Corriere dello Sport 113 1,179 Il Messaggero 100 543 Il Giornale 99 496 TuttoSport 65 535 L'Unita Online 56 429 UnioneSarda 40 412 Il Mattino 35 452 Il Tempo 32 84 Il Secolo XIX 29 221 Il Resto del Carlino 28 117 Leggo 21 274 La Gazzetta del Mezzogiorno 15 85 LaSicilia.it 12 68 La Nazione 12 31 Il Quotidiano della Calabria 11 70 Il Giorno 11 25 Gazzettadiparma.it 11 93 Gazzetta del Sud 10 46 Il Foglio.it 10 32 Total 3,403 36,202 Source: Audiweb on Nielsen data For the first time Corriere.it and Repubblica.it are mentioned by Web Trend 2009, the map of the Internet’s leading names and domains. The map - carried out using the architecture of Tokyo subway - is produced every four years by Information Architects, based on a set of parameters: traffic of the domain, revenues, years of presence on the web, publisher. The map includes the leading Internet 333 websites and 111 personalities. These results are a clear sign that on-line publishing has become a natural integration of traditional publishing. The avowed aim of the main publishing groups is to boost the growth of revenues in the digital market, hinging upon the reliability that printed newspapers gained over time. The new distribution platforms offer to publishers, on the one hand, to define the editorial lines in tune with the preferences of the audience, on the other hand, to invest in the VAS area (value added services). However, print media seems destined to remain the hub of publishing activities, until the on-line turnover reaches an amount that justifies the adoption of different company strategies. As already pointed out, the crisis of the publishing sector, affecting turnovers and margins of the companies, does not reduce the number of contacts between dailies and the public, thanks also to a process of offer diversification. However, the value of information contents and the future of on-line newspapers are the subjects of very heated debate. Rupert Murdoch has recently announced his plans to introduce charges for access to all News Corporation’s newspaper websites following the Wall Street Journal’s experience. Pay websites could be the prelude to a U-turn also in terms of cultural model, with immediate effects on the future of information, on paper and digital. Murdoch’s initiative arrives in a very ticklish moment of print media, all over the world, companies of the sector are facing a systemic crisis, sparked off by the slump in advertising and by the precipitous sales decline, obliging companies to carry out painful reorganisations. On the other hand, it goes without saying that receipts of on line advertising are not enough to overcome the crisis. In the management of digital information, the challenge for publishing companies of dailies will be to find a way to charge some contents - without losing readers - by identifying the information products on which an additional charge can be asked for their use. In the digital era, newspapers capable of developing their traditional relationship with readers will be successful. A key role will be played once again by the confidence bond between readers and contents distributed as printed products, quality journalism, distributed through the different platforms and customised according to different needs and interests. For publishing companies the attempt to impose this business model, will mean, on the one hand, to ask users to pay for the on-line access to the newspaper, on the other hand, to exploit the growing use of the so-called mobile readers. The business model for print media appears to be similar to the model introduced in the mobile telephone sector. After fifteen years of free news on the web, publishers started to look at the world of mobile phones with interest: since the beginning mobile users have been used to paying for services used. The cutting production costs, from paper to news distribution, will enable publishers to save and thus to offer advantageous prices to their customers. Such model will be strongly influenced by the spreading of electronic devices, so as to reach a large part of the public, and by the willingness of the users - now accessing news on line for free - to pay for services provided on the electronic devices. Finally, from the analysis of the competitive structure of the Italian market of daily publishing (table 1.58), it emerges the substantial equivalence of the share of the two main publishing groups (L’Espresso Group and RCS Mediagroup), whereas the other groups keep the positions already stabilized in 2007. The consolidation of the market shares is evidenced by the trend of the concentration index (HHI) which remains almost the same, on modest values, below 2,000 points.
Table 1.58 Market share in daily publishing 2007 2008 L’Espresso Publishing Group 27.2 27.2 RCS Mediagroup 26.4 27.1 Il Sole 24 ore 11.5 11.6 Caltagirone 10.5 10.5 Poligrafici Editoriale 8.5 8.6 Others 16.0 14.9 Total 100.0 100.0 Herfindahl-Hirschman Index (HHI) 1815.0 1820.0 Million euro 2,609 2,598 Source: corporate data processed by AGCOM In 2008 overall net circulations77 decreased by 2.4%, a reduction that net of free press becomes more noticeable (-2.6%) (table 1.59).
Table 1.59 Daily publishing - net circulations (million copies) 2007 2008 % Var. ‘08/’07 Overall copies 3,681.9 3,593.8 -2.4 Copies net of free press 3,026.4 2,947.1 -2.6
Source: Data of the Informativa Economica di Sistema (Media & Communications Industry Database) processed by AGCOM With regard to data of the main publishing groups – with the detail for each newspaper for 2008 showed in the following tables 1.62-1.63-1.64-1.65 – it is to be pointed out the slow-down in the overall net circulation (-3.2%) which is definitely higher than the average of the other publishing companies of dailies (-1.7%), and it is even more dramatic for the two main publishing groups: RCS and L’Espresso Publishing Group (table 1.60).
Table 1.60. Net circulation of the main publishing groups (million copies) % Var 2007 2008 ‘08/07 RCS Group Overall copies 709.3 679.0 -4.3 Net of free press 545.2 529.0 -3.0 L'Espresso Publishing Overall copies 463.1 439.8 -5.0 Group Net of free press 463.1 439.8 -5.0 Caltagirone Group Overall copies 371.5 371.7 0.0 Net of free press 210.2 205.5 -2.3 Monti Group Overall copies 177.7 176.4 -0.8 Net of free press 177.7 176.4 -0.8 Total Overall copies 1,721.7 1,666.8 -3.2 Net of free press 1,396.3 1,350.5 -3.3
77 Total number of printed copies net of printing rejects. The reduction in the volumes of net circulations influenced also the market share of the companies taken into consideration that in 2008 record a slight drop compared to the previous year, accounting for a slightly more than 46% with reference both to overall circulation and net of free press (figure 1.61).
Table 1.61. Net circulations – market shares (%) 2007 2008 RCS Group Overall copies 19.26 18.89 Net of free press 18.10 18.03 L'Espresso Publishing Group Overall copies 12.58 12.24 Net of free press 15.38 14.99 Caltagirone Group Overall copies 10.09 10.34 Net of free press 6.98 7.00 Monti Group Overall copies 4.83 4.91 Net of free press 5.90 6.01 Total Overall copies 46.76 46.38 Net of free press 46.36 46.04 Source: Data of the Informativa Economica di Sistema (Media & Communications Industry Database) processed by AGCOM In order to complete the market situation with more detailed information, tables on Italian and interregional basis with data concerning the circulation of each daily newspaper belonging to the major publishing groups are provided. Such data refer to 2008 (tables 1.62; 1.63; 1.64; 1.65).
Table 1.62. Caltagirone Group Net Italy North North Centre South Newspaper Circulation % West % East% % % Corriere Adriatico 8,693,585 0.24 0.74 Il Gazzettino 40,963,192 1.14 11.53 Il Mattino 38,911,167 1.08 8.48 Il Messaggero 105,530,160 2.94 9.00 Leggo 166,247,014 4.63 14.17 Nuovo Quotidiano di Puglia 9,109,646 0.25 1.99 Quotidiano di Lecce, Brindisi, Taranto 900 0.00 0.00 Tuttomarket 2,242,893 0.06 0.49 Total 371,698,557 10.34 Source: Data of the Informativa Economica di Sistema (Media & Communications Industry Database) processed by AGCOM
Table 1.63. L’Espresso Publishing Group Net Italy North North Centre South Newspapers Circulation % West% East% % % Gazzetta di Mantova 13,941,264 0.39 0.87 Gazzetta di Reggio 6,086,788 0.17 1.71 Il Centro 11,027,782 0.31 0.94 Il Lunedì de 36,270,784 1.01 3.09 La Repubblica Il Mattino di Padova 13,540,277 0.38 3.81 Il Piccolo 15,029,805 0.42 4.23 Il Piccolo del Lunedì 2,282,250 0.06 0.64 Il Tirreno 36,721,264 1.02 3.13 La Città-Quotidiano 0.11 0.88 di Salerno e Provincia 4,051,558 La Nuova di Venezia e Mestre 6,153,889 0.17 1.73 La Nuova Ferrara 5,054,507 0.14 1.42 La Nuova Sardegna 25,930,803 0.72 5.65 La Provincia Pavese 8,424,425 0.23 0.52 La Repubblica 219,627,423 6.11 18.72 La Tribuna di Treviso 8,479,924 0.24 2.39 Messaggero del Lunedì 3,060,905 0.09 0.86 Messaggero Veneto 18,985,577 0.53 5.34 Nuova Gazzetta di Modena 5,105,709 0.14 1.44 Total 439,774,934 12.24
Source: Data of the Informativa Economica di Sistema (Media & Communications Industry Database) processed by AGCOM
Table 1.64. Monti Publishing Group Net Italy North North Centre South Newspapers Circulation % West% East% % % Il Giorno 38,692,691 1,08 2.41 Il Resto Del Carlino 74,239,648 2,07 20.90 La Nazione 63,423,806 1,76 5.41 Total 176,356,145 4,91
Source: Data of the Informativa Economica di Sistema (Media & Communications Industry Database) processed by AGCOM
Table 1.65. RCS Group Net Italy North North Centre South Newspapers Circulation % West% East% % % City Bari 6,129,000 0.17 0.38 City Bologna 7,598,500 0.2 0.47 City Firenze 7,570,000 0.21 0.47 City Genova 6,512,000 0.18 0.41 City Milano 44,568,774 1.24 2.77 City Napoli 13,420,000 0.37 0.84 City Roma 38,252,000 1.06 2.38 City Torino 15,730,200 0.44 0.98 City Verona 2,662,000 0.07 0.17 Corriere Del Mezzogiorno12,465,848 0.35 2.72 Corriere Del Mezzogiorno 0.28 Bari e Puglia 10,087,623 2.20 Corriere Del Trentino 2,695,174 0.07 0.76 Corriere Del Veneto 22,758,339 0.63 6.41 Corriere Della Sera 280,149,608 7.80 17.44 Corriere Della Sera 0.26 0.58 Anteprima 9,277,728 Corriere Dell’Alto Adige 1,793,329 0.05 0.50 La Gazzetta Dello Sport 191,250,604 5.32 11.90 Mezzogiorno Economia 2,041,774 0.06 0.45 Total 674,962,501 18,89
Source: Data of the Informativa Economica di Sistema (Media & Communications Industry Database) processed by AGCOM Table 1. Daily Newspapers: Nationwide Circulation (2008)
Publisher Gross circulation Net circulation % of Name nationwide circulation 24’VENTIQUATTROMINUTI IL SOLE 24 ORE S.p.A. 64,390,550 60,538,585 1.68 ALTOADIGE/CORRIERE DELLE ALPI/TRENTINO S.E.T.A. Società Editrice Tipografica 17,479,398 16,540,262 0.46 S.E.T.A. Atesina - Società per Azioni, (the achronim is S.E.T.A. S.p.A.) AVVENIRE AVVENIRE NUOVA EDITORIALE ITALIANA 49,485,299 46,731,006 1.30 SPA BRESCIAOGGI EDIZIONI BRESCIA S.P.A. 6,484,305 6,039,880 0.17 BUONGIORNO CAMPANIA Dossier soc. coop. d’inf. serv. e pubb. 1,655,609 1,655,609 0.05 relaz CITY BARI CITY ITALIA S.P.A. 6,517,218 6,129,000 0.17 CITY BOLOGNA CITY ITALIA S.P.A. 8,061,840 7,598,500 0.21 CITY FIRENZE CITY ITALIA S.P.A. 8,288,450 7,570,000 0.21 CITY GENOVA CITY ITALIA S.P.A. 6,805,197 6,512,000 0.18 CITY MILANO CITY ITALIA S.P.A. 46,504,521 44,568,774 1.24 CITY NAPOLI CITY ITALIA S.P.A. 13,976,047 13,420,000 0.37 CITY ROMA CITY ITALIA S.P.A. 39,749,093 38,252,000 1.06 CITY TORINO CITY ITALIA SPA 16,295,645 15,730,200 0.44 CITY VERONA CITY ITALIA SPA 3,042,330 2,662,000 0.07 CONQUISTE DEL LAVORO CONQUISTE DEL LAVORO SRL 19,338,850 19,338,850 0.54 CORRIERE COOPERATIVA EDITORIALE GIORNALI 5,048,800 5,048,800 0.14 ASSOCIATI A R.L. CORRIERE ADRIATICO Società Editoriale Adriatica S.p.a. 10,356,449 8,693,585 0.24 CORRIERE DEL GIORNO DI PUGLIA E LUCANIA Cooperativa 3,811,925 3,706,589 0.10 CORRIERE DEL MEZZOGIORNO EDITORIALE DEL MEZZOGIORNO S.r.l 13,412,745 12,465,848 0.35 CORRIERE DEL MEZZOGIORNO - BARI E EDITORIALE DEL MEZZOGIORNO S.r.l 10,528,112 10,087,623 0.28 PUGLIA CORRIERE DEL TRENTINO EDITORIALE TRENTINO ALTO ADIGE 2,861,445 2,695,174 0.07 S.R.L. CORRIERE DEL VENETO EDITORIALE VENETO S.R.L. 24,209,568 22,758,339 0.63 CORRIERE DELLA SERA R.C.S. EDITORI S.P.A. 295,657,064 280,149,608 7.80 CORRIERE DELLA SERA - Anteprima R.C.S. EDITORI S.P.A. 9,635,150 9,277,728 0.26 CORRIERE DELL'ALTO ADIGE EDITORIALE TRENTINO ALTO ADIGE 2,065,460 1,793,329 0.05 S.R.L. CORRIERE DELLO SPORT STADIO CORRIERE DELLO SPORT S.R.L. 145,718,731 136,855,109 3.81 CORRIERE DI CASERTA LIBRA EDITRICE PICCOLA SOC. COOP. A 5,323,290 4,723,819 0.13 R.L. CORRIERE DI COMO EDITORIALE SRL. 4,159,400 4,159,400 0.12 CORRIERE MERCANTILE GIORNALISTI E POLIGRAFICI COOP. R.L. 5,146,073 4,288,235 0.12 CRONACAQUI.IT EDITORIALE ARGO Societa’ Cooperativa 19,270,299 18,121,985 0.50 CRONACHE DI LIBERAL EDIZIONI DEL MEZZOGIORNO S.r.l 8,251,039 6,739,937 0.19 CRONACHE DI NAPOLI LIBRA EDITRICE PICCOLA SOC. COOP. A 6,208,079 5,594,101 0.16 R.L. DEMOCRAZIA CRISTIANA BALENA BIANCA PICCOLA S.C.A.R.L. 1,044,000 1,044,000 0.03 DIE NEUE SUEDTIROLER TAGESZEITUNG DIE NEUE SUEDTIROLER TAGESZEITUNG 2,782,500 2,650,000 0.07 S.R.L.“G.M.B.H” DOLOMITEN ATHESIA DRUCK S.R.L. 18,165,690 17,038,118 0.47 E Polis E POLIS S.p.A. 149,485,386 139,525,010 3.88 EDITORIALE OGGI NUOVA EDITORIALE OGGI S.r.l 7,535,452 7,535,452 0.21 EUROPA EDIZIONI DLM EUROPA 14,486,013 13,073,698 0.36 SOCIETA’ P.A. EDITRICE DEL SUD - 1,801,342 1,801,342 0.05 GAZETA SHQIPTARE EDISUD S.p.A. GAZZETTA ASTE E APPALTI PUBBLICI EDITRICE S.I.F.I.C. SOCIETA’ ITALIANA 1,019,420 1,011,920 0.03 FINANZIARIA IMMOBILIARE E COMMERCIALE S.r.l. GAZZETTA DEL LUNEDI’ GIORNALISTI E POLIGRAFICI COOP. R.L. 1,151,314 1,029,592 0.03 GAZZETTA DEL SUD SOCIETÀ EDITRICE SICILIANA 25,490,470 24,385,503 0.68 GAZZETTA DI MANTOVA FINEGIL EDITORIALE S.P.A. 14,327,965 13,941,264 0.39 GAZZETTA DI REGGIO FINEGIL EDITORIALE S.P.A. 6,196,050 6,086,788 0.17 GIORNALE DI BRESCIA EDITORIALE BRESCIANA S.P.A. 21,521,502 21,521,502 0.60 GIORNALE DI SICILIA GIORNALE DI SICILIA EDITORIALE 31,781,201 29,972,845 0.83 POLIGRAFICA S.P.A. IL CAMPANILE NUOVO SOCIETÀ COOPERATIVA EDITRICE IL 739,354 533,571 0.01 CAMPANILE NUOVO A R.L. IL CENTRO FINEGIL EDITORIALE S.P.A. 11,739,159 11,027,782 0.31 IL CITTADINO EDITORIALE LAUDENSE S.R.L. 4,606,876 3,978,725 0.11 IL CITTADINO OGGI EDITRICE GRAFIC COOP. SOCIETÀ 14,841,500 13,896,500 0.39 COOPERATIVA DI GIORNALISTI A R.L. IL DENARO EDIZIONI DEL MEDITERRANEO S. C. 2,802,545 2,535,117 0.07 GIORNALISTICA A R.L. IL DOMANI T. & P. EDITORI S.R.L. 1,964,800 1,738,400 0.05 IL FOGLIO QUOTIDIANO Il Foglio quotidiano scarl 28,109,038 25,141,998 0.70 IL GAZZETTINO SOCIETA' EDITRICE PADANA S.P.A. 43,670,040 40,963,192 1.14 IL GIORNALE SOCIETÀ EUROPEA DI EDIZIONI S.P.A. 112,886,819 105,604,165 2.94 IL GIORNALE DELL'EMILIA ROMAGNA GIORNALE DI REGGIO SRL 1,398,566 1,398,566 0.04 IL GIORNALE DELL'UMBRIA GRUPPO EDITORIALE UMBRIA 1819 S.R.L. 2,364,800 2,364,800 0.07 IL GIORNALE DI CALABRIA EDITORIALE '91 S.C.R.L. 271,700 271,700 0.01 IL GIORNALE DI VICENZA SOCIETÀ ATHESIS S.P.A. 19,257,791 18,585,990 0.52 IL GIORNALE NUOVO DELLA TOSCANA SOCIETÀ TOSCANA DI EDIZIONI S.P.A. 4,721,900 4,721,900 0.13 IL GIORNO POLIGRAFICI EDITORIALE S.P.A. 41,632,395 38,692,691 1.08 IL LUNEDÌ DE LA REPUBBLICA GRUPPO EDITORIALE L'ESPRESSO S.P.A. 37,258,055 36,270,784 1.01 IL MANIFESTO QUOTIDIANO COMUNISTA IL MANIFESTO COOPERATIVA EDITRICE 27,975,238 26,519,773 0.74 S.C.R.L. IL MATTINO EDI.ME. EDIZIONI MERIDIONALI SPA 40,694,253 38,911,167 1.08 IL MATTINO DI PADOVA FINEGIL EDITORIALE SPA 14,106,468 13,540,277 0.38 IL MESSAGGERO IL MESSAGGERO SPA 112,340,794 105,530,160 2.94 IL NUOVO CORRIERE EDITORIALE 2000 SRL 5,168,674 3,966,737 0.11 IL NUOVO GIORNALE DI BERGAMO BERGAMO INIZIATIVE EDITORIALI S.R.L. 1,103,700 959,700 0.03 IL NUOVO RIFORMISTA EDIZIONI RIFORMISTE PIC. SOC. COOP A 9,035,277 7,522,194 0.21 R.L. IL PICCOLO EDITORIALE FVG S.P.A. 15,760,355 15,029,805 0.42 IL PICCOLO DEL LUNEDÌ EDITORIALE FVG S.P.A. 2,393,350 2,282,250 0.06 IL QUOTIDIANO FINANZIARIA EDITORIALE S.R.L. 8,748,869 8,176,189 0.23 IL QUOTIDIANO DEL GOLFO Soc. Coop. a. r.l. Giornalisti Stampa Locale 122,800 113,691 0.00 Ischia IL RESTO DEL CARLINO POLIGRAFICI EDITORIALE S.p.A. 81,486,046 74,239,648 2.07 IL ROMANISTA I ROMANISTI S.r.l 5,091,707 4,265,185 0.12 IL SALERNITANO ARCADIO società cooperativa 1,004,353 1,004,353 0.03 IL SANNIO QUOTIDIANO PAGINE SANNITE SCRL 3,060,721 2,570,781 0.07 IL SECOLO XIX SOCIETA' EDIZIONI E PUBBLICAZIONI 49,502,632 44,965,419 1.25 S.P.A. IL SOLE 24 ORE IL SOLE 24 ORE S.P.A. 151,401,955 141,488,363 3.94 IL TEMPO SOCIETA' EDITRICE IL TEMPO SPA 29,847,874 27,455,072 0.76 IL TIRRENO FINEGIL EDITORIALE S.p.A. 40,055,674 36,721,264 1.02 IMPRESA ARTIGIANA EDITART S.r.l 154,750 154,750 0.00 INCITTA’ E DINTORNI BRESCIA NUOVA EDITORIALE S.r.l 3,440,760 2,980,500 0.08 INCITTA’ E DINTORNI VICENZA NUOVA EDITORIALE S.r.l 2,918,330 2,316,700 0.06 INCITTA’ VERONA NUOVA EDITORIALE S.r.l 3,755,562 3,327,400 0.09 IO L'IMPRESA EDITORIALE ARTIGIANATO E PICCOLA 1,021,180 960,955 0.03 IMPRESA EMILIA ROMAGNA SRL ITALIA SERA GIORNALISTI & POLIGRAFICI ASSOCIATI 1,059,313 828,042 0.02 SCRL ITALIAOGGI ITALIA OGGI EDITORI ERINNE S.r.l 37,169,383 37,169,383 1.03 LA CITTÀ-QUOTIDIANO DI SALERNO E EDITORIALE LA CITTÀ S.P.A. 4,321,258 4,051,558 0.11 PROVINCIA LA CRONACA COOPERATIVA NUOVA INFORMAZIONE A 3,680,000 3,680,000 0.10 R.L. LA DISCUSSIONE - QUOTIDIANO DELL'UDC EDITRICE EUROPA OGGI S.R.L. 3,417,288 3,161,788 0.09 LA GAZZETTA DEL MEZZOGIORNO SOCIETÀ P.A. EDITRICE DEL SUD - 24,196,696 22,952,126 0.64 EDISUD S.P.A. LA GAZZETTA DELLO SPORT R.C.S. EDITORI S.P.A. 201,137,728 191,250,604 5.32 LA GAZZETTA DI TARANTO SOCIETA' P.A. EDITRICE DEL SUD - 1,549,088 1,436,365 0.04 EDISUD SPA LA NAZIONE POLIGRAFICI EDITORIALE S.P.A. 71,085,641 63,423,806 1.76 LA NUOVA DEL SUD ALICE MULTIMEDIALE SRL 371,642 371,642 0.01 LA NUOVA DI VENEZIA E MESTRE FINEGIL EDITORIALE SPA 6,562,315 6,153,889 0.17 LA NUOVA FERRARA FINEGIL EDITORIALE SPA 5,158,158 5,054,507 0.14 LA NUOVA SARDEGNA EDITORIALE LA NUOVA SARDEGNA S.p.A. 26,561,752 25,930,803 0.72
LA PADANIA – LA VOCE DEL NORD EDITORIALE NORD Soc. Coop. a r.l. 19,876,687 18,755,042 0.52 LA PREALPINA LA PREALPINA S.r.l. 9,348,583 7,934,944 0.22 LA PROVINCIA LA PROVINCIA DI COMO EDITORIALE 21,216,503 19,858,888 0.55 S.p.A. LA PROVINCIA S.E.C. SOCETÀ EDITORIALE CREMONESE 10,116,916 10,116,916 0.28 S.P.A. LA PROVINCIA PAVESE E.A.G. S.P.A. 8,927,813 8,424,425 0.23 LA PROVINCIA QUOTIDIANO EFFE COOPERATIVA EDITORIALE A R.L. 3,698,010 3,698,010 0.10 LA REPUBBLICA GRUPPO EDITORIALE L'ESPRESSO S.p.A. 225,931,128 219,627,423 6.11 LA SICILIA DOMENICO SANFILIPPO EDITORE S.p.A. 30,537,341 29,128,872 0.81 LA STAMPA EDITRICE LA STAMPA S.p.A. 156,359,294 149,761,448 4.17 LA TRIBUNA DI TREVISO FINEGIL EDITORIALE S.p.A. 8,866,867 8,479,924 0.24 LA VERITÀ EDITORIALE LA VERITÀ S.C. GIORN. R.L. 5,413,723 4,384,884 0.12 LA VOCE IMPEGNO SOCIALE PICCOLA SOC. COOP 1,143,073 898,085 0.02 GIORN. A R.L. LA VOCE DELLA CITTÀ TARANTO LE NEWS L'EDITORIALE S.R.L. 1,826,700 1,602,600 0.04 DELLA SERA LA VOCE DI MANTOVA VIDIEMME SCARL 1,798,800 1,798,800 0.05 LA VOCE DI ROMAGNA EDITRICE LA VOCE S.R.L. 5,947,664 4,346,055 0.12 LA VOCE NUOVA COOPERATIVA EDITORIALE 2,538,099 1,935,173 0.05 INFORMAZIONE STAMPA C.E.I.S. SOC. COOP. ARL LA VOCE REPUBBLICANA NUOVE POLITICHE EDITORIALI PICC. 539,943 352,280 0.01 SOC. COOP GIORN. ARL L'ADIGE S.I.E. S.P.A. SOCIETÀ INIZIATIVE 12,010,813 11,596,045 0.32 EDITORIALI L'AGENZIA DI VIAGGI LIBERI EDITORI S.r.l. 583,657 583,657 0.02 L’ALTRO FAX EDIGIORNALISTI - SOCIETÀ 53,800 53,800 0.00 COOPERATIVA GIORNALISTICA A R.L. L'ARENA SOCIETA' ATHESIS SPA 21,829,892 21,180,400 0.59 L'AVANTI! INTERNATIONAL PRESS SCRL 4,278,858 3,879,448 0.11 L'AVVISATORE MARITTIMO L'AVVISATORE MARITTIMO SRL 367,350 299,999 0.01 L’ECO DI BERGAMO SASAAB SpA 23,554,986 22,786,176 0.63 LEGGO SIGMA EDITORIALE S.p.A. 174,999,997 166,247,014 4.63 LIBERAZIONE GIORNALE COMUNISTA M.R.C. S.r.l. 26,976,426 24,681,086 0.69 LIBERTÀ, LIBERTÀ LUNEDÌ SETTIMO NUMERO STABILIMENTO TIPOGRAFICO 13,354,706 12,645,304 0.35 DI LIBERTÀ PIACENTINO SAPA L'INFORMAZIONE - IL DOMANI (former IL EDITORIALE BOLOGNA SRL 1,533,900 1,533,900 0.04 DOMANI DI BOLOGNA) L'OPINIONE DELLE LIBERTÀ AMICI DE L’OPINIONE SOC.COOP.GIORN. 1,257,792 927,000 0.03 A R.L. L'UMANITÀ EDIZIONI RIFORMISTE S.C.R.L. 2,048,045 1,629,008 0.05 L'UNIONE SARDA L'UNIONE SARDA S.p.A. 30,544,280 29,368,967 0.82 L’UNITA’ NUOVA INIZIATIVA EDITORIALE S.p.A. 50,947,955 45,713,053 1.27 MESSAGGERO DEL LUNEDÌ EDITORIALE FVG S.P.A. 3,339,505 3,060,905 0.09 MESSAGGERO VENETO EDITORIALE FVG S.P.A. 20,743,082 18,985,577 0.53 METRO EDIZIONI METRO S.r.l. 147,733,092 144,067,759 4.01 METROPOLI DAY (former METROPOLI) SETTE MARI PICCOLA SCARL 684,100 684,100 0.02 METROPOLIS STAMPA DEMOCRATICA 95 SCRL 3,445,760 3,193,232 0.09 MEZZOGIORNO ECONOMIA EDITORIALE VESUVIO S.r.l. 2,180,556 2,041,774 0.06 MF MILANO FINANZA MILANO FINANZA EDITORI S.P.A. 20,939,723 20,939,723 0.58 NEW BET COEDIP SCRL 6,349,193 5,479,866 0.15 NOTIZIE VERDI (AGENZIA QUOTIDIANA DI UNDICIDUE S.r.l. 2,809,100 2,809,100 0.08 INFORMAZIONE DEI VERDI ITALIANI) NUOVA GAZZETTA DI CASERTA edizioni giornali quotidiani piccola soc. 1,545,178 1,107,522 0.03 coop. a r.l. NUOVA GAZZETTA DI MODENA FINEGIL EDITORIALE SPA 5,274,706 5,105,709 0.14 NUOVO CORRIERE BARISERA EDITORIALE GIORNALISTI ASSOCIATI 725,324 534,692 0.01 SCRL NUOVO OGGI EDITORIALE CIOCIARIA OGGI Sr.l. 2,941,841 2,941,841 0.08 NUOVO QUOTIDIANO DI PUGLIA ALFA EDITORIALE S.r.l. 9,667,989 9,109,646 0.25 OPINIONE NUOVE LIBERO QUOTIDIANO C.E.L. COOPERATIVA EDITORIALE LIBERO 75,666,691 69,447,184 1.93 PICCOLA S.C.R.L. ORE 12 CENTRO STAMPA REGIONALE SOC.COOP A 488,049 382,665 0.01 R.L. OTTOPAGINE L'APPRODO S.R.L. 1,653,460 1,653,460 0.05 PRIMORSKI DNEVNIK PRAE PRA Promozione Attività Editoriale srl 3,383,250 3,241,012 0.09 PUBLIPRESS PROMOSET S.R.L. 1,900,000 1,635,000 0.05 PUGLIA QUOTIDIANO DI VITA REGIONALE essepi s.c. a r.l. 1,056,340 1,024,650 0.03 QUOTIDIANO DELLE REGIONI EDITORIALE ABRUZZO SOC. COOP. 1,444,250 1,416,367 0.04 QUOTIDIANO DI FOGGIA E BARI EDITORIALE NUOVA COMUNICAZIONE 7,800,000 6,800,000 0.19 Sr.l. QUOTIDIANO DI LECCE, BRINDISI, TARANTO ALFA EDITORIALE Sr.l. 1,809 900 0.00 QUOTIDIANO DI SICILIA EDISERVICE Sr.l. 6,725,417 6,364,500 0.18 RINASCITA RINASCITA SOC. COOP. ED A R.L. 5,099,903 4,528,096 0.13 ROMA EDIZIONI DEL ROMA SOC. COOP. A R.L. 7,622,356 6,453,340 0.18 SCUOLA E INSEGNANTI EDITORIALE BM ITALIANA Sr.l. 285,000 285,000 0.01 SCUOLA SNALS EDITORIALE BM ITALIANA Sr.l. 9,714,500 9,714,500 0.27 SECOLO D'ITALIA SECOLO D'ITALIA 4,551,411 3,708,733 0.10 STAFFETTA QUOTIDIANA RIP RIVISTA ITALIANA PETROLIO S.R.L. 403,332 338,672 0.01 TUTTOMERCATO ALFA EDITORIALE SRL 2,301,469 2,242,893 0.06 TUTTOSPORT Nuova Editoriale Sportiva S.r.l. 75,514,504 71,055,613 1.98 3,813,673,699 3,593,838,293 100.00
Table 2. Daily Newspapers: North-West Interregional circulation Piedmont, Valle D’aosta, Lombardy, Liguria (2008)
Name Publisher Gross circulation Net circulation % of circulation in the area 24’VENTIQUATTROMINUTI IL SOLE 24 ORE S.p.A. 64,390,550 60,538,585 3,77 AVVENIRE AVVENIRE NUOVA EDITORIALE ITALIANA 49,485,299 46,731,006 2,91 SPA BRESCIAOGGI EDIZIONI BRESCIA S.P.A. 6,484,305 6,039,880 0.38 CITY BARI CITY ITALIA S.P.A. 6,517,218 6,129,000 0.38 CITY BOLOGNA CITY ITALIA S.P.A. 8,061,840 7,598,500 0.47 CITY FIRENZE CITY ITALIA S.P.A. 8,288,450 7,570,000 0.47 CITY GENOVA CITY ITALIA S.P.A. 6,805,197 6,512,000 0.41 CITY MILANO CITY ITALIA S.P.A. 46,504,521 44,568,774 2.77 CITY NAPOLI CITY ITALIA S.P.A. 13,976,047 13,420,000 0.84 CITY ROMA CITY ITALIA S.P.A. 39,749,093 38,252,000 2.38 CITY TORINO CITY ITALIA SPA 16,295,645 15,730,200 0.98 CITY VERONA CITY ITALIA SPA 3,042,330 2,662,000 0.17 CORRIERE DELLA SERA R.C.S. EDITORI S.P.A. 295,657,064 280,149,608 17.44 CORRIERE DELLA SERA - Anteprima R.C.S. EDITORI S.P.A. 9,635,150 9,277,728 0.58 CORRIERE DI COMO EDITORIALE SRL. 4,159,400 4,159,400 0.26 CORRIERE MERCANTILE GIORNALISTI E POLIGRAFICI COOP. R.L. 5,146,073 4,288,235 0.27 CRONACAQUI.IT EDITORIALE ARGO Societa’ Cooperativa 19,270,299 18,121,985 1.13 GAZZETTA DI MANTOVA FINEGIL EDITORIALE S.P.A. 14,327,965 13,941,264 0.87 GIORNALE DI BRESCIA EDITORIALE BRESCIANA S.P.A. 21,521,502 21,521,502 1.34 IL CITTADINO EDITORIALE LAUDENSE S.R.L. 4,606,876 3,978,725 0.25 IL FOGLIO QUOTIDIANO Il Foglio quotidiano scarl 28,109,038 25,141,998 1.56 IL GIORNALE SOCIETÀ EUROPEA DI EDIZIONI S.P.A. 112,886,819 105,604,165 6.57 IL GIORNO POLIGRAFICI EDITORIALE S.P.A. 41,632,395 38,692,691 2.41 IL NUOVO GIORNALE DI BERGAMO BERGAMO INIZIATIVE EDITORIALI S.R.L. 1,103,700 959,700 0.06 IL SECOLO XIX SOCIETA' EDIZIONI E PUBBLICAZIONI 49,502,632 44,965,419 2.80 S.P.A. IL SOLE 24 ORE IL SOLE 24 ORE S.P.A. 151,401,955 141,488,363 8.81 ITALIAOGGI ITALIA OGGI EDITORI ERINNE S.r.l 37,169,383 37,169,383 2.31 LA CRONACA COOPERATIVA NUOVA INFORMAZIONE A 3,680,000 3,680,000 0.23 R.L. LA GAZZETTA DELLO SPORT R.C.S. EDITORI S.P.A. 201,137,728 191,250,604 11.90 LA PADANIA – LA VOCE DEL NORD EDITORIALE NORD Soc. Coop. a r.l. 19,876,687 18,755,042 1.17 LA PREALPINA LA PREALPINA S.r.l. 9,348,583 7,934,944 0.49 LA PROVINCIA LA PROVINCIA DI COMO EDITORIALE S.p.A. 21,216,503 19,858,888 1.24 LA PROVINCIA S.E.C. SOCETÀ EDITORIALE CREMONESE 10,116,916 10,116,916 0.63 S.P.A. LA PROVINCIA PAVESE E.A.G. S.P.A. 8,927,813 8,424,425 0.52 LA STAMPA EDITRICE LA STAMPA S.p.A. 156,359,294 149,761,448 9.32 LA VOCE DI MANTOVA VIDIEMME SCARL 1,798,800 1,798,800 0.11 L'AVVISATORE MARITTIMO L'AVVISATORE MARITTIMO SRL 367,350 299,999 0.02 L’ECO DI BERGAMO SASAAB SpA 23,554,986 22,786,176 1.42 MF MILANO FINANZA MILANO FINANZA EDITORI S.P.A. 20,939,723 20,939,723 1.30 NEW BET COEDIP SCRL 6,349,193 5,479,866 0.34 OPINIONE NUOVE LIBERO QUOTIDIANO C.E.L. COOPERATIVA EDITORIALE LIBERO 75,666,691 69,447,184 4.32 PICCOLA S.C.R.L. TUTTOSPORT Nuova Editoriale Sportiva S.r.l. 75,514,504 71,055,613 4.42 1,700,585,517 1,606,801,739 100.00
Table 3. Daily Newspapers: North-Est Interregional circulation Trentino Alto Adige, Veneto, Friuli Venezia Giulia, Emilia Romagna (2008)
Name Publisher Gross circulation Net circulation % of circulation in the area ALTOADIGE/CORRIERE DELLE ALPI/TRENTINO S.E.T.A. Società Editrice Tipografica Atesina 17,479,398 16,540,262 4.66 S.E.T.A. - Società per Azioni, (the achronim is S.E.T.A. S.p.A.) CORRIERE COOPERATIVA EDITORIALE GIORNALI 5,048,800 5,048,800 1.42 ASSOCIATI A R.L. CORRIERE DEL TRENTINO EDITORIALE TRENTINO ALTO ADIGE S.R.L. 2,861,445 2,695,174 0.76 CORRIERE DEL VENETO EDITORIALE VENETO S.R.L. 24,209,568 22,758,339 6.41 CORRIERE DELL'ALTO ADIGE EDITORIALE TRENTINO ALTO ADIGE S.R.L. 2,065,460 1,793,329 0.50 DIE NEUE SUEDTIROLER TAGESZEITUNG DIE NEUE SUEDTIROLER TAGESZEITUNG 2,782,500 2,650,000 0.75 S.R.L.“G.M.B.H” DOLOMITEN ATHESIA DRUCK S.R.L. 18,165,690 17,038,118 4.80 GAZZETTA DEL LUNEDI’ GIORNALISTI E POLIGRAFICI COOP. R.L. 1,151,314 1,029,592 0.29 GAZZETTA DI REGGIO FINEGIL EDITORIALE S.P.A. 6,196,050 6,086,788 1.71 IL GAZZETTINO SOCIETA' EDITRICE PADANA S.P.A. 43,670,040 40,963,192 11.53 IL GIORNALE DELL'EMILIA ROMAGNA GIORNALE DI REGGIO SRL 1,398,566 1,398,566 0.39 IL GIORNALE DI VICENZA SOCIETÀ ATHESIS S.P.A. 19,257,791 18,585,990 5.23 IL MATTINO DI PADOVA FINEGIL EDITORIALE SPA 14,106,468 13,540,277 3.81 IL PICCOLO EDITORIALE FVG S.P.A. 15,760,355 15,029,805 4.23 IL PICCOLO DEL LUNEDÌ EDITORIALE FVG S.P.A. 2,393,350 2,282,250 0.64 IL RESTO DEL CARLINO POLIGRAFICI EDITORIALE S.p.A. 81,486,046 74,239,648 20.90 INCITTA’ E DINTORNI BRESCIA NUOVA EDITORIALE S.r.l 3,440,760 2,980,500 0.84 INCITTA’ E DINTORNI VICENZA NUOVA EDITORIALE S.r.l 2,918,330 2,316,700 0.65 INCITTA’ VERONA NUOVA EDITORIALE S.r.l 3,755,562 3,327,400 0.94 IO L'IMPRESA EDITORIALE ARTIGIANATO E PICCOLA 1,021,180 960,955 IMPRESA EMILIA ROMAGNA SRL 0.27 LA NUOVA DI VENEZIA E MESTRE FINEGIL EDITORIALE SPA 6,562,315 6,153,889 1.73 LA NUOVA FERRARA FINEGIL EDITORIALE SPA 5,158,158 5,054,507 1.42 LA TRIBUNA DI TREVISO FINEGIL EDITORIALE S.p.A. 8,866,867 8,479,924 2.39 LA VOCE DI ROMAGNA EDITRICE LA VOCE S.R.L. 5,947,664 4,346,055 1.22 LA VOCE NUOVA COOPERATIVA EDITORIALE INFORMAZIONE 2,538,099 1,935,173 0.54 STAMPA C.E.I.S. SOC. COOP. ARL L'ADIGE S.I.E. S.P.A. SOCIETÀ INIZIATIVE 12,010,813 11,596,045 3.26 EDITORIALI LIBERTÀ, LIBERTÀ LUNEDÌ SETTIMO NUMERO STABILIMENTO TIPOGRAFICO PIACENTINO 13,354,706 12,645,304 5.96 DI LIBERTÀ SAPA L'INFORMAZIONE - IL DOMANI (former IL EDITORIALE BOLOGNA SRL 1,533,900 1,533,900 3.56 DOMANI DI BOLOGNA) MESSAGGERO DEL LUNEDÌ EDITORIALE FVG S.P.A. 3,339,505 3,060,905 0.43 MESSAGGERO VENETO EDITORIALE FVG S.P.A. 20,743,082 18,985,577 0.86 NUOVA GAZZETTA DI MODENA FINEGIL EDITORIALE SPA 5,274,706 5,105,709 5.34 PRIMORSKI DNEVNIK PRAE PRA Promozione Attività Editoriale srl 3,383,250 3,241,012 0.19 380,395,730 355,268,185 100.00
Table 4. Daily Newspapers: Centre Interregional circulation Tuscany, Marches, Umbria, Latium, Abruzzo (2008)
Name Publisher Gross circulation Net circulation % of circulation in the area CONQUISTE DEL LAVORO CONQUISTE DEL LAVORO SRL 19,338,850 19,338,850 1.65 CORRIERE ADRIATICO Società Editoriale Adriatica S.p.a. 10,356,449 8,693,585 0.74 CORRIERE DELLO SPORT STADIO CORRIERE DELLO SPORT S.R.L. 145,718,731 136,855,109 11.67 EDITORIALE OGGI NUOVA EDITORIALE OGGI S.r.l 7,535,452 7,535,452 0.64 EUROPA EDIZIONI DLM EUROPA 14,486,013 13,073,698 1.11 GAZZETTA ASTE E APPALTI PUBBLICI EDITRICE S.I.F.I.C. SOCIETA’ ITALIANA 1,019,420 1,011,920 0.09 FINANZIARIA IMMOBILIARE E COMMERCIALE S.r.l. IL CAMPANILE NUOVO SOCIETÀ COOPERATIVA EDITRICE IL 739,354 533,571 0.05 CAMPANILE NUOVO A R.L. IL CENTRO FINEGIL EDITORIALE S.P.A. 11,739,159 11,027,782 0.94 IL CITTADINO OGGI EDITRICE GRAFIC COOP. SOCIETÀ 14,841,500 13,896,500 1.18 COOPERATIVA DI GIORNALISTI A R.L. IL GIORNALE DELL'UMBRIA GRUPPO EDITORIALE UMBRIA 1819 S.R.L. 2,364,800 2,364,800 0.20 IL GIORNALE NUOVO DELLA TOSCANA SOCIETÀ TOSCANA DI EDIZIONI S.P.A. 4,721,900 4,721,900 0.40 IL LUNEDÌ DE LA REPUBBLICA GRUPPO EDITORIALE L'ESPRESSO S.P.A. 37,258,055 36,270,784 3.09 IL MANIFESTO QUOTIDIANO COMUNISTA IL MANIFESTO COOPERATIVA EDITRICE 27,975,238 26,519,773 2.26 S.C.R.L. IL MESSAGGERO IL MESSAGGERO SPA 112,340,794 105,530,160 9.00 IL NUOVO CORRIERE EDITORIALE 2000 SRL 5,168,674 3,966,737 0.34 IL NUOVO RIFORMISTA EDIZIONI RIFORMISTE PIC. SOC. COOP A 9,035,277 7,522,194 0.64 R.L. IL ROMANISTA I ROMANISTI S.r.l 5,091,707 4,265,185 0.36 IL TEMPO SOCIETA' EDITRICE IL TEMPO SPA 29,847,874 27,455,072 2.34 IL TIRRENO FINEGIL EDITORIALE S.p.A. 40,055,674 36,721,264 3.13 IMPRESA ARTIGIANA EDITART S.r.l 154,750 154,750 0.01 ITALIA SERA GIORNALISTI & POLIGRAFICI ASSOCIATI 1,059,313 828,042 0.07 SCRL LA DISCUSSIONE - QUOTIDIANO DELL'UDC EDITRICE EUROPA OGGI S.R.L. 3,417,288 3,161,788 0.27 LA NAZIONE POLIGRAFICI EDITORIALE S.P.A. 71,085,641 63,423,806 5.41 LA PROVINCIA QUOTIDIANO EFFE COOPERATIVA EDITORIALE A R.L. 3,698,010 3,698,010 0.32 LA REPUBBLICA GRUPPO EDITORIALE L'ESPRESSO S.p.A. 225,931,128 219,627,423 18.72 LA VOCE IMPEGNO SOCIALE PICCOLA SOC. COOP 1,143,073 898,085 0.08 GIORN. A R.L. L'AGENZIA DI VIAGGI LIBERI EDITORI S.r.l. 583,657 583,657 0.05 L'AVANTI! INTERNATIONAL PRESS SCRL 4,278,858 3,879,448 0.33 LEGGO SIGMA EDITORIALE S.p.A. 174,999,997 166,247,014 14.17 LIBERAZIONE GIORNALE COMUNISTA M.R.C. S.r.l. 26,976,426 24,681,086 2.10 L'OPINIONE DELLE LIBERTÀ AMICI DE L’OPINIONE SOC.COOP.GIORN. A 1,257,792 927,000 0.08 R.L. L'UMANITÀ EDIZIONI RIFORMISTE S.C.R.L. 2,048,045 1,629,008 0.14 L’UNITA’ NUOVA INIZIATIVA EDITORIALE S.p.A. 50,947,955 45,713,053 3.90 METRO EDIZIONI METRO S.r.l. 147,733,092 144,067,759 12.28 NOTIZIE VERDI (AGENZIA QUOTIDIANA DI UNDICIDUE S.r.l. 2,809,100 2,809,100 0.24 INFORMAZIONE DEI VERDI ITALIANI) NUOVO OGGI EDITORIALE CIOCIARIA OGGI Sr.l. 2,941,841 2,941,841 0.25 ORE 12 CENTRO STAMPA REGIONALE SOC.COOP A 488,049 382,665 0.03 R.L. QUOTIDIANO DELLE REGIONI EDITORIALE ABRUZZO SOC. COOP. 1,444,250 1,416,367 0.12 RINASCITA RINASCITA SOC. COOP. ED A R.L. 5,099,903 4,528,096 0.39 SCUOLA E INSEGNANTI EDITORIALE BM ITALIANA Sr.l. 285,000 285,000 0.02 SCUOLA SNALS EDITORIALE BM ITALIANA SRL 9,714,500 9,714,500 0.83
SECOLO D'ITALIA SECOLO D'ITALIA 4,551,411 3,708,733 0.32 STAFFETTA QUOTIDIANA RIP RIVISTA ITALIANA PETROLIO S.R.L. 403.332 338.672 0.03 1,242,687,332 1,172,949,239 100.00
Table 5 Daily Newspapers: Interregional AreA – south circulation Molise, Campania, Apulia, Basilicata, Calabria, Sicily, Sardinia (2008)
Name Publisher Gross circulation Net circulation % of circulation in the area BUONGIORNO CAMPANIA Dossier soc. coop. d’inf. serv. e pubb. 1,655,609 1,655,609 0.36 relaz CORRIERE DEL GIORNO DI PUGLIA E LUCANIA Cooperativa 3,811,925 3,706,589 0.81 CORRIERE DEL MEZZOGIORNO EDITORIALE DEL MEZZOGIORNO S.r.l 13,412,745 12,465,848 2.72 CORRIERE DEL MEZZOGIORNO - BARI E PUGLIA EDITORIALE DEL MEZZOGIORNO S.r.l 10,528,112 10,087,623 2.20 CORRIERE DI CASERTA LIBRA EDITRICE PICCOLA SOC. COOP. A 5,323,290 4,723,819 1.03 R.L. CRONACHE DI LIBERAL EDIZIONI DEL MEZZOGIORNO S.r.l 8,251,039 6,739,937 1.47 CRONACHE DI NAPOLI LIBRA EDITRICE PICCOLA SOC. COOP. A 6,208,079 5,594,101 1.22 R.L. DEMOCRAZIA CRISTIANA BALENA BIANCA PICCOLA S.C.A.R.L. 1,044,000 1,044,000 0.23 E Polis E POLIS S.p.A. 149,485,386 139,525,010 30.41 GAZETA SHQIPTARE SOCIETA’ P.A. EDITRICE DEL SUD - 1,801,342 1,801,342 0.39 EDISUD S.p.A. GAZZETTA DEL SUD SOCIETÀ EDITRICE SICILIANA 25,490,470 24,385,503 5.31 GIORNALE DI SICILIA GIORNALE DI SICILIA EDITORIALE 31,781,201 29,972,845 6.53 POLIGRAFICA S.P.A. IL DENARO EDIZIONI DEL MEDITERRANEO S. C. 2,802,545 2,535,117 0.55 GIORNALISTICA A R.L. IL DOMANI T. & P. EDITORI S.R.L. 1,964,800 1,738,400 0.38 IL GIORNALE DI CALABRIA EDITORIALE '91 S.C.R.L. 271,700 271,700 0.06 IL MATTINO EDI.ME. EDIZIONI MERIDIONALI SPA 40,694,253 38,911,167 8.48 IL QUOTIDIANO FINANZIARIA EDITORIALE S.R.L. 8,748,869 8,176,189 1.78 IL QUOTIDIANO DEL GOLFO Soc. Coop. a. r.l. Giornalisti Stampa 122,800 113,691 0.02 Locale Ischia IL SALERNITANO ARCADIO società cooperativa 1,004,353 1,004,353 0.22 IL SANNIO QUOTIDIANO PAGINE SANNITE SCRL 3,060,721 2,570,781 0.56 LA CITTÀ-QUOTIDIANO DI SALERNO E EDITORIALE LA CITTÀ S.P.A. 4,321,258 4,051,558 0.88 PROVINCIA LA GAZZETTA DEL MEZZOGIORNO SOCIETÀ P.A. EDITRICE DEL SUD - 24,196,696 22,952,126 5.00 EDISUD S.P.A. LA GAZZETTA DI TARANTO SOCIETA' P.A. EDITRICE DEL SUD - 1,549,088 1,436,365 0.31 EDISUD SPA LA NUOVA DEL SUD ALICE MULTIMEDIALE SRL 371,642 371,642 0.08 LA NUOVA SARDEGNA EDITORIALE LA NUOVA SARDEGNA S.p.A. 26,561,752 25,930,803 5.65
LA SICILIA DOMENICO SANFILIPPO EDITORE S.p.A. 30,537,341 29,128,872 6.35 LA VERITÀ EDITORIALE LA VERITÀ S.C. GIORN. R.L. 5,413,723 4,384,884 0.96 LA VOCE DELLA CITTÀ TARANTO LE NEWS L'EDITORIALE S.R.L. 1,826,700 1,602,600 0.35 DELLA SERA LA VOCE REPUBBLICANA NUOVE POLITICHE EDITORIALI PICC. 539,943 352,280 0.08 SOC. COOP GIORN. ARL L’ALTRO FAX EDIGIORNALISTI - SOCIETÀ 53,800 53,800 0.01 COOPERATIVA GIORNALISTICA A R.L. L'UNIONE SARDA L'UNIONE SARDA S.p.A. 30,544,280 29,368,967 6.40 METROPOLIS STAMPA DEMOCRATICA 95 SCRL 3,445,760 3,193,232 0.70 MEZZOGIORNO ECONOMIA EDITORIALE VESUVIO S.r.l. 2,180,556 2,041,774 0.45 NUOVA GAZZETTA DI CASERTA edizioni giornali quotidiani piccola soc. 1,545,178 1,107,522 0.24 coop. a r.l. NUOVO CORRIERE BARISERA EDITORIALE GIORNALISTI ASSOCIATI 725,324 534,692 0.12 SCRL NUOVO QUOTIDIANO DI PUGLIA ALFA EDITORIALE S.r.l. 9,667,989 9,109,646 1.99 OTTOPAGINE L'APPRODO S.R.L. 1,653,460 1,653,460 0.36 PUBLIPRESS PROMOSET S.R.L. 1,900,000 1,635,000 0.36 PUGLIA QUOTIDIANO DI VITA REGIONALE essepi s.c. a r.l. 1,056,340 1,024,650 0.22 QUOTIDIANO DI FOGGIA E BARI EDITORIALE NUOVA COMUNICAZIONE 7,800,000 6,800,000 1.48 Sr.l. QUOTIDIANO DI LECCE, BRINDISI, TARANTO ALFA EDITORIALE Sr.l. 1,809 900 0.00 QUOTIDIANO DI SICILIA EDISERVICE Sr.l. 6,725,417 6,364,500 1.39 ROMA EDIZIONI DEL ROMA SOC. COOP. A R.L. 7,622,356 6,453,340 1.41 TUTTOMERCATO ALFA EDITORIALE SRL 2,301,469 2,242,893 0.49 490,005,120 458,819,130 100.00
Magazines In the aggregate, in 2008, the most important companies of magazine publishing recorded a significant drop in revenues, but with different trends if we analyse separately the weekly and monthly segments in relation to the single revenue items (table 1.66). It appears as homogeneous the decrease in the revenues from the sale of collateral products – becoming more and more significant - thus confirming the situation already described for the dailies as to the reduced propensity to consume these products and the ensuing limited investment by publishing companies. Also for the sector of magazine publishing, the smaller incidence of this item on the overall revenues (12.8%) is to be pointed out. The decrease in the revenues from the sale of copies affects the weekly magazines (-5.8%) more than monthly ones (-2%). The results in terms of revenues for the sale of advertising spaces in weekly magazines (-6.7%) and in monthly ones (+5.9%) are diametrically opposed. This is due to the fact that, in the two segments taken into account, magazine publishing has distinctive and unique features in the type of product. Weekly publishing is characterized by a high content of “generalist” information of the offer, whereas in monthly publishing there is a more marked thematic direction of the magazines that entails a more homogenous reference readership and thus an increased interest for specialized manufacturers. Table 1.66. Magazine publishing by type of revenue 2007 2008 % % % Var. ‘07 ‘08 ‘08/’07 Magazine publishing 2,158 2,010 100.0 100.0 -6.9 Selling of copies 769 734 35.6 36.5 -4.5 Advertising 1,028 1,018 47.6 50.7 -0.9 Collateral products 362 258 16.8 12.8 -28.7 - of which weekly 1,403 1,235 100.0 100.0 -11.9 Selling of copies 508 478 36.2 38.7 -5.8 Advertising 554 517 39.5 41.8 -6.7 Collateral products 341 240 24.3 19.4 -29.6 - of which monthly 755 775 100.0 100.0 2.6 Selling of copies 260 255 34.5 32.9 -2.0 Advertising 474 502 62.7 64.7 5.9 Collateral products 21 18 2.8 2.3 -14.2 Source: corporate data processed by AGCOM Summary data surveyed by ADS and concerning mobile average in 12 months – from January 2008 to December 2008 – if compared to 2007 data, referred to the same magazines, confirm a significant reduction of the copies sold for weekly magazines equal to 4.51%, whereas monthly magazine remains in the same position (+0.04). With regard to the reading of magazines compared to dailies, in 2008, Audipress data show a 0.4%-decrease of the reading levels for magazines (table 1.67). According to such estimates, the drop is due to a decreased reading of weekly magazines compared to monthly magazines. In general, it is to be pointed out that the penetration index for magazines, is still very high (62.9%). This proves the capacity of this type of publishing products to be a significant component of the media system and to reach a very large number of people.
Table 1.67. Magazine readers (2001-2008) Years Pop. (*) Readers last % % (000) period (000) Var. penetration 2001 50,103 33,728 67.3 2002 50,103 33,487 -0.7 66.8 2003 50,103 33,418 -0.2 66.7 2004 49,720 32,818 - 1.7 66.0 2005 (I) 50,206 33,919 3.4 67.6 2005 (II) 50,206 34,207 0.9 68.1 2006 (I) 50,769 34,038 -0.5 67.0 2006 (II) 50,769 32,689 -4.0 64.4 2007 (I) 51,042 32,265 -1.3 63.2 2007 (II) 51,042 32,483 0.7 63.6 2008 (I) 51,397 32,352 -0.4 62.9
Source: Audipress Finally, with regard to the analysis of the market positions, the main Italian publishing groups lose few percentage points on the shares they have in the two segments taken into consideration to the benefit of minor operators as shown in table 1.68.
Table 1.68. Market shares in weekly and monthly magazine publishing (%) Magazine of which of which Publishing weekly monthly 2007 2008 2007 2008 2007 2008 Arnoldo Mondadori 32.0 30.0 38.7 38.0 19.7 17.4 RCS Mediagroup 21.2 19.8 23.5 22.3 17.0 15.9 L’Espresso Publ. Group 9.5 9.4 12.7 13.3 3.7 3.2 Condè Nast 8.9 9.9 4.8 5.7 16.4 16.5 Hachette Rusconi 5.8 6.2 4.1 4.2 9.0 9.3 Others 22.5 24.7 16.3 16.5 34.2 37.7 Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: corporate data processed by AGCOM
1.2.6. Advertising International and European Scenario In 2008, the advertising market suffered from the economic slump started in the third quarter of the year and continued with a further acceleration in the fourth one. As it is shown in table 1.69, in the aggregate, the growth is 0.97%. The most substantial drop is in the North American market that accounts for more than a third of the global market. Table 1.69. Worldwide advertising investments by geographical area billion € % % % Var. 2007 2008 ‘07 ‘08 ‘08/’07 North America 137.5 132.4 39.30 37.47 -3.73 Western Europe 87.8 86.8 25.08 24.58 -1.07 Eastern-Central Europe 23.1 25.6 6.60 7.25 10.86 Asia/Pacific 72.7 74.9 20.79 21.21 3.01 Latina America 18.3 20.6 5.22 5.83 12.72 Africa/Rest of the world 10.5 12.9 3.00 3.66 23.13 Total 350.0 353.4 100.00 100.00 0.97 Source: Zenith Optimedia data processed by AGCOM The analysis of the market trend by means used (table 1.70), shows a significant decrease for daily and magazine publishing (–4.91%), that, in 2008, loses its leadership as main advertising channel to the benefit of television and the Internet. Table 1.70. Worldwide advertising investments by medium billion € % % % Var. 2007 2008 ‘07 ‘08 ‘08/’07 Press 137.7 131.0 39.35 37.06 -4.91 TV 130.1 133.9 37.19 37.89 2.87 Radio 27.9 27.3 7.97 7.72 -2.19 Cinema 1.7 1.8 0.48 0.50 5.86 Outdoor advertising 22.3 22.9 6.38 6.49 2.78 Internet 30.2 36.5 8.63 10.34 20.90 Total 350.0 353.4 100.00 100.00 0.97
Source: Zenith Optimedia data processed by AGCOM According to ZenithOptimedia forecasts, the worldwide advertising market – struck by the financial crisis - will lose about 7% in 2009. The current barriers to recovery are created by the lack of confidence in the credit market and by the limited trust on the growth prospect in the short term. For the crisis time is needed and the growth of advertising investment will start again at different speeds in the various world markets. ZenithOptimedia envisages a 1.5% growth worldwide in 2010 followed by a 4.5% growth in 2011. In the current economic period the majority of the advertisers tend to wait until the last minute to confirm their commitments. Many entrepreneurs are now dealing with advertising as a discretionary expense, identifying it, as a suitable sector, in some cases, for cutting costs. Advertising investments are strongly related to the profits of the company and the market it is likely to start again its growth only when a regular recovery of profits takes place. As occurred during previous recession periods, consumers started to reduce their expenses and to spend more time at home, with the ensuing increase of the consumption of some entertaining media, such as television and the Internet. The Internet appears as the only medium that can attract higher advertising investments in 2009, with an expected growth of 8.6%, but, in any case, with a sharp decline compared to 2008 (+ 20.9%). This growth will depend mostly on the research of new advertising forms for products and on applications that can assist the user in the research of the product that best suits his needs. Television is showing encouraging signs in this recession period. According to estimates, it will decrease by 5.5% in 2009, even if this entails an increase in the market share from 38.1% to 38.6%. In 2008, the North American market suffered more than the others from the economic crisis. A strong decline was recorded for the investment on print media (-10.3%) and on television (-1.4%). Whereas, investments on the Internet went up (21.1%), confirming the increasing importance gained by this medium in the communications strategies of the companies. Likewise, in Western Europe, investments on press and television are significantly down and also in this case the Internet confirms itself as the medium with the greatest growth potential (table 1.71).
Table 1.71. European advertising investments by medium – Western Europe billion € % % % Var. 2007 2008 ‘07 ‘08 ‘08/’07 Press 25.0 24.3 34.33 32.37 -2.86 TV 29.2 30.0 40.11 40.04 2.84 Radio 3.6 3.8 4.93 5.08 6.10 Cinema 0.3 0.3 0.39 0.39 3.36 Outdoor advertising 7.7 8.0 10.54 10.69 4.51 Internet 7.1 8.6 9.70 11.42 21.31 Total 72.7 74.9 100.00 100.00 3.01
Source: Zenith Optimedia data processed by AGCOM In Western Europe, the advertising expense decreased by 1.1% in 2008. In 2009, a 6.7% drop is envisaged as a result of the current economic slump. All the major markets in Western Europe are facing a difficult situation and most of the traditional media are prepared to face a very difficult year. With regard to the repositioning of each medium in relation to investments, according to ZenithOptimedia data, the share of advertising investments of traditional press will go down from 44.4% in 2008 to 40.8% in 2011. According to forecasts, television will remain with a share similar to its current one, going from 30.3% in 2008 to 29.9% in 2011, whereas the radio will confirm its market share. In the meantime, advertising on the Internet will continue to erode the market share of traditional press and will account for about 17.1% of the total of advertising expenses in Western Europe in 2011, compared to 12.9% in 2008. By the end of 2009, the Internet will get more than 15% of the ad markets in Denmark, Norway, Sweden and in the United Kingdom. By the end of 2011, this quota will be reached also by Finland and France whereas in the same year, in Sweden, the corresponding value could exceed 30%. In Asia, in 2008, advertising investments increased by 3%. The only sector recording a decrease is the press, whereas on line advertising shows a two-figure growth, for the first time, in this region, its share is higher than the resources allocated to outdoor advertising (table 1.72).
Table 1.72. Advertising investments by medium - Asia billion € % % % Var. 2007 2008 ‘07 ‘08 ‘08/’07 Press 25.0 24.3 34.33 32.37 -2.86 TV 29.2 30.0 40.11 40.04 2.84 Radio 3.6 3.8 4.93 5.08 6.10 Cinema 0.3 0.3 0.39 0.39 3.36 Outdoor advertising 7.7 8.0 10.54 10.69 4.51 Internet 7.1 8.6 9.70 11.42 21.31 Total 72.7 74.9 100.00 100.00 3.01
Source: Zenith Optimedia data processed by AGCOM According to estimates, in 2009, the advertising expense will decrease by 3.4% in the whole region, and then it goes up with a 2.7% growth in 2010. However, the return to a real growth is not envisaged until 2011. Also in Asia, the owners of traditional media, as elsewhere, are working hard to check the revenue shortfall. In 2000, dailies attracted 33.3% of the overall advertising expenses; this figure went down to 25.8% in 2008, and by 2011 it is expected to reach 22.4% only. During the same period, the share of resources for magazines decreased from 8% to 6.6% and it is envisaged that it goes down to 5% by the end of 2011. TV and radio do not seem to be hard hit by the crisis, their final repositioning is to take place by 2011 and should bring to the coverage of about 45.5% of the market in this geographic region. The Italian Market in Detail In Italy advertising investments recorded an increase by slightly more than 2%, reaching 8.7 billion euro (table 1.73). This result is due, in particular, to the heavily negative results recorded by the press, except for free press, and to the growth of television that, even if moderate, it consolidates its share of the overall advertising resources (55.5%). Table 1.73. Advertising investments in Italy by medium billion € % % % Var. 2007 2008 ‘07 ‘08 ‘08/’07 Television 4,720 4,851 55.18 55.50 2.77 Press 2,819 2,610 32.95 29.86 -7.41 of which daily 1,363 1,238 15.93 14.16 -9.17 of which "free press" 127 140 1.49 1.60 10.36 of which magazine 1,328 1,231 15.53 14.09 -7.30 Radio 431 437 5.03 5.00 1.41 Outdoor 234 227 2.73 2.60 -2.78 Cinema 70 58 0.82 0.67 -16.43 Internet 282 557 3.30 6.38 97.71 Total 8,555 8,740 100.00 100.00 2.17
Source: Nielsen Media Research data processed by AGCOM The Internet shows a significant growth also in 2008. The figure is not perfectly comparable with the corresponding value in 2007, since part of the estimated increase is due to the introduction by Nielsen of the “Keywords” of Google and Yahoo Search Marketing, that had not been considered in the past due to the strict international policies of the two leading Internet operators. The share of advertising investments that is assigned to the Internet in Italy is, in any case, considerably below the average in Western Europe (6.38%). The analysis of the advertising investments in the main product sectors (table 1.74) shows considerably different trends, where, in particular, the most significant growth of the advertising investments is recorded in the sectors of tourism, leisure time and of kid products. A significant decrease is recorded for advertising investments on personal belongings, household and household appliances. Table 1.74. Advertising investments in Italy by product category billion € % Var. 2007 2008 ‘08/’07 Clothing 592 597 0.84 House 339 350 3.04 Food 1,110 1,111 0.14 Cars 1,016 1,000 -1.59 Beverage/alcohol 471 440 -6.56 Grooming 358 346 -3.36 Service 177 156 -11.83 Distribution 321 409 27.36 Household appliances 158 145 -8.42 Bodies /Institutions 137 159 15.80 Pharmaceuticals/Sanitary 260 279 7.19 Finance/insurance 428 444 3.83 Household 308 279 -9.59 Games/ School items 98 121 22.86 Industry/Building /Activity 158 170 7.67 IT /Photography 94 99 5.86 Local 124 127 1.95 Media/Publishing 463 449 -3.07 Moto/Vehicles 66 73 9.99 Personal belongings 204 178 -12.64 Indexed 66 67 1.91 Professional Services 176 192 8.86 Telecommunications 748 765 2.24 Leisure time 118 140 19.46 Toiletries 315 341 8.01 Tourism /Travelling 180 215 19.44
Source: Nielsen Media Research data processed by AGCOM Finally, with reference to the product composition of advertising investments in each medium (table 1.75), television depends mostly on the investments of manufacturers of products with a high circulation, whereas magazine press and the Internet are the favourite media of manufacturers of specialized goods. Table 1.75. Advertising investments in Italy by product categories (2008 in %) TV Radio Newspapers Free Magazines Outdoor Cinema Internet Press Clothing 20.39 1.34 15.11 0.27 55.51 5.93 0.65 0.79 100.0 House 39.41 2.16 15.18 1.45 33.50 5.67 0.45 2.19 100.0 Food 86.04 3.12 2.18 0.27 6.25 0.83 0.75 0.55 100.0 Cars 60.69 9.71 15.16 0.88 5.79 2.34 1.59 3.85 100.0 Beverage/alcohol 79.07 4.10 6.26 0.37 6.03 2.29 0.91 0.98 100.0 Grooming 55.91 2.36 4.67 0.13 33.11 1.57 0.43 1.82 100.0 Service 0.00 0.00 94.74 1.66 0.04 0.00 0.00 3.56 100.0 Distribution 36.13 9.78 21.40 3.06 6.44 4.57 0.04 18.58 100.0 Domestic appliances 64.85 2.99 6.41 0.33 20.35 1.67 0.53 2.86 100.0 Bodies/Institutions 41.46 5.98 22.16 3.65 7.57 7.45 1.72 10.01 100.0 Pharmaceuticals/Health 78.02 5.10 3.44 0.50 10.92 0.61 0.32 1.08 100.0 products Finance/Insurance 41.86 5.40 18.78 4.70 8.47 1.69 0.75 18.34 100.0 Household 87.85 2.98 2.07 0.25 5.87 0.40 0.33 0.26 100.0 Games/School items 92.19 0.55 0.80 0.25 2.61 0.15 0.69 2.76 100.0 Industry/Building/Activity 46.14 8.31 22.27 1.29 15.10 3.25 1.03 2.62 100.0 Information Technology/ 9.16 4.68 19.28 1.13 22.71 1.69 0.61 40.75 100.0 ca/Photography Local 0.00 0.00 0.00 74.20 25.77 0.02 0.00 0.00 100.0 Media/Publishing 60.90 12.12 10.86 2.62 6.16 1.91 0.40 5.02 100.0 Motorcycles/Vehicles 16.49 24.26 17.30 0.68 37.39 2.52 0.00 1.36 100.0 Personal belongings 34.26 0.35 20.60 0.71 38.85 2.20 2.46 0.55 100.0 Indexed 0.00 0.00 91.83 0.00 2.05 0.00 0.00 6.12 100.0 Professional Services 14.51 3.98 43.39 4.57 13.88 4.14 0.01 15.52 100.0 Telecommunications 76.19 3.95 4.41 1.30 4.49 4.21 0.37 5.08 100.0 Leisure time 33.67 7.16 10.60 0.32 16.80 3.70 0.12 27.64 100.0 Toiletries 84.05 2.12 1.77 0.18 10.86 0.36 0.21 0.46 100.0 Tourism/Travelling 18.63 7.10 18.94 2.34 20.98 4.27 0.61 27.14 100.0 Miscellanea 1.47 0.16 6.41 0.80 20.92 3.48 0.00 66.75 100.0 Source: Nielsen Media Research data processed by AGCOM