Italy is one of the most important markets in Europe for the Information Technology and Communications (ICT) sector, and the market was valued in 2009 at $86 billion. The market registered a significant decrease versus the previous year, but some signs of recovery manifested themselves towards the end of the year and in the first quarter of 2010.
As U.S. leadership in the ICT sector is widely recognized, good opportunities exist for U.S. companies offering innovative and sophisticated products and services and willing to enter into cooperative agreements with well-established local firms.
Please note that content, estimates and forecasts of this report are based on interviews and information from different trade sources, including the trade association Assinform and Italian government sources.
Italy is the world's sixth largest industrialized economy and the Italian ICT market represents approximately 9% share of the total European market. The size and importance of the Italian economy are often not fully appreciated by American exporters. The market is far from being mature in many segments, and the potential for American ICT exports to Italy is still significant.
More specifically, Italy is Europe's fourth largest market for the Information Technology (IT) industry and IT represents the country’s fourth most important industrial sector, with 97,000 active companies and 390,000 employees. Italy is also Europe’s third largest market for the communications equipment and services industry, as well as the second largest and most advanced mobile communications market in western Europe.
Mobile phone diffusion in Italy is among the highest in the world, with over 91 million SIM cards activated (with multiple-SIM ownership) and 23 million of them enabling UMTS services. Clients served number more than 46 million, about three quarters of the total population.
Despite its magnitude, the Italian ICT market does still suffer from long-existing structural problems and is undersized and lags behind in comparison with the other major European countries. The technology gap is still significant, although ICT penetration is improving.
Italy also lags behind other major European countries in regard to Internet usage, but the market has experienced significant growth in recent years with an estimated number of 32 million users in 2009.
Italian users are relatively less mature in the use of this medium with respect to the European average, although they are catching up.
Broadband access is developing steadily, although at a lower rate than the European average, with 12.5 million users at the end of 2009 (+9.2% over 2008). xDSL dominates the market and is utilized in over 97% of cases, while fiber optics represents only 3%.
Italy is in urgent need of an ultra high-speed Next Generation Network (NGN). Italy's government and regulator Agcom have repeatedly called for a common effort by Italy's telecoms operators to boost broadband investment in the country. While the Italian government has committed to NGN investments of $1 billion in the next three years, incumbent operator Telecom Italia SpA, which owns the existing fixed-line network, is not willing to share control of its key copper and broadband infrastructure with other operators. The company has announced its own investments for $9.7 billion for network infrastructure and information technology, plus an additional $8.3 billion by 2016, with the aim of offering ultra broadband services to 50% of the Italian population by 2018 through a 1OO megabit fiber optic infrastructure.
On the other hand, Italy's main alternative telecom operators (Fastweb, Wind and the local subsidiary of Vodafone) have recently presented to the European Union a joint Fiber-to-the-Home (FTTH) project aimed at boosting the country's broadband infrastructure by replacing the traditional copper network with a broadband fiber network. The project will involve a total investment of about $3.5 billion during the first five years and should provide high-speed services to 15 major Italian cities and 10 million people. A second phase calls for an investment of $11.8 billion, which should provide services to cities with more than 20,000 inhabitants, thus reaching 50% of the Italian population. The project will also be open to other telecom operators and the three providers have asked the Italian Government to trigger the process for the creation of a “fiber company.”
The WiMAX license auction, which in February 2008 assigned the right to utilize 3.5GHz frequencies to a number of operators, also represents an important tool for increasing competition on the broadband market and for reducing the digital divide in rural or underserved areas.
With regard to ICT market results, while some signs of recovery have manifested themselves towards the end of the year and in the first quarter of 2010, trade figures indicate that, overall, 2009 was the worst year since 1991 for the Italian ICT market. According to ASSINFORM, the major Italian Association of Information and Communications Technology companies, in 2009 the Italian ICT market was worth $86 billion, an aggregate decrease of 4.2% in Euro currency over the previous year, with IT registering an 8.1% decrease, and the telecommunications market a 2.3% decrease.
The hesitancy of larger companies to invest in new ICT projects, the severe cutback of ICT budgets in the public administration at the central level and in several companies active in formerly leading sectors, SME’s difficulty accessing financing all negatively impacted market growth in 2009. It is anticipated that these factors will continue to have some repercussions through, at least, the second semester of 2010.
On the positive side, Italian companies employing 50 to 250 employees are expected to continue to represent the most dynamic segment, as they are investing in ICT innovation with the aim of increasing their productivity and competitiveness in both the local and global markets, thus reducing the digital divide with larger companies. In addition, ASSINFORM has recently reached an agreement with two major Italian banks to provide favourable financing terms of $1.2 billion to Italian companies wishing to invest in new IT projects.
The Italian Government is committed to modernizing the country through the development of policies which will accelerate widespread acceptance and use of new information and communication technologies, both in the public and private sectors. It is also fostering a “new ICT economy” business culture by offering grants to small and medium size enterprises. Among the most recent programs is the “Industry 2015” innovation program for the adoption of advanced IT solutions in “Made in Italy” sectors, which provides grants of $280 million to companies and research centers.
By Nicoletta Postiglione