The Italian market for telecommunications equipment and services is the third largest in Europe. Italy is also the second largest mobile communications market in Western Europe and one of the most advanced. Mobile phone diffusion in Italy is among the highest in the world, with close to 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 in Italy.
With regard to Internet usage, Italy still lags behind other major European countries, but it has experienced significant growth in recent years. The estimated number of internet users in Italy reached 31 million in 2008, even though ten million Italian families still do not own a PC. Italian users are relatively less mature in the use of this medium with respect to the European average, but they are catching up.
Broadband access is developing, although at a rate less than the European average, with 10.7 million users connected in June 2008, due to growing interest in interactive digital content. xDSL dominates the market and is utilized in over 96 percent of cases, while fiber optics represent less than four percent. The very successful WiMAX license auction, which in February 2008 assigned the right to utilize 3.5GHz frequencies to a number of operators, is expected to represent an important tool for increasing competition on the broadband market and reducing the digital divide in rural areas.
Preliminary trade estimates value the Italian telecommunications market at USD 65.5 billion in 2008, an aggregate 0.8 percent increase in Euro currency over 2007. The market is split between USD 29.8 billion for fixed line equipment and services, and USD 35.7 billion for mobile telecom equipment and services.
Telecom systems, terminals and infrastructure equipment, both for fixed and mobile telecom, account for USD 14.3 billion, an increase of 0.9 percent in Euro currency over 2007. Despite the current financial crisis, it is expected that networking equipment, innovative mobile phones and audio/video conferencing equipment will drive the segment’s performance in 2009. Moreover, the need for ultra-high speed Next Generation Networks (NGNs) is forecast to create excellent opportunities both in the infrastructure market segment and in the systems segment.
The telecommunication services segment accounts for the lion’s share of the market, with a total value of USD 51.3 million, an increase of 0.8 percent in Euro currency over 2007. Growth in the telecommunications services market is driven by Value Added Services (VAS) and by the considerable development of broadband Internet access technologies. Slowdown in revenues from traditional voice services, both fixed and mobile, is making it essential for operators to launch new value-added services to increase their average revenue per user (ARPU).
The introduction of HSDPA (High Speed Downlink Packet Access) and DVB-H (Digital Video Broadcast Handheld) technologies is offering both consumer and business users further improved bandwidth and “quadruple play” services (broadband Internet access, television and telephone with wireless service provisions), thus accelerating the convergence of communications and multimedia operators and opening new market opportunities.
In the fixed line segment, Unified Communication, outsourced Internet Data Center and telecom and Call Center services are gaining momentum. In the mobile segment, the wide acceptance of UMTS technology has made it possible to develop new services utilizing improved bandwidth. SMS, internet browsing, mobile e-mail and Mobile TV will continue to grow and to represent excellent opportunities. The entry of Mobile Virtual Network Operators (MVNO) in the Italian market is expected to further enhance the offer of innovative mobile VAS, such as mobile payment and location based services.
While many business users still utilize smart phones mainly for mobile e-mail applications and, to a lesser extent, for internet access and SMS messaging, most Italian consumers utilize the mobile phone as a true multimedia device, are very open to new services as they become available, and are playing a key role in the development of the mobile VAS market.
The Italian market for VAS is characterized by more than 13,000 different services offered by more than 500 suppliers, including telecom companies, media companies, the major record and movie labels, and mobile content and service providers.
Fixed-mobile convergence (FMC) is expected to develop considerably in the next three years, stimulating the need for products and services allowing the seamless integration of mobile and fixed-line telephone services. Key factors will be extended broadband availability and wireless technologies. The creation of Next Generation Networks will contribute to make IP-based solutions the real market driver. Wireless WiMax, WiFi and HyperLan technologies are expected to be employed increasingly and will represent excellent development opportunities.
Telecom value-added services will continue to be a particularly dynamic segment, with video services expected to become increasingly important. Voice and data services over IP have become the viable alternative to the traditional Public Switched Telephone Network, and they are expected to continue growing, also stimulating the systems segment.
U.S. technology and standards are highly regarded, and the best opportunities for success will be for those American companies offering innovative and sophisticated products. However, it is important that U.S. companies team up with well-established Italian firms for distribution or joint venture agreements in order to handle the burdensome bureaucratic procedure of public procurement.
The need for ultra-high speed Next Generation Networks (NGNs) will create considerable opportunities both in the infrastructure market segment and in the systems segment. The Italian government is committed to investing USD one billion in the next three years towards building new NGNs, which will have a strategic and driving effect for the national economy.
With regard to WiMAX, several public/private projects are being carried out in many Italian regions - such as Sardinia, Sicily, Marche, Liguria, Piedmont, and Valle d’Aosta – with investments totaling several hundred million of dollars.