Italy Plans to Strengthen Telecoms Regulator

ROME -(Dow Jones)- The center-left government unveiled a proposal Tuesday that will give the country's telecommunications regulator more powers, the Communications Ministry said in a statement.

The new rules, the broad outlines which have already been made public, will be inserted in the form of an amendment to the liberalization bill already working its way through parliament, the statement said.

The new rules are designed to empower the country's telecommunications regulator, AGCOM, to oversee the "functional separation" of Telecom Italia's fixed-line network into a ring-fenced unit.

AGCOM had already been examining a Telecom Italia plan to separate the fixed-line network for regulatory purposes, aimed at giving alternative operators cheaper access to the company's local loop.

Recent talks between Telecom Italia's main shareholder Pirelli and AT&T of the USA prompted the Italian government to speed up the regulatory changes, since it was concerned about the prospect of Telecom Italia becoming foreign-owned.

The "functional separation" of Telecom Italia's network is seen by the government as a way of keeping some national control over the network in the event that Telecom Italia is eventually acquired by a foreign company.

The talks between Pirelli and AT&T collapsed last week, partly because of what Pirelli said was "regulatory uncertainty," referring to the Italian government's decision to speed up the regulatory changes after AT&T came on the scene.

The new rules will also give the AGCOM power to define the boundaries of the ring-fenced unit, which would include not only the last mile of the network but all of the local access loop and "all the elements necessary to provide broadband access."

The so-called "last mile" is the final leg of delivering connectivity from a telcoms provider to a customer. Typically, it belongs to a former monopoly, who must open it up to competitors at prices set by the regulator. The "local loop refers to the wires that connect users' hopes to the nearest network switch.

The AGCOM will also be able to set up governance rules for the ring-fenced unit.

The regulator has the power to impose the "functional separation" of Telecom Italia's network into a ring-fenced unit even if the two parties do not reach an agreement about the terms at the end of their negotiations.

The government inserted the new rules into a previous bill on liberalization which is on a fast-track approval process in parliament in the hope that it will be approved by the end of the summer, a government person said.

-By Jennifer Clark, Dow Jones Newswires; 39 06 678 2543, jennifer.clark@dowjones.com

(Giada Zampano also contributed to this report)

(END) Dow Jones Newswires "

Posted to the site on 24th April 2007