Agenda

1. BROADBAND POLICIES FOCUS ON THE ITALIAN GOVERNMENT ACTION PLANDaniela Battisti Member of the Executive Committee for Broadband Action Plan Ministry for Innovation and Technology (Italy)

2. Agenda • - Do we Need/Have a Broadband Definition? • e-Europe2005 and the Sevilla Summit • The Italian BB Action Plan • Focus on Public Demand

3. TO BEGIN WITH… One day, the elephant said to the bird: “I wish I had wings” – And the bird: “No problem. Just get them!” The elephant asked again: “But, how do I get them?” “I do not know! I just do policies.” The bird exclaimed.

4. DO WE NEED/HAVE A BROADBAND DEFINITION ? • Broadband communications refers to the technological enviroment that permits the use of digital technologies at maximum levels of interactivity • (Source: Italian Broadband Report, Feb 2002)

5. SHALL GOVERNMENT ENACT POLICIES TO PROMOTE BROADBAND ? • E-EUROPE 2005 ACTION PLAN (SEVILLA 21 JUNE 2002) • ALMOST ALL EUROPEAN GOVERNMENTS ARE ADOPTING POLICIES TO PROMOTE BB BUT FEW HAVE AN ACTION PLAN • THE ITALIAN BB ACTION PLAN (PHASE 1,2, 3)

6. BB APPROACH IN ITALY • Accordingly, the development of broadband in Italy is considered an economic policy objective priority. • In such an environment, the Government must intervene to ensure that the development of broadband is as homogeneous and rapid as possible nationwide.

7. The Principles for Action (Italy) • Government has included the Broadband Plan in the Economic and Financial Planning Document for the period 2002-2006. • Plan will: 1) assess, 2) identify the key importance of broadband, 3) formulate measures 4) ensure implementation • Interministerial Broadband Task Force, (1st phase executed), has reaffirmed that BB is a prerequisite for the economic development of the country. • Objective of 2nd (current phase) is to formulate a plan. • 3rd phase will consist of the implementation of the plan itself.

8. 3 Main Macro-phases 1 2 3 • Macrophase • Vision • Planning • Implementation • Owner • Broadband Task Force • Executive Committee for the definition of a Broadband Plan for Italy • (to be defined)) • ... • Time horizon • June • 2002 • March 2002 • September 2001 • ... • Medium-term operationalprojects and rapid actions (pilot projects) • Deliverables • Broadband Report • Broadband Plan • Final phase

9. What Actions can ensure BB Development by 2005 • Current situation • (planned) • Snapshot of situation hitherto • Additional actions • Objectives • Levels of interactivity & evolution over time • INFRASTRUCTURE • INFRASTRUCTURE • PLANNING OF ACTIVITIES • MECHANSISMS FOR IMPLEMENTATION • PUBLIC SECTOR DEMAND • PUBLIC SECTOR DEMAND • PRIVATE SECTOR DEMAND • PRIVATE SECTOR DEMAND • MECHANISMS FOR CONTROL • Evaluation of the impact on productivity and the national income The objective of the plan is the development of the market within the established time frame (2005)

10. Scopo degli interventi Coverage objectives A B C Infrastructure Private Demand Public Demand Purpose of interventions Purpose of action The achievement of objectives requires public intervention to enhance infrastructure and generate public and private demand • 85-90% of government buildings • 65% of businesses • 35% of households Lines of intervention • generate incremental investmentbyprivate-sector operators over and above that invisaged in current declared business plans • generate an incremental market which will create a substantial and permanent increase in tax revenues

11. A • Infrastructure The special nature of the Italian infrastructure situation makes enabling and stimulus action essential technological • Lack of alternatives to copper-based connections for access networks and, particularly, the absence of cable modems • Copper-based network delivers better performance than the European average (better quality, lower average distances in the local loop) • Development of fibre optics could be fostered using existing conduits owned by the incumbent • The building of extensive enabling infrastructure for the development of WiFi • The development of experimental telecommunication services that are delivered through the electricity grid • Special nature of Italian infrastructure competitive • A sufficient level of competition has not been reached in the market, Enabling and preliminary actions Regulatory measures Administrative simplification • Necessary actions Stimulus activities

12. B • Private Demand Actions to boost private demand are aimed at both consumers and businesses producing content, services and applications • Public support for the production of content, services and applications • Support the expansion of demand for services with a high degree of interactivity • Objectives Supply-side fiscal measures Demand-side fiscal measures Funding • Incentives to content, service and application producers using measures similar to those introduced by the “Tremonti bis” law • Fiscal incentives to consumers in the form of tax endowments • Use of Community financing (participation in eEurope projects) • Actions

13. C • Public Demand Public demand is essential for the development of Broadband • Public demand: • Brings about an expansion in direct demand from government offices as well as indirect demand from the users of the applications • Demonstrates the utility of newtechnologies and improves the likelihood of them being taken up • Creates a critical mass, including in those areas where the market is least developed, which fosters the supply of connectivity, services and applications, and reduces prices • Role • The potential of public demand can be tapped by using demand aggregation methods • Public demand should be able to make use of structural funds and other available sources of European financing (Ten Telecom, IDA, IST, etc.) • The objective is to take some of the funds set aside for the development of the information society and channel them into projects that will bring broadband to the most disadvantaged areas • The Department forInnovation and Technologies must act as a coordinating body to avoid duplication,, encourage cooperation, capitalise on the intersectoral features of the projects of other government departments and maximise synergies. • Actions

14. C • Public Demand To act as a stimulus, public-sector demand must expand from current broadband coverage of 20% to more than 80% by 2005 Current situation Objectives Number of buildings Narrowband Broadband Narrowband Broadband Central govt 1 10,000 6,300 (63%) 3,700 (37%) 500 (5%) 9,500 (95%) Local govt 2 13,000 7,900 (61%) 4,300 (33%) 1,000 (8%) 12,000 (92%) Schools3 42,000 34,500 (82%) 7,500 (18%) 6,500 (15%) 35,500 (85%) NHS buildings4 20,000 18,600 (93%) 1,400 (7%) 3,000 (15%) 17,000 (85%) Total 85,000 67,300 (79%) 16,900 (20%) 11,000 (13%) 74,000 (87%) • Source: CT RUPA and individual departments • Source : individual regions • Inclusive of central and local governments. Source: Ministry of Universities, Education & Research (targets set on basis of eEurope 2005 plan) • Source: Ministry of Health (targets set with reference to strategic goals of National Health Plan and eEurope 2005) • Figures compiled by Roland Berger Strategy Consultants Increase by 2005 of broadband coverage of government from current level of 20% to ’87%, with at least 15% of connections at speeds over 2 Mbit/s

15. Distribution and impact of actions B Areas with medium development potential C Areas with low development potential A Areas with high development potential Public-sector demand Tax relief (Tremonti bis) - Infrastructure contributions Subsidised infrastructure loans - State contributions to structural funds Incentives for private demand Low High The actions will have an impact around the country, especially in areas with the lowest development potential Preliminary

16. The Government will provide €1,200 million in funds for public demand and €600 million for infrastructure building and private demand Cost of Incentive Plan* • Economies achieved by demand aggregation Incremental spending 2003-2005 (millions €) 200 State budget Local gov budget Total 1,200 • Public demand entails total costs of €1,000 – 1,200 million, with reference to the savings achieved through demand aggregation Central govt 150 150 Public demand Local govt 150 150 1000 Schools 100 650 550 Hospitals 250 250 Total 700 500 1,000 – 1,200 Private demand • Total investment €100 million (minimum value) 100 • Total investment of €500 million to leverage private resources worth €2,500 million 500 Infrastructure * The resources activated make it possible eventually to achieve tax revenues sufficient to ensure full coverage of the costs incurred

17. Public sector demand / and broadband Public sector demand is one of the main levers for the development of the BB market, calling for models of demand aggregation • ALL ACTIVITIES • Mapping public sector demand for connectivity (Unified Government Network (RUPA)-Regional networks- e-government in local authorities), and digital services, and mapping the related implementation plans (drafted by the Department for Innovation and Technologies, other branches of central government, the regions and e-government in local authorities) • Processing of information received and identification of current and projected public sector demand in terms of advanced interactivity • Selecting models for actions (demand aggregation) • Incidence of public sector demand on the economic situation of operators (business plan) and the planning of actions Public sector demand ACTIVITIES UNDERTAKEN TO DATE Mapping central and local government departments Demand aggregation

18. MAPPING SPACE • Regions • Provinces • Municipalities • Schools • Hospitals INFORMATION REQUESTED • Logistics of offices • Connectivity • Digital services Regions/Local Government were Requested to Provide Detailed Information 8,100 municipalities have been addressed + all the Regions

19. INFORMATION REQUIRED • Logistics of offices • Connectivity • Digital services Mapping Public Administration is a Key Step… Mapping of Unified Government Network (RUPA) Main peripheral offices of ministries, local non-economic government bodies and other agencies Geographically referenced database All offices of ministries, local non-economic government bodies and other agencies Ministries • Ministry of Education, • Universities and Research • Ministry of Justice • Ministry of Health • Ministry for the Economy Direct involvement in Public Demand Committee

20. … While Contributing to the Acceleration of BB 5 Impact on the market for broadband services of combining public with private-sector demand 4 Possibility of defining minimum bandwidth standards for the entire public administration Benefits of aggregating public sector demand for broadband services 3 Greater penetration of broadband in the public sector at low operating costs 2 Increase in demand for broadbandfromwithin the public sector 1 Greater efficiency in government procurement and consequent economies of scale

21. This ‘telephone’ has too many shortcomings to be seriously considered as a means of communications. The device is inherently of no value to us -- Western Union 1876 • Broadband: • In the absence of substantial demand • does it matter? • We believe it does