INFOSTRADA/TELECOM ITALIA-TECNOLOGIA ADSL
PRESS RELEASE
PRESS RELEASE
TELECOM FOUND LIABLE FOR ABUSE OF A DOMINANT POSITION ON THE MARKET FOR NEW BROADBAND TECHNOLOGY APPLICATIONS
At its meeting on 27 April 2001, the Competition Authority found that Telecom had abused its dominant position on the market for the supply of local connectivity and data transmission and Internet access services with the application of the new ADSL and x-DSL/SDH broadband technologies to the public switched network.
Telecom Italia holds a dominant position on the market for the supply of local network transmission capacity by virtue of being the de facto monopolist for the supply of direct circuits and the sole switched telephony public network carrier; the network cannot be reproduced at the local level, and is not yet available to its competitors (in view of the failure to implement the unbundling rules). Telecom Italia is therefore the main supplier of transmission capacity to Internet Service Providers and other competing telecommunications carriers and operators on the data transmission and Internet access services end-user supply markets.
Moreover, Telecom Italia also holds a dominant position on these markets because of its large market shares, the nationwide nature of its data networks, its proprietorship of a well-known trade name, its availability of vast technological and financial resources, and its nature as a vertically integrated operator.
Acting on a complaint from Infostrada, followed by complaints from other competitors such as Albacom, FastWeb, Wind, and the Italian Association of Internet Service Providers, the Authority examined the conduct of Telecom Italia since 1998 regarding the supply of local connectivity and final services to business and residential customers based on ATM/x-DSL innovative access and carrier technologies, discovering a series of offences committed against competition law.
The investigation concluded by the Authority has demonstrated that Telecom Italia has been pursuing a strategy to exclude and discriminate against its competitors, to gain a head-start on securing for itself the most innovative segments of the Internet access and data transmission services markets, illegally exploiting its position as the former statutory monopolist over the public switched network, at a time when the supply of infrastructure has been liberalized.
In particular, as long ago as the end of 1998 Telecom Italia had been offering broadband Internet access and data transmission services firstly by implementing innovative ADSL technologies and subsequently, during the course of 1999 the x-DSL type technologies to the distributive (twisted pair) section of the switched public network.
In the same period, Telecom Italia had, without any justification, refused requests from competitors for local connectivity to be used by them to supply similar services. Telecom Italia had also implemented a policy to market its broadband services to end-users (including Netway, Big@cces, FastInternet, RING and the Full Business Company), without permitting its competitors to make competitive offerings based on the same technologies by creating appropriate wholesale offerings. This constituted a violation of the principle of nondiscrimination and the principle of equal market opportunities, with which Telecom Italia is obliged to comply by virtue of its special responsibilities as a result of its dominant position.
In short, the Authority has found that Telecom Italia had restricted access to the markets investigated, and had hampered technological development to the detriment of consumers, by unlawfully exploiting the advantages it enjoyed in its de facto monopoly position on the market upstream of the supply of local connectivity services, on the strength of being vertically integrated into the network and the services, and as a carrier in a dominant position on the downstream markets.
Considering the seriousness and the duration of these offences, which it had begun to commit at the end of 1998 and which, in some cases had continued until the first few months of 2001, violating the regulations governing this industry, the Authority has imposed fines on Telecom Italia totalling approximately 115 billion lire.
Rome, 2 May 2001