Italy government pushing for broadband solution

By Danilo Masoni MILAN (Reuters) - The Italian government is pushing to speed up the roll-out of ultrafast broadband networks to help its ailing economy, fuelling speculation it could force incumbent Telecom Italia into a costly overhaul of its existing infrastructure. The cabinet of Prime Minister Matteo Renzi meets on Tuesday to approve an 6 billion euro ($6.7 billion) plan to build a nationwide fiber optic network by replacing the aging copper wires that run into subscribers' homes. Italy ranks 28th out of the 34 members of the Organisation for Economic Cooperation and Development in terms of fixed broadband subscriptions. The 40-year-old premier has made linking together millions of Italian households with super fast cables a priority. Speculation about the plans has been heating up before Tuesday's meeting with little sign of agreement between the government and phone companies including former state monopoly Telecom Italia . Renzi has taken a close interest in the issue, which he considers vital to modernizing Italy's economy and officials see the billions of euros that would need to be invested as a valuable boost to overall demand. However the issue has run into a complex web of problems, running from whether to move straight from the old copper network to modern glass-fiber cables, the costs of investment, price setting, regulation and network access. Tensions were rekindled at the weekend when newspapers reported the government planned to force Telecom Italia to switch off its copper network by 2030, writing off assets worth billions of euros and upgrading to modern optical fiber. The government late on Saturday denied it would impose such a deadline but the clash highlighted difficulties in reaching agreement with phone operators which will be carrying out the infrastructure upgrade. "The measures to be adopted will be limited to applying the ultrabroadband plan to stimulate investment by all the operators: there will be no decree on Telecom Italia or to impose any arbitrary switch off of the copper network," junior minister Antonello Giacomelli said in a statement. Italy was sticking to a European target of bringing connections running at a speed of 100 Megabites to half its population by 2020, the statement said. A source familiar with the talks said Telecom Italia had warned Raffaele Tiscar, a member of Renzi's broadband task force who had reportedly signed the decree, about the potential damage that would stem from a forced switch-off. Trade unions also voiced concerns, saying such a move would put at risk thousands of jobs at a time when Italy is grappling with record unemployment levels. "Companies have been waiting years for rules that support investment and cannot be asked to pay for delays on the digital agenda," said the Cisl and Fistel unions in a statement. One key problem is that while the government favors bringing fiber directly into the homes -- a more radical infrastructure upgrade that requires costly and time-consuming trench digging -- operators prefer a cheaper solution. Instead of being forced to replace all its copper wires with fiber optic cables, Telecom Italia prefers a more gradual transition by first using existing infrastructure to deliver high-speed broadband through the street cabinets. Sector regulator AGCOM also is favoring the so-called fiber-to-the cabinet architecture but the uncertainty has made it more difficult for phone operators to plan for long term investment. Pending government decisions, Telecom Italia approved last month a plan to spend 10 billion euros to upgrade its aging domestic network and hire 4,000 people in the coming years. The plan presented by Telecom Italia follows a failure to reach a deal to buy Metroweb, a part state-owned fiber company, due to disagreements over the ownership structure and opposition from rivals such as mobile phone giant Vodafone . (Reporting by Danilo Masoni; editing by James Mackenzie and Rosalind Russell)