The regulatory environment in the Italian IT, media and telecommunications sector is dynamic. Many new regulatory measures have been adopted since the beginning of 2015.
With regard to telecommunications, the Italian Communications Authority (AGCOM):
- a completed the analysis of the markets for access services provided at a fixed location (Resolution No. 623/15/CONS), which defined prices and conditions for the supply by Telecom Italia of wholesale access services on its optical fibre and copper networks until 2017;
- b launched a public consultation regarding the new model proposed by Telecom Italia to ensure equivalent conditions of network access for all wholesale clients, including its own retail operations. The public consultation will last until February 2017; and
- c adopted ‘Guidelines for wholesale access conditions to publicly funded ultra-broadband networks’ (Resolution No. 120/16/CONS), as a way to carry out the Italian Strategy for ultra-broadband approved by the Italian government on 3 March 2015.
Moreover, the Italian government adopted Legislative Decree No. 33/2016, which implements EU Directive 2014/61/EU and provides measures to reduce the installation costs of high-speed electronic communications networks.
As for mobile communications, the Ministry of Economic Development launched a public auction in September 2015 for the assignment of 1,452–1,492MHz frequencies (L Band), on the basis of the rules and procedures set out by AGCOM (Resolution 18/15/CONS). AGCOM also defined the rules for the assignment of the 3,600–3,800MHz band.
In the audiovisual and media sectors, AGCOM launched an enquiry (Resolution No. 286/15/CONS) aimed at identifying the relevant markets and any positions of dominance or likely to harm pluralism in the integrated communications system (ICS).2
Finally, the Anti-Terrorism Decree (Law Decree No. 7/2015, converted into law by Law No. 43/2015) introduced several measures concerning the use of the internet and IT tools in the fight against international terrorism.
i The regulators
There are two authorities entrusted with the regulation of the IT, media and telecoms sectors in Italy:
- a AGCOM, established by Law No. 249/1997, is an independent administrative body empowered to regulate and supervise the electronic communications, broadcasting and publishing sectors in Italy. Since 2012, Law Decree No. 201/2011 extended AGCOM’s powers to the postal services markets. The scope of AGCOM’s activity is twofold: it ensures fair competition among market operators by preventing the creation of monopolies; and it protects consumers by ensuring minimum standards of quality, pluralism and the provision of universal services; and
- b the Ministry of Economic Development, through its Department of Communications. In coordination with AGCOM, the Ministry manages the radio spectrum by approving the national Frequency Allocation Plan and by issuing the related tender procedures.
Upon request by the operators, it also grants authorisations for the provision of networks and electronic communications services, as well as for the provision of television and radio contents.
The main sources of law in the TMT sector are:
- a Legislative Decree No. 259/2003 (the Code), which implemented the comprehensive regulatory framework for electronic communications networks and services adopted in 2002 at the EU level, including the Framework,3 Authorisation,4 Access5 and Universal Service Directives.6
- In 2009, Directive 2009/140/EC, Directive 2009/136/EC and Regulation (EC) No. 1211/2009 were adopted to improve and update the 2002 regulatory framework, and the Code was amended accordingly.
- The Code sets out the rules governing both public and private telecommunications services, including the provision of internet-based services;
- b Law No. 249/1997, which established AGCOM and set out its regulatory powers; and
- c Legislative Decree No. 177/2005 (the Consolidated Text on Radio and Audiovisual Media Services), which contains the regulatory framework concerning radio and television broadcasting.
ii Regulated activities
Italian telecommunications law provides for a general authorisation regime set out in the Code. Pursuant to Article 25, Section 3 of the Code, any provider of networks or electronic communications services is required to obtain an authorisation from the Ministry of Economic Development. To this end, the provider must file a declaration of its intention to commence the provision of electronic communication networks or services.
Article 1 of the Code defines the notion of ‘electronic communications services’ as those services, normally provided for remuneration, which consist wholly or mainly in the transmission of signals on electronic communications networks (by cable, optical fibre, satellite and any other electromagnetic means).
The provider can start to operate as soon as it has filed the declaration. However, no later than 60 days from the filing of the declaration, the Ministry of Economic Development must verify that the conditions and requirements are met and grant the authorisation or, where appropriate, impose a ban on the activity. The authorisation is granted for a maximum 20-year period, it is renewable and can be transferred to third parties.
The authorisation grants the provider the right to negotiate interconnection with pre-existing network providers and telecommunication services operators. It also entails the right to use radio frequencies.7
The provision of media services is also subject to an authorisation regime, as set out in the Consolidated Text on Radio and Audiovisual Media Services.
iii Ownership and market access restrictions
Italian law generally makes no distinction between Italians and foreign nationals concerning investment and ownership in the telecommunications sector. However, Article 25, Section 1 of the Code provides that restrictions on the general authorisation regime provided by law can be applied by the Ministry of Economic Development to non-EU or non-EEA citizens and enterprises.
Moreover, the Ministry of Economic Development can issue an authorisation to non-EU companies only if Italian entities would have a reciprocal right to enter the market in their country.
Access to the telecommunications sector is also affected by the general rules set out in Law Decree No. 21/2012, as implemented by Presidential Decree No. 85/2014, concerning the regulation of strategic operations in the communications sector, such as the installation of infrastructure and the provision of broadband services.
These rules give the Italian government special powers when facing operations that could constitute a threat to national security and defence – namely, the possibility to:
- a impose additional requirements related to supply safety, data security and technology transfers;
- b impose a veto on the merger or demerger of a company, on its transfer or the transfer of its registered office abroad, as well as on the dissolution of a company; and
- c prohibit the purchase of shares by entities other than the Italian government, Italian public bodies or entities controlled by them, in the event that the purchase of shares would result in the purchaser holding a share of capital able to compromise the interests of defence and national security.
iv Transfers of control and assignments
In the telecommunications sector, both AGCOM and the Italian Competition Authority (AGCM) enforce merger control rules. Pursuant to Article 1.6(c)(11) of Law No. 249/1997, the AGCM must obtain a non-binding opinion from AGCOM on proposed decisions concerning communication operators.
Italian law also provides ownership restrictions to ensure external pluralism and competition in the media sector. Pursuant to Article 43 of the Consolidated Text on Radio and Audiovisual Media Services, AGCOM exercises its control in order to prevent the creation of dominant positions and ensure that the anti-concentration limits provided by law are respected by companies operating in the ICS.
To this end, undertakings operating in the ICS are required to notify the proposed merger to AGCOM, which can veto the merger if it would result in the creation of a dominant position capable of harming pluralism. Any merger concluded without prior clearance by AGCOM is null and void.
As stated in AGCOM’s Procedural Regulation adopted under Article 43 of the Consolidated Text on Radio and Audiovisual Media Services, AGCOM’s investigations on dominant positions are articulated in two subsequent stages: market identification and analysis.8
III TELECOMMUNICATIONS AND INTERNET ACCESS
i Internet and internet protocol regulation
Given the variety of internet-based services (email, mailing lists, social networks and web search engines, to mention but a few) all attempts to provide a comprehensive internet regulation have been unsuccessful.
However, sector-specific regulation exists, for example, with regard to online piracy. The digitisation of communications has exponentially increased the ability to reproduce and distribute works online without the consent of the copyright owner. Pursuant to Article 182-bis and 182-ter of Law No. 633/1941 (the Copyright Law), as amended by Law No. 248/2000, both AGCOM and the Italian association of authors and publishers (SIAE) are competent to prevent and detect online copyright violations.
In exercising its powers, by Resolution No. 680/13/CONS, AGCOM adopted the ‘Regulation on the protection of copyright on electronic communications networks’, the first measure ever adopted in Italy to fight online piracy. The Regulation aims to protect online copyright through two complementary actions: (1) support for the development of a legal offer of digital works; and (2) fighting against piracy through effective, proportionate and dissuasive enforcement procedures. The Regulation is only addressed to intermediary service providers and not to end-users. The Regulation ensures the provided protection only at the initiative of the copyright owner. If the owner has already filed a claim on the same matter before the judicial authority, AGCOM has to dismiss the matter.
In order to stop copyright breaches, AGCOM may adopt different measures. If the works that infringe copyright are on a server that is situated in Italy, AGCOM can order the hosting service provider to remove the works or to disable access to them. If the server is located abroad, AGCOM orders the mere conduit service provider to disable access to the copyright-infringing website. Moreover, AGCOM can enable redirection to a web page whose content will be determined by AGCOM itself. All the measures taken by AGCOM may be appealed before the administrative judge.
ii Universal service
EU Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services (the Universal Service Directive) has been implemented in Italy by Articles 53–57 of the Code. These provisions state that all users on the national territory, regardless of their geographical location, shall be entitled to certain electronic communications services to be provided at a predetermined quality level.
Article 58 of the Code establishes that: (1) AGCOM may designate one or more undertakings as having a universal service obligation; (2) AGCOM carries out an objective, transparent and non-discriminatory designation procedure, whereby no undertaking is a priori excluded from being designated; and (3) until the designation, which to date has not yet been made by AGCOM, Telecom Italia is designated by law as having a universal service obligation.
The universal service in the telecommunications field currently includes the following services:
- a the provision of access at a fixed location to the public communications network, that allows the user to make and receive calls, communicate by fax, send data and have functional access to the internet;
- b the supply of telephone directory services;
- c the provision of public pay telephones, which also allows for free access to emergency numbers; and
- d the supply of special conditions and options of service for disabled users.
In economic terms, the cornerstone of the universal service principle is the accessibility and flexibility of rates (i.e., the obligation to provide service even to unprofitable customers).
Although the concept of universal service has been extended over time to include a reference to ‘functional internet access’, it still does not include broadband services. However, by Resolution No. 113/16/CONS, AGCOM launched a preliminary investigation concerning the possibility to qualify the provision of broadband in terms of universal service.
iii Restrictions on the provision of service
Although there is no law in Italy that specifically regulates network neutrality, the latter has become a growing concern in the AGCOM agenda. Network neutrality is the principle according to which there should be no discrimination in the treatment of internet data, based on the content, device, application, origin and destination of the content.9 In 2011, AGCOM launched a public consultation entirely focused on net neutrality, the results of which were summarised in Resolution No. 714/11/CONS.10
Network neutrality is challenged by the spread of forms of traffic management, which implies the treatment of bytes transmitted over communications networks.
Internet service providers’ liability
As regards the liability of internet service providers (ISPs), pursuant to Article 17 of Legislative Decree No. 70/2003, ISPs are not subject to a general monitoring obligation with regard to content uploaded by their users that ISPs transmit or store, nor are they subject to a general obligation to actively seek facts or circumstances indicating illegal activity. However, when informed of any unlawful conduct or information provided by recipients of their service, they must promptly inform the competent judicial or administrative authority. Also, upon request by the authorities, they must promptly prohibit access to illegal content. Failure to comply with this requirement may result in their civil liability.
Measures against unsolicited phone calls, faxes, emails and texts
Presidential Decree No. 178/2010 has established a Public Objections Register. The Ministry of Economic Development – Department of Communications has entrusted the management of this register to the Ugo Bordoni Foundation (FUB). Anyone, whether a natural or legal person, whose telephone number is listed in public telephone directories, can subscribe free of charge to the register in order to stop receiving unsolicited sales and marketing calls.
If, notwithstanding the subscription to the register, the interested person still receives unsolicited calls, they can seek the intervention of the Authority for the Protection of Personal Data or the judicial authority.
Article 130 of Legislative Decree No. 196/2003 protects consumers against unsolicited advertising through email, fax or SMS (such as spam) by requiring their prior consent to the use of personal data for commercial purposes.
Law No. 43/2015 converted into law the Anti-Terrorism Decree (Law Decree No. 7/2015). It contains urgent measures for the fight against international terrorism. In order to protect national security, the law introduces measures to counter the proselytising activities organised through the use of the internet. The use of IT tools is considered an aggravating circumstance for crimes related to terrorism or incitement to terrorism committed through IT tools. The law also provides that the Italian Postal and Communications Police must constantly update a blacklist of websites that are being used for terrorist purposes in order to facilitate police investigation.
With regard to the limitations to self-expression on the internet, there is no criminal provision that specifically targets online defamation. Article 595 of the Italian Criminal Code contains the general provision on defamation. However, it does not refer to defamation committed through the use of the internet, not even as an aggravating circumstance.11
Data protection, privacy and the right to be forgotten
The protection of personal data in electronic communications is regulated by Legislative Decree No. 196/2003 (the Privacy Code).
As a general rule,12 any operator in charge of collecting and processing personal data can do so only after obtaining the written consent of the person to whom the data relates. To this end, the operator has to provide the user with any relevant information concerning the purpose of the data collection and the rights of the user to access such data and to demand for its modification or deletion.
Pursuant to Article 31 of the Privacy Code, network operators are subject to a general obligation of custody to reduce the risk of destruction, loss or unauthorised access to personal data.
Traffic data, meaning data processed for the purpose of conveying a communication on an electronic communications network, must be deleted by the network operator as soon as the communication is complete.13 However, the operator is allowed to store it for a longer period of time – in any case not longer than six months – if this is necessary for invoicing purposes. Moreover, the operator must store traffic data for up to 24 months for the prosecution of criminal offences.
Pursuant to Article 126 of the Privacy Code, location data can only be processed when it is made anonymous (or with the prior consent of the users, revocable at any time) and to the extent and for the duration necessary for the provision of the service requested.
Failure to comply with these requirements may result in the application of both administrative fines and criminal sanctions.14
The operator processing the data has to inform AGCOM, the Italian Privacy Authority and the interested person about any risk of breach of network security, or breach of personal data that has occurred.
Privacy concerns also underlie the ‘right to be forgotten’, which is the right for individuals to have information about themselves deleted from the internet so that they cannot be found through search engines. This principle has been affirmed by the European Court of Justice in the Google Spain case,15 where the court established that an online search engine such as Google is responsible for the personal data collected and therefore shall, upon request, remove from the list of results all the links to web pages containing information about that person.
At the national level, one of the most prominent judgments in this field was rendered by the Court of Cassation in the case Google v. Vivi Down,16 concerning the broadcasting on Google Video of a video showing some boys humiliating a fellow student suffering from Down’s syndrome and also insulting the Association Vivi Down. Google’s managers faced criminal charges for failing to prevent online defamation and for having unlawfully processed personal data concerning the health condition of the boy. However, in the end, they were acquitted of all charges.
Following the judgment in the Google Spain case, Google has adopted a template to request the removal of search results deemed to be inappropriate, offensive or harmful to privacy. Alongside this measure, pursuant to Article 7 of the Privacy Code the interested person has the right to obtain the cancellation, anonymisation or blocking of data unlawfully processed, including data whose retention is unnecessary for the purposes for which it was collected. According to Article 145 of the Privacy Code, these rights can be enforced before the Italian Privacy Authority or, alternatively, before the judicial authority.
Interception of electronic communications
Law No. 43/2015 modified Article 226 of the implementing provisions to the Code of Criminal Procedure. When it is necessary to acquire information concerning the prevention of crimes having, inter alia, terrorist purposes, committed through the use of electronic devices, the Public Prosecutor may authorise the interception of communications for a maximum of 40 days. The prosecutor can also authorise the storage of traffic data for up to 24 months and the acquisition of all useful information from telecommunications operators.
Protection of children
Pursuant to Article 34 of the Consolidated Text on Radio and Audiovisual Media Services, as amended by Legislative Decree No. 120/2012, it is in principle prohibited to broadcast programmes that, taking into account the time of the broadcast, could seriously harm the physical, psychological and moral development of children, especially if they contain violent or pornographic scenes.
Nevertheless, such programmes can be broadcast upon the request of broadcasting companies provided that they include a parental control system. In particular, they must be marked with an audio and visual signal at the beginning of and during the broadcast.
There is no specific law in Italy regarding the protection of children online, in order to protect them from phenomena such as grooming or cyberbullying.17 In 2003, the representatives of ISPs adopted the Italian Self-Regulation Internet and Underage Code, which contains specific provisions in order to target online child pornography.
Cybersecurity is a growing policy concern in Italy. Nowadays, the threats in cyberspace can take different forms such as cybercrime, cyberespionage and cyberterrorism. In 2013 the Italian government strengthened the protection of Italian cyberspace by creating a three-layer structure.18 The first layer is embodied in the Inter-ministerial Committee for the Security of the Republic, which is in charge of elaborating general strategies for national security. On the middle layer, the Decree establishes the creation of a permanent body in charge of connecting all administrations and regulatory bodies involved in the pursuit of strategic cybersecurity objectives. Finally, the Inter-ministerial Centre for Situation Assessment and Strategic Planning coordinates the recovery of systems functionality after an attack.
The National Anti-Crime Computer Centre for Critical Infrastructure Protection is a branch of the Italian police in charge of surveilling the cybersecurity of infrastructures in sensitive areas, such as defence, telecommunications and energy.
In June 2016, in the framework of the National Conference on Cyber Warfare held in Rome, the creation of the first European Centre for Advanced Cybersecurity was announced, based in Italy.
IV SPECTRUM POLICY
Radio spectrum is an essential resource for telecommunications networks. It is the basis for wireless communications but is also key in areas such as broadcasting, transport, defence, environmental protection and energy. Due to the increasingly urgent demand for this scarce resource, spectrum policy has become crucial at both European and national level.
The management of the Italian radio frequency spectrum is entrusted to two regulatory authorities: the Ministry of Economic Development and AGCOM. The Ministry elaborates the national Frequency Allocation Plan, which divides radio spectrum into frequency bands and assigns each band to services and users.
On this basis, AGCOM adopts the national Frequency Assignment Plan, which determines the location of radio stations and the frequencies assigned to each of them. The final allocation of frequencies and the granting of the related rights of use is made by the Ministry of Economic Development following a call for applications by network operators. Both the allocation and the assignment of radio frequencies has to be based on objective, transparent, non-discriminatory and proportionate criteria.19
ii Flexible spectrum use
Following the European trend,20 the Italian regulatory framework concerning spectrum use has become more flexible. The intention is to promote spectrum sharing, not necessarily limited to a particular frequency band, as a spectrum management tool.
In July 2015 the Ministry of Economic Development together with FUB started an experiment on the 2.3GHz band, comprising the full sharing of spectrum by licensed and unlicensed operators.
On the basis of the results of this experiment, by Resolution No. 121/16/CONS AGCOM launched a public consultation concerning the licensed shared access to radio spectrum. The consultation concerned the extent to which a public or private frequency owner should share the portion of the spectrum that is not being used with one or more licensees on a voluntary or mandatory basis, without the risk of interferences that could impair the normal operation of its systems.
Pursuant to Article 14-ter of the Code, the owner of allocated frequencies can trade them or allow other entities to use them through a lease. The owner has to notify both the Ministry of Economic Development and AGCOM of the intention to trade such frequencies. The authorities can impose a ban on the intended transfer of frequencies if the rights to use them were obtained free of charge.
iii Broadband and next-generation mobile spectrum use
Following the Radio Spectrum Policy Programme elaborated at the EU level, AGCOM aims to boost the development of broadband services in Italy through efficient assignment of frequencies.
By Resolution 18/15/CONS, AGCOM set out the rules and procedures for the assignment of the 1,452–1,492MHz frequencies (L Band), to be allocated to broadband and ultra-broadband mobile services with 4G technology. On this basis, the Ministry of Economic Development launched a public auction in September 2015, making Italy the second European country (after Germany) to allocate this band.21
No new entrants were allowed to bid, because the portion of L Band allocated was meant to be used by mobile network operators as a supplementary downlink (i.e., to enable users to receive and download data more quickly and efficiently).
Considering the increasing market demand for wireless broadband services, AGCOM also defined the rules for the assignment of the 3,600–3,800MHz band in Resolution No. 659/15/CONS. The Resolution establishes coverage obligations to meet the demand for high-speed connectivity services, in order to implement the national strategy for ultra-broadband (see Section II.ii, supra).
Despite the calls from the European Commission to make the 700MHz frequency available to mobile broadband in order to implement 4G and 5G technology across Europe, Italy has not yet adopted any measure.
iv Spectrum auctions and fees
The Italian regulatory authorities believe that competitive procedures, namely auctions, are the most appropriate means to assign radio frequencies to interested network operators. The merits of auctions are transparency, capacity to attract foreign capital and the fact that they allow the legislator to set a certain threshold of financial gain.
The auction is generally structured as an open procedure with a simultaneous multiple round ascending mechanism. A large number of licences are simultaneously placed for sale and potential buyers call prices up during each round.
Only one operator for each group of companies is allowed to participate, in order to avoid any risk of collusion and anticompetitive hoarding of frequencies. Participation in the auction must also be secured by an appropriate security deposit. Auction procedures have been used in Italy to assign the right of use for the 3.5GHz, 800, 1,800, 2,000 and 2,600MHz and 1,452–1,492MHz bands.
i Restrictions on the provision of service
The Consolidated Text on Radio and Audiovisual Media Services sets out the rules governing the Italian broadcasting system. This regulatory framework includes different provisions for network operators22 and content providers.23
Network operators must obtain a 12-year authorisation granted by the Ministry of Economic Development. However, the authorisation does not entail the automatic allocation of radio frequencies and the right to use them, which has to be obtained separately.
The provision of television and radio content is also subject to a 12-year authorisation, granted by the Ministry of Economic Development. Television content providers are additionally required to fulfil the obligations established by AGCOM in Regulation 435/01/CONS.24
Private broadcasters have to comply with a number of limitations and obligations established by law in order to protect end-users. They are required to organise programming based on issuer classification. Therefore, the nature of the authorisation determines the related obligations, depending on whether the broadcaster has a commercial, social, information or teleshopping purpose. To this end, information content providers authorised to provide content at national or local level are required to, among others: (1) broadcast news and radio-news daily; (2) allow access to their programmes to all political actors on an equal basis (par condicio); and (3) broadcast certain events, considered by AGCOM as having a major importance for society, on a free-to-air basis.25
More stringent obligations are imposed on RAI S.p.A., the concessionaire of the public broadcasting service, which has to be provided throughout the whole national territory (i.e., servicing not only lucrative urban areas but also rural areas).26
ii Internet-delivered video content
In Italy, as high-speed broadband connections become more widespread, internet video distribution continues to grow. According to the 12th Report on Communication by Censis-UCSI in 2015, Web TV has a 23.7 per cent audience, mobile TV has a 11.6 per cent audience and 10 per cent of Italians use a smart TV connected to a network.
All of the most important TV channels have developed on-demand services that allow users to watch TV programmes online after the original broadcast. In addition to this, many operators have started to provide internet protocol TV (IPTV) services. IPTV allows users to access television broadcasting networks (both in live-streaming and on-demand mode) via an internet broadband connection by using a set-top box (and not a PC, tablet or smartphone, which can be used for Web TV).27
Although there is no comprehensive law governing the delivery of video content over the internet, by Resolutions No. 606/10/CONS and No. 607/10/CONS, AGCOM adopted two regulatory measures concerning the provision of audiovisual and radio media services on other electronic media (Web-TV, IPTV and mobile TV) and the provision of on-demand audiovisual media services, respectively.
VI THE YEAR IN REVIEW
i Relevant regulatory measures
Resolution No. 623/15/CONS
As mentioned in the overview, in Resolution No. 623/15/CONS, AGCOM analysed the markets for wholesale local access services provided at a fixed location and the market for wholesale central access provided at a fixed location for mass market products. It updates AGCOM’s previous 2009 markets analysis contained in Resolution No. 731/09/CONS.
In Resolution No. 623/15/CONS, AGCOM confirmed that Telecom Italia holds significant market power in the markets for wholesale local access services at a fixed location. This entails an obligation on Telecom Italia to provide other licensed operators (OLOs) with: (1) wholesale access to the fixed network (provisioning) and (2) corrective maintenance (assurance) of unbundled local loop lines (ULLs) and of sub-loop unbundled lines (SLUs). AGCOM also required Telecom Italia to submit a proposal for setting up outsourcing mechanisms which should include the possibility for clients to obtain provisioning and assurance services on Telecom Italia’s network from third-party providers.
New Equivalence Model
The public consultation launched by AGCOM regarding the New Equivalence Model proposed by Telecom Italia in 2015 is currently ongoing. The New Equivalence Model aims to modify the conditions for the provision of wholesale access services to Telecom Italia’s retail division and OLOs, in order to make them equivalent and symmetrical.
The two guiding principles of the New Equivalence Model are: (1) creating one single standard procedure, applicable to both internal divisions and third parties, for the provision of wholesale local access services provided at a fixed location and wholesale central access services provided at a fixed location for mass market products and (2) improving the level of efficiency by introducing new ways of unbundling and outsourcing for the provision and assurance of ULL and SLU services.
At the end of the public consultation, the New Equivalence Model will impose specific obligations on Telecom Italia, if it is approved by AGCOM.
Guidelines for wholesale access conditions to publicly funded ultra-broadband networks
As regards regulatory measures concerning access to ultra-broadband networks, AGCOM has made an essential contribution in this field by adopting the ‘Guidelines for wholesale access conditions to publicly funded ultra-broadband networks’.
The Guidelines refer to two different schemes of public funding: (1) public funding based on an incentive model and (2) a direct intervention model.
The incentive model is a form of network co-financing, meaning that public funding can amount to a maximum of 70 per cent of the invested capital. The ownership of the ultra-broadband network is retained by the operator that receives the funding, which, in return, is committed to provide wholesale access services to other operators active in the retail market of ultra-broadband services. The wholesale access has to be guaranteed for a minimum of seven years. As for the prices charged for the wholesale access to the partially publicly funded fibre networks, AGCOM refers to the Reference Offer elaborated by Telecom Italia, the incumbent operator.
In the direct intervention model, fibre networks remain publicly owned but they are managed by a concessionaire, identified through a public procedure. The concessionaire is responsible for the supply of wholesale access to the publicly funded infrastructure to other operators.
ii Relevant judgments
The Council of State, Third Section, Judgment of 14 July 2016, No. 3143
The Council of State upheld the appeal filed by Telecom Italia and some OLOs against AGCOM Resolutions No. 746 and 747/13/CONS, in which AGCOM had established the prices of wholesale access services for 2013 on the basis of the Reference Offer proposed by the incumbent Telecom Italia. The Reference Offer subject to AGCOM approval concerned services for: (1) wholesale broadband access (WBA) and (2) unbundling of the local loop.
The Council of State put great emphasis on the application of the principle of cost-orientation of prices set out in Article 50 of the Code, stating that ‘it is necessary that AGCOM directs all prices to the underlying costs, after having verified that these costs are actually incurred and efficient.’ Thus, the Court upheld the complaints of those who asked for higher or lower prices based on the fact that AGCOM had not provided an appropriate explanation to its own calculations.
The judgment relied on the Recommendation adopted by the Commission at the end of the proceedings based on Article 7 of the Framework Directive. It is a significant ruling because it departs from the deferential approach shown so far by the administrative courts to AGCOM when facing highly discretional and technical regulatory decisions.
The Council of State, Plenary Conference, Judgment of 4 February 2016, No. 4
The Plenary Conference of the Council of State tackled the sensitive issue of the respective roles of AGCOM and the AGCM in the application of general rules on unfair commercial practices in the telecommunications sector.
The jurisdiction of the AGCM regarding unfair commercial practices (Articles 20–26 of the Italian Consumer Code) can overlap with the jurisdiction of AGCOM with regard to the protection of users pursuant to sector-specific regulation such as the Electronic Communications Code.
The Council of State stated that: (1) even in regulated sectors, the AGCM has exclusive competence regarding aggressive commercial practices; (2) the application of the sector-specific regulation contained in the Electronic Communications Code and the subsequent jurisdiction of AGCOM can be affirmed only where the sector-specific regulation is comprehensive and complete; and (3) the identification of applicable rules (the Consumer Code or the sector-specific regulation overseen by AGCOM) should be done on a case-by-case basis.
According to the Council of State, in each case one should assess if the violation of the regulatory provision (overseen by AGCOM) is a constituent element of a broader unlawful conduct aimed at restricting the freedom of users (that is, an unfair commercial practice). In the latter case, jurisdiction lies with the AGCM because AGCOM cannot sanction the most serious breach.
The Court of Cassation, Joined Chambers, Judgment of 1 February 2016, No. 1836.
The Court of Cassation ruled on the sensitive matter of the positioning of broadcasters on the remote control for the digital terrestrial television signal. The issue is crucial to competition in the TV market as the positioning on the remote control is able to affect the audience and, ultimately, the economic resources of the broadcaster. Exercising its powers in this area pursuant to the Consolidated Text on Radio and audiovisual Media Services, in Resolution No. 366/10/CONS, AGCOM assigned to the music channels MTV and Deejay Television numbers in the block 1–9, which were reserved for generalist TV.
The Council of State annulled AGCOM’s decision, holding that these broadcasters were specialist and not generalist and ordered AGCOM to conduct a survey aimed at ascertaining the preferences of users with regard to 2010 in order to assign positions on the remote control (Judgment No. 4660/2012).
In 2013, AGCOM conducted an opinion survey and in Resolution 237/13/CONS it confirmed the assignment of positions 7–9 to these broadcasters. This resolution was set aside by the Council of State in Judgment No. 6021/2013, which AGCOM and the Ministry of Economic Development then appealed before the Court of Cassation.
The Court of Cassation upheld the appeal. It found that by ordering AGCOM to execute its Judgment No. 4660/2012 the Council of State had exceeded its jurisdiction, because it required AGCOM to assign positions on the remote control on the basis of a ‘now for then’ survey aimed at ascertaining the preferences of users with regard to 2010. However, between 2010 and 2012 a radical change took place in the media sector: the digital switchover, which made impossible to replicate the factual conditions existing in 2010.
Based on the above reasoning, the Court of Cassation confirmed the applicability of Resolution No. 237/13/CONS.
Administrative Court of Lombardy (Brescia), Judgment of 17 August 2016 No. 1114
This 2016 judgment required Enel to open its electricity grid to third-party operators. In 2015 the municipality of Gardone Val Trompia had ordered Enel Distribuzione to allow a third company (Intred) to lay a fibre optic network in its cable ducts.
As highlighted in the judgment, Directive 61/2014/EU directs all public concessionaires to allow the installation of fibre optic networks in their infrastructure (in this case, the cable ducts). To challenge a refusal by the concessionaire the operator can either start proceedings before the judicial authority or, pursuant to Legislative Decree No. 33/2016, refer the matter to AGCOM.
The cable ducts already used for energy distribution have to be considered as urban infrastructure. Therefore, according to the Administrative Court of Lombardy, the only reason that could justify a refusal is the possible incompatibility between optical fibre and the technology used for electricity distribution in a given segment of the electricity grid. However, according to the judges, the municipality of Gardone Val Trompia had already proved that there was no such incompatibility.
iii A joint venture in the mobile telecommunications market
A very significant transaction will take place in the Italian mobile market by the end of 2016:28 the joint venture between the Italian subsidiaries of Vimpelcom (Wind) and Hutchinson (H3G Italia). The transaction was cleared by the European Commission on condition that the joint venture would divest radio spectrum and mobile base station sites to a third company, the French telecom operator Iliad. Also, the joint venture would have to grant Iliad the use of its network in order for Iliad to be able to offer mobile services to customers until it builds its own.
This transaction will enable a new mobile network operator, Iliad, to enter the Italian market.
VII CONCLUSIONS AND OUTLOOK
The Italian IT, media and telecommunications sector is very dynamic. The development of technology leads to continuous changes in consumers’ behaviour and the regulatory environment.
As part of the initiatives aimed at achieving the European Digital Agenda, the priority to which the Italian government is currently committed is the implementation of the national strategy for ultra-broadband launched in 2015. AGCOM took a fundamental step in this direction by adopting the guidelines for wholesale access conditions to publicly funded ultra-broadband networks.
The Guidelines aim to allow the development of ultra-broadband networks even in areas of market failure (‘white areas’), while ensuring an adequate level of competition between telecommunications operators.
The adoption of a specific law on online piracy is also a long-awaited development. The future challenge appears to be the efficient use of spectrum. This means encouraging the shared use of radio frequencies, in order to meet the increasing demand for spectrum and to promote innovation and investments.
1 Marco D’Ostuni is a partner and Marco Zotta and Manuela Becchimanzi are associates at Cleary Gottlieb Steen & Hamilton LLP.
2 Pursuant to Article 2(g) of Law No. 112/2004, the ICS is ‘the economic sector that includes the following activities: newspapers and periodicals; electronic publishing including the Internet; radio and television; cinema; external advertising; product and service announcements and sponsorship’.
3 Directive 2002/21/EC.
4 Directive 2002/20/EC.
5 Directive 2002/19/EC.
6 Directive 2002/22/EC.
7 See Articles 26 and 27 of Legislative Decree No. 259/2003.
8 See Articles 5, 6 and 7 of the Procedural Regulation adopted by AGCOM with Resolution No. 368/14/CONS. In the first phase, AGCOM issues a draft resolution identifying the relevant markets, which is submitted to public consultation for 30 days. On the basis of the consultation outcome, AGCOM issues a final resolution that indicates the market that will be subject to analysis in order to assess the existence of dominant positions or positions that could otherwise harm pluralism.
In the second phase, after having acquired the necessary information, AGCOM issues a new draft resolution, which it also submits to public consultation, concerning the analysis of the relevant market. If, based on the analysis, AGCOM finds a dominant position, it must adopt measures aimed at removing it.
9 For example, according to this principle, a service provider cannot reserve priority to its own audiovisual content over that released by its competitors or via YouTube.
10 The results of the consultation showed a widespread consensus on, inter alia, the following issues:
a the idea that applying forms of traffic management does not constitute per se a market failure or a reduction in the opportunities available to the end-user; and
b the fact that pricing (for example, choosing between flat-rate pricing and usage-based pricing) considerably affects the use of internet-based services.
The results are available at www.agcom.it/le-risultanze-delle-consultazioni-gennaio-2012-.
11 Nonetheless, Italian courts often condemned online defamation under this provision.
12 Article 23 of the Privacy Code.
13 Article 123 Section 1 of the Privacy Code. The exact moment of completion of the transmission of a communication depends on the type of electronic communications service provided. For example, for a telephone call the transmission will be completed when one of the users terminates the connection. For an email, it will be when the recipient collects the message from the server of his or her service provider.
14 See Articles 162 and 167 of the Privacy Code.
15 Case C-131/12, Google Spain SL, Google Inc. v. Agencia Espanola de Proteccion de Datos, Mario Costeja Gonzales, 13 May 2014.
16 Court of Cassation, Judgment No. 5107/14 of 17 December 2013.
17 On 20 September 2016 the Italian Chamber of Deputies approved the law against bullying and cyberbullying. It is now subject to a third reading by the Italian Senate.
18 The structure was created by the Decree of the President of the Council of Ministers 24 January 2013, Directive laying down the guidelines for cybernetic protection. Article 2 Section 1 of the Decree defines cybersecurity as ‘the condition under which cyberspace is protected by adopting appropriate measures of physical, logical and procedural security to face events, either voluntary or accidental, consisting of the undue acquisition and transfer of data, in its modification or unlawful destruction or in the damage, destruction or impairment of the smooth operation of networks and information sytems or their components’.
19 Article 14 Section 1 of the Code.
20 See COM (2012) 478 Final, 3 September 2012, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Promoting the shared use of radio spectrum resources in the internal market’.
21 The tendering procedure ended with the award of a portion of 20MHz each to Telecom Italia Mobile S.P.A (TIM) and Vodafone Italia.
22 Article 2(1)(c) of the Consolidated Text on Radio and Audiovisual Media Services defines a network operator as ‘the holder of the right to install, provide and operate an electronic communications network via digital, cable or satellite on terrestrial frequencies and the right to provide installations for the transmission, multiplexing, distribution and dissemination of frequency resources that allow the transmission of programmes to users’.
23 Article 2(1)(d) of the Consolidated Text on Radio and Audiovisual Media Services defines content providers as ‘the person who has the editorial responsibility for the preparation of television or radio programmes and related data-programmes to be broadcast, even with conditional access, on terrestrial frequencies via digital, cable or satellite or by any other means of electronic communication and who is entitled to carry out commercial and publishing activities related to the diffusion of the images or sounds and related data’.
24 For example, pursuant to Article 6 of the Regulation content providers are required to store the complete recording of television programmes for a period of three months following broadcasting. Pursuant to Article 10, they must also reserve at least 20 minutes per week for advertising European works.
25 See Article 7 of the Consolidated Text on Radio and Audiovisual Media Services and AGCOM Resolution No. 131/12/CONS.
26 See Article 45 of the Consolidated Text on Radio and Audiovisual Media Services.
27 In 2015 the most widespread Web TV, Netflix, made its debut on the Italian market.
28 See the joint press release at www.windgroup.it/it/media/comunicati/comunicato/article/ck-hutchison-e-vimpelcom-esprimono-soddisfazione-per-lapprovazione-da-parte-della-