Battle of the Italian Telco

As lovely as telecom industry may seem to those on the outside looking in, it’s not all fun and games. Recently, we published a blog about the expanding fiber network in Italy. Telecom Italia is laying infrastructure across the country which will allow for much more reliable connection as well as higher speeds across the nation.

Though this effort has been engaged to help both businesses and residences, the company has also gained considerable control over the fixed line market. Any time something of this nature occurs in the business world, those who are not as successful will feel their toes have been stepped upon by a growing giant.

It is rightfully just to feel as though a major player in a market may be taking advantage of a situation. Like when a certain strategic position has been acquired in combat, it becomes easier to maintain this position and further conquer more ground. This is why certain companies feel threatened when a major advantage has been gained by a participant.

Most of the world is experiencing problems with a multitude of industries revolving around the issue of a business or group of businesses monopolizing a certain sector. As we have been pointing out in recent posts that the Canadian telecom is in the midst of an uproar because of the potential entry of Verizon Wireless. The mere presence of the company standing at the gates reinforced by a confirmed open invitation from Ottawa, is going to spark some kind of change which has other companies panicking.

The start of a beef in Italy

The company Telecom Italia is in the beginning process of a lawsuit which was recently filed by the Italian group for Vodafone. There is some discrepancy over the practices committed by the company over the past 5 years. As such, an injunction has been filed in order to reprimand the company for its dominant position.

Funny enough, the ones pointing the finger is the largest telecom conglomerate in the world. Vodafone owns large pieces of some of the largest providers in the world. In fact, they are the second largest of mobile providers, only topped by China Mobile who serves about 160% subscribers comparatively.

Vodafone has 100% ownership in 20 different countries across the world. Two of the other countries where Vodafone owns part of a major telecom provider are in the United States (Verizon Wireless) and South Africa (Vodacom) though they have partners in some 40 countries. As these are free markets, there are other providers so consumers have choices which is why the company is usually viewed a tool for healthy competition in these areas.

Getting big

If a company becomes a major service entity, most democratic countries have certain regulations in place that it must do so without violating anti-competitive laws. Vodafone seized opportunity in the early days of the wireless up rise to create a service platform for the future mobile market.

In most counties, this was done alongside other providers which created a healthy environment for the mobile market. Of course, since that time in the early 1990s, Vodafone has been the subject of scrutiny for some of the actions the company has taken. In some cases, for the lack of acceptable service based on the price paid by the consumer.

Vodafone Class Action

Back in 2010, the law firm Piper Alderman established a class action lawsuit against the company for unacceptable service. The action was filed on behalf of consumers that could not receive adequate service in areas that should boast exceptional service. Vodafone admitted service to be substandard, especially in major metropolitan areas because of a poor infrastructure.

Individual claims had not been large enough for any one person to make a successful claim against the company. Unfortunately for the consumer, the action fizzled out because of a lack of support from those who were victim to faulty service. However, earlier this year, the open case received support from another 23,000 participants which could mean that this class action may finally be seen by a court.

Vodafone vs. Telecom Italia

Maybe it’s coincidence, but Vodafone is taking shots the Italian provider because they are hogging the Italian market the way Carmelo Anthony from the Knicks hogs the ball. Though the company has been the most dominant force to expand the fixed line market with fiber, they have passively caused problems for other providers. This is why Vodafone is taking the reins on behalf of other telecommunications providers.

Telecom Italia is accused of inflating prices for commercial customers. The initiative started three years ago with an investigation launched by Rivals Wind and further supported by Swisscom. Because of the high pricing for usage of their line, this caused both companies to lose some of their business.

In actuality, the entire fixed line economy is growing weaker. Vodafone has posted double digit losses in their otherwise more reliable markets of Germany and Great Britain, where the company is headquartered. Telecom Italia has been experiencing losses as well.

The whole situation is likely pointing to total decline in fixed line sales. Because of the fiber expansion, companies are using data for VoIP based connections. Residential consumers are also declining too just like in other parts of the world as people are giving up landlines altogether. At the end of the day, all telecom companies will have to come to terms that data over fiber and mobile networks are the most popular and will only continue to grow.

About the author  ⁄ Dan

A veteran of the dotcom boom, Dan has worked with leading tech companies and startups, and is the author of several books and articles. Dan has been contributing to for several years.

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