Six and a half billion spent on 5G frequencies alone (of which 80% by Tim and Vodafone, with around 2,5 billion each), revenues down by 26% in the last eight years (-11,1 billion in fewer, compared to 8 in France, 6,6 in Spain and 3,4 in the UK), prices which have fallen by 43% since 2001 (the EU average is -20%, in the UK they have even risen by 11%…). In the crucial months for the construction of a single fiber optic infrastructure and for the experimentation of the 5G network, which it already sees Milan capital of Europe (coverage will be completed by 2019), is this the state of health of telecommunications operators in Italy. On the eve of the fourth industrial revolution, the one in which thanks to 5G we will share cars driven by software, we will receive groceries via drones, we will work alongside robots in factories and offices and a SIM will be enough to connect all home appliances , the question is: Telecom, Vodafone, Wind-Tre, Fastweb and Iliad, i.e. the 5 operators that each one is creating the basis for all of this, will they return from their investments and will they have the strength to make more? A cry of alarm that also came from the outgoing CEO of the Vodafone group, Vittorio Colao ("The splitting of frequencies has proved extremely expensive for operators, the result is that there will be fewer resources to invest in Italy") and on which FIRSTonline asked the opinion of Andrea Rangone, founder of the Digital Innovation Observatories of the Milan Polytechnic and CEO of the Digital360 group.
Professor Rangone, is Colao right then?
“Whether the cost of the 5G auctions in Italy has been too high for the telcos is difficult to assess. In theory, nothing is too much if the return is adequate, but 5G is such a technology disruptive that it is impossible to say whether the companies have spent the right or a lot, simply because it will bring so many changes in the business that it is difficult to quantify the consequences. However, we can certainly say that in other countries the costs for auctions have been lower”.
And in other European countries, the market for mobile operators is not as difficult as in Italy.
“No, in other countries operators have suffered fewer losses than in us, above all because they have not succumbed to the game of the price war and therefore prices have not plummeted as has happened in Italy, above all in recent years: from 2001 to 2017 there was a drop of over 43%, against a European average of 20%. Iliad's entry gave the last blow but it has already been some time since competition on tariffs has exploded in Italy and is bringing down revenues, leaving little room for investment. This means that market regulation has been wrong, but also that the market itself has failed. Indeed, in other sectors, although regulated such as the telco sector, prices have remained practically stable. I am thinking of energy, gas, local public transport, trains, or water, where prices have indeed increased significantly in the last five years”.
And so, what are the risks for the telcos in Italy, given these circumstances?
“If Italian telecommunications operators continue like this, I'm not saying they risk disappearing but they will survive badly: they will find it increasingly difficult to remunerate their shareholders but above all, and this is the most important thing, they will struggle to do their job and that is to build the our future. A telecommunications company is not a factory that produces biscuits or snacks: the telecommunications sector is not like any other, it is at the heart of the fourth industrial revolution and cannot be left behind. The network today is the thing that matters most, which drives everything else”.
What would be the solutions?
“Mainly two. Meanwhile, a new regulation is needed: it is clear that the current one, at the European level, has failed. It's not up to me to decide how, but new rules are needed that above all protect pricing and perhaps, why not, limit free access to operators in this sector, with further restrictions. And then, to survive the telcos would have to change and expand the offer of new digital services, going beyond the role of only telephone operator. There are already several examples around the world: Vodafone itself has launched Internet of Things products, in France Orange has launched the mobile bank Orange Bank, in the USA Verizon has acquired the Spanish Movildata, which develops traffic management software via GPS, and always in the USA AT&T has produced a Digital video recorder service”.
In fact, you argued that the usual Over-the-top operators will benefit from the investments made by telecommunications operators in infrastructure, providing services whose diffusion will be enabled or speeded up by 5G technology.
“If we think about it, it has always been like this: any infrastructural innovation, from GSM to ultra-broadband, passing through all the others, has benefited the big names on the Internet. From Google onwards, big or small. With 5G, which among many things will enable the spread of drones and self-driving cars, great deals are conceivable, for example for Amazon or Uber, but not only. The point is that the telcos are taking on the huge investment to build the motorway and the over-the-tops will be the ones who will travel along it, without however paying a toll”.
A solution could therefore also be that of paying one fee who has built the infrastructure to use it, as if it were a motorway toll?
“I can't say this, but surely those who have invested should be remunerated in some way. Even only in the two ways I mentioned earlier, that is, either by adapting himself to the market and entering new businesses or by benefiting from a new regulation that somewhat curbs the price war and therefore the drop in revenues”.
However, the fourth industrial revolution, that of digital technology, does not only raise doubts about the stability of telecommunications companies. It also represents a new world, a new model of society that frightens many, starting with the risks to privacy and cybersecurity. What does it have to say about this?
“These are two fundamental aspects and not at all overrated. With new technologies, billions of personal data will circulate on the net, our whole life will be digitized, more and more sensitive data will be in the possession of companies. It is evident that from this point of view we need effective regulation but also a new awareness on the part of the companies themselves, which should be the first to invest in the security of user data”.
The repercussions at work are also scary. A recent study by the Polytechnic University admits that many professions will be replaced by machines, but that in the end, through the so-called reskilling, 95% of jobs can be saved.
“Just look at previous revolutions. In the XNUMXth century, the steam engine caused the artisans and farmers of the time to lose their jobs, but in reality it gave birth to the industrial economy, which was one of the greatest employment reservoirs of the XNUMXth century. The truth is that throughout history all job losses caused by a transition have been largely compensated. It is clear that this time too professional categories will be eliminated, but others will emerge. And who will do the work, will do it better: how much time and how much quality of work will a lawyer, for example, earn, if he does the archival and research work, instead of him or his assistant - and faster - a robot? ”.
The digital revolution will affect all areas of our lives, professional and otherwise. If you had to choose the sector where this impact will be most important, which one would you choose?
“The competitiveness and productivity of industry. Italy cannot afford to fall behind, our economy needs it too much”.
