The jungle book

Italy’s broadband stimulus plan questioned after small islands fail

Italian telecom players have all refused to participate in a project to roll out very high speed broadband in its islands, an outcome that could have a ripple effect.

The first ultra-broadband tender under Italy’s National Recovery and Resilience Plan, known locally as PNRR, has been designed to allocate €60.5 million in funding to builders of networks, system integrators, etc., for the construction of submarine fiber optic cables to provide broadband to around twenty so-called minor islands, including parts of Sicily and Sardinia. According to the Italian financial daily Le Sole 24 Ore, the deadline for submitting applications of December 22 passed without a single candidate appearing. There has, however, been no official confirmation of this from the government.

In the general scheme of things, this first tender was small, and so it’s tempting not to read too much into it. But there are larger funding allocations for the same umbrella project, so the failure of the first part naturally casts doubt on the overall success changes.

As a reminder, the PNRR was designed as Italy’s response to the Covid-19 pandemic. It avails itself of funding from the European Union’s €750 billion Next Generation EU (NGEU) program… a lot of it actually. The PNRR mobilizes 191.5 billion euros in European funding as well as a few tens of billions in additional funding planned by the Italian government. High-speed broadband is only a small part of spending; €6.7 billion is available for broadband, including fixed broadband, 5G and satellite, with the aim of improving connectivity across the country in the wake of the pandemic.

Future broadband funding allocations under the PNRR will be in the billions of euros and should therefore prove more tempting for industry players. But as the Le Sole 24 Ore report points out, some problems with the tendering of minor islands could resurface in subsequent awards.

Foremost among these are some onerous conditions imposed on funding. The document highlights the onerous bank guarantees and insurance requirements, as well as the severe financial penalties – up to 20% of the net contracted amount – in the event of non-compliance with the intermediate project deadlines imposed by the Commission European.

The ‘Italia a 1 Giga’ tender is due to take place this month and will see €3.8 billion in funding up for grabs for the rollout of fixed ultra-broadband, while a call for 5G deals of 2 billion euros is also in sight. As the document says, Italy cannot afford another misstep with these allocations.

The government is currently reviewing the terms and conditions, which could help pave the way for future tenders and generate interest in a revived minor islands project.

But the conditions of the tenders are not the only potential obstacle.

Some members of the government, including members of the Democratic Party – one of the many groups that make up the Draghi government – are calling for the “Italia a 1 Giga” contest to be postponed pending the outcome of KKR’s takeover bid on Tim.

In the current state of affairs, the Ministry of Technological Innovation and Digital Transition (MITD), headed of course by Minister Vittorio Colao, intends to continue the call for tenders as planned, notes the newspaper. But time will tell on this point.