Services to OLOs

The Telecom Italia National Wholesale Service (NWS) Department, which, as of November 2015, has been hierarchically subordinate to the Wholesale Department, is the point of contact for OLOs and ISPs regarding the provision of network infrastructure and services for subsequent marketing by the said OLOs of electronic communication services to their own customers. NWS is responsible for pre- and after-sales design, identifying requirements and drawing up offers and contracts, sales, support and billing for products/services supplied. Organisational and administrative separation between the retail departments of Telecom Italia and NWS, which is verified every year by an external body, ensures compliance with the principles of equal treatment and non-discrimination established by current regulatory provisions and in particular Resolution 152/02/CONS.

On an annual basis, NWS draws up and submits the reference offers (RO) for the various regulated wholesale services. The process of approval of each reference offer involves joint examinations and reviews designed to provide the clarifications requested by AGCOM, which approves its contents and monitors the work of the NWS in order to ensure that competition is safeguarded. AGCOM also acts as the guarantor and relevant authority in cases brought by OLOs/ISPs and end users on regulatory matters.

In addition to the regulated services, NWS offers infrastructure and transmission capacity, data access and transmission, TLC equipment hosting, outsourcing and all the added value services that allow operator networks to be “virtualised”.

Each OLO has a direct relationship with its own account manager in the sales department of NWS, who receives the customer’s requests and customises the respective supply contracts in accordance with current regulatory requirements. In particular contracts relating to regulated services include clauses which provide for constant monitoring of the various stages of the supply of the service, ensuring that a number of the main indicators are subject to periodic notification to AGCOM. The interests of the client are safeguarded on a continuous basis, formalised through a process of conference calls, video conferencing and meetings involving all the company departments concerned.

For further information regarding dialogue and involvement initiatives (Wholesale Working Together, Focus Days Wholesale Portal), caring initiatives and the actions taken to measure OLO satisfaction go to the Telecom Italia Wholesale websites: wholesale.telecomitalia.com and widedigitalspace.wholesale.telecomitalia.com

The Italian Communications Authority (AGCOM)

Telecom Italia interacts with AGCOM in order to contribute to the administration of the regulatory process on matters considered concrete to the growth in value of the Company. For this purpose, Telecom Italia pursues an honest dialogue and ongoing discussion with the Authorities and institutions with the aim of achieving a simple, effective and symmetrical regulatory framework. Furthermore, the Group makes its own knowledge available by participating in public consultations, institutional hearings, conventions, public meetings and by presenting appropriate testimony and petitions. The constant discussions with AGCOM and the institutions ensure that Telecom Italia gathers their opinions, supplying transparent, reliable responses, and anticipates events, creating and exploiting the best opportunities for the Company. For further information on legal provisions that regulate public consultations, market analyses, fact-finding surveys and dispute resolution among operators see the sustainability section of the website telecomitalia.com.

Telecom Italia provides the answers required (e.g. public consultations, defensive testimony, supply of data and information of various kinds, etc.) and always ensures the completeness and reliability of the contribution.

In the case of violation proceedings, Telecom Italia presents testimony, expert reports and other defence documents, requesting a hearing by those responsible for the proceedings on the facts that are the subject of the dispute. The Company is considering whether to submit a proposal, subject to the termination of the disputed conduct, aimed at improving competitive conditions in the sector, removing the anticompetitive consequences through suitable and stable measures.

The Italian Competition and Market Authority (AGCM)

As part of the protection of competition and the consumer, the Group interacts with the Competition Authority both in a preventative way and during proceedings launched by it.

In addition to responding to the requests regularly sent by the Authority in the performance of its duties pursuant to Law 287/90 and the Consumer Code, in order to ensure transparency, the company’s departments preventively organise information meetings aimed at providing a clearer understanding of the evolution of the market and its effects on the Authority’s areas of responsibility.

The areas in which prior information is provided include the development of the Group’s offer, the company’s position on strategic issues such as the development of the access network and net neutrality, the development of pricing criteria adopted in the markets in which the Company is in a dominant position, and the technical and economic characteristics of certain offers disputed by competitors.

In the event of dispute proceedings being launched, the Group presents its case in the appropriate forums, in some cases presenting the Authority with undertakings that will reduce the alleged anti-competitive aspects at the centre of the proceedings. After having assessed these undertakings, the Authority may make them compulsory and end the proceedings without imposing any financial penalty.

Within the Company there are preventive controls on processes with potentially significant impacts in Antitrust terms such as, for example, the drawing-up of marketing plans, the development of contracts, conditions for the provision of telecommunication services, the development of the company’s information systems. The controls are aimed at ensuring that the operational management of the processes take into consideration these potential impacts. In order to raise awareness and disseminate a correct approach to the subject, as a follow-up to the online training programme launched in 2010, in 2013, management were offered a specific classroom training course on the application of competition law. In 2014, training activities continued for staff belonging to the National Wholesale Services function. Between the end of 2015 and the beginning of 2016, a new edition of the online course was published, provided and used by about 3,000 employees. In 2016 the same employees will be given classroom training.

[G4-DMA Anti-Competitive Behavior] During 2015, the Company launched a Compliance Antitrust activity with the help of an external law firm specialised in competition law. The initiative is part of the constant training activity being carried out on competition law, which has until now been organised and implemented by the internal Antitrust department.

The activity, which ended in December, was split into the following stages:

  • interviews with previously identified senior staff;
  • checking of documents contained on the personal computers of a specific number of managers previously selected in order to perform an objective collection of such documents;
  • competition training;
  • review/writing of an competition code of conduct;
  • internal competition procedure;
  • establishment of the specific competition compliance programme.

With this activity, Telecom Italia wants to strengthen the values of transparency and fairness that are the basis of its actions, in accordance with the Group’s Code of Ethics and Conduct.

[G4-SO7] the Group’s main disputes in this respect are listed and described in Note 24 (Contingent liabilities, other information, commitments and guarantees) of the Consolidated Financial Statements, particularly in the Significant disputes and pending legal actions section. [G4-SO8] The same Note contains a description of all the Group’s other disputes.

Undertakings regarding the access network

In December 2008, AGCOM approved the voluntary undertakings presented by Telecom Italia with Resolution 718/08/CONS, subdivided into 14 groups (plus three additional groups of a methodological nature: variation, expiry, modulation). The impact of the undertakings on stakeholders, both internal (shareholders) and external (customers, institutions, competitors, community) can be broken down into different aspects. Specifically:

  • greater satisfaction of wholesale and retail customers, achievable by promoting innovation in internal processes, the qualitative development and improvement of the fixed access network and respective services, the reduction of disputes;
  • development of fair competition among competitors, which is considered to be in the interests of the Group, the market, the customers and stakeholders in general, promoting equality of technical and economic treatment among the marketing departments of Telecom Italia and the other operators;
  • maintenance of competitive conditions in the transition to new generation networks, in order to ensure the creation of an open network able to offer the Community high quality services;
  • more transparency in the evolution of fixed access network for competitors and institutions through communication of the technical plans for quality and development of the infrastructure;
  • fulfilment of requests received from AGCOM, consumer associations and alternative operators, contributing to the development of a relationship and problem resolution model based on constructive relationships founded on a climate of trust and continuous discussion

A fundamental requirement for the fulfilment of these undertakings is the development of a new culture centred on the concept of Equivalence1 and the role of Open Access, the structure set up to provide access services to the Retail sales department of Telecom Italia and other alternative operators through NWS (for further information see Services to OLOs section). The access network is an infrastructure of primary importance for the whole country and is used by alternative operators in the market to connect their infrastructures and offer services to the community. The Open Access and NWS activities for the production and sale of access services are separate and managed independently from the other commercial departments of the Telecom Italia Group. Also in 2008, the Supervisory Body was set up, a supervisory committee that verifies the proper fulfilment of the undertakings, the equality of access by other operators to the fixed network infrastructure and the achievement of service quality objectives.

In November 2011 AGCOM, with Resolution 600/11/CONS, acknowledged the full implementation of the undertakings by Telecom Italia while continuing monitoring activities with special reference to some particularly important aspects concerning guarantees of Equivalence (new provisioning system, information databases and equality of treatment indicators). Following AGCOM Resolution 1/12/CONS, with which Telecom Italia was named as an operator with significant market power in NGAN access services as well, as of July 2012 the equivalence model was extended to these services as well.

The equivalence model, which is constantly monitored by AGCOM and the Supervisory Body, has evolved, transposing and adapting itself to the provisions recently defined by the Authority regarding the development of new generation networks, particularly in respect of the methods for fulfilling co-location and cabinet access obligations (Resolutions 747/13/CONS and 155/14/CONS).

Further to the EU Recommendation of 2013 on non-discrimination2, which identifies Equivalence of Input (EoI) as the most appropriate model for ensuring full equality of internal and external treatment in respect of NGA services, and the EU Recommendation on new relevant markets of 20143, in its resolution 42/15/CONS the Authority updated the public consultation regarding the identification and analysis of fixed network access service markets, carrying out a detailed assessment of the proportionality of the EoI obligation applied to the Italian context, in order to define a more suitable equivalence model for the regulatory period in question. In view of the results of the consultation, the Authority drew up a draft resolution which was submitted for examination to the European Commission and is now awaiting final publication. The Authority found that the application of the EoI principle is not proportionate, neither for services on the copper network nor for services on the NGA network AGCOM has asked Telecom Italia to strengthen its Equivalence of Output model (EoO) in respect of the following areas in particular:

  • key performance indicators and quality targets;
  • governance of the EoO;
  • SLAs4 and penalties;
  • databases available to alternative operators;
  • unbundling of ancillary services.

On November 5, 2015, the Group board approved a new equivalence model, aimed at further strengthening the efficiency and effectiveness of the processes for activating and maintaining the Telecom Italia fixed network wholesale access services supplied to its own commercial divisions and OLOs, which reflects the recent regulatory guidance.

The new equivalence model places Telecom Italia’s commercial divisions and the OLOs on an equal footing, strengthening the internal and external equality of treatment and ensuring greater transparency in the management of line activation requests.

In order to implement the above, a change to the Company’s organisational structure has been introduced which has made Open Access and NWS hierarchically answerable to the same head of the Wholesale department, as described in the Services to OLOs section.

Relations with the regulation and competition authorities in Brazil

TIM Brasil maintains participatory and collaborative relations with ANATEL (Agência Nacional de Telecomunicações) and CADE (Conselho Administrativo de Defesa Econômica), the authorities involved in regulating the telecommunication sector and the competition and markets respectively.

TIM Brasil has been working with ANATEL on developing the debate around a regulatory framework for telecommunications that will facilitate growth in the sector and the economy as a whole. The dialogue is primarily aimed at identifying the most relevant issues and reducing the typical barriers in the sector, particularly in order to develop important regulatory texts on issues such as managing the frequency spectrum, network sharing and interconnection, coverage of rural areas.

TIM Brasil has a transparent and collaborative relationship with CADE, which it has a duty to notify of mergers, acquisitions and agreements, and to provide timely disclosure thereof. Furthermore, the Company promotes debates and studies and cooperates with academic institutions to support research on market and competition policies.

1 The concept of Equivalence, introduced by Resolution 718 of 2008, exceeds the concept of equality of treatment referred to in Resolution 152 of 2002. Essentially, “being equivalent” means:

  • behaving in a way that does not discriminate against competitors; or serving the customers of other operators as if they were retail customers of Telecom Italia, which means providing the same services, under the same conditions and above all an identical standard of quality;
  • ensuring the transparency of the market, making technical, economic and commercial information public, including the terms and conditions for the supply and the use of services, and the characteristics and development plans for the access network;
  • guaranteeing access to and use of network resources, accepting all reasonable requests from OLOs;
  • setting cost-driven prices and having specific accounting information regarding these prices.

2 European Commission Recommendation of September 11, 2013 (2013/466/EU) on consistent non-discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment.

3 European Commission Recommendation of October 9, 2014 (2014/710/UE) on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services.

4 Service Level Agreements