Italy's telecommunications regulator Tuesday urged operators to work together to develop a fast fiber-based network, warning that failure to do so could be costly for the country's economic growth and competitiveness as Italy lags the rest of Europe in broadband penetration.

In the regulator's annual speech to parliament, AGCOM Chairman Corrado Calabro said two separate plans--one from Italy's largest telecoms operator Telecom Italia SpA (TI) and another from a group of its competitors--need to converge under one nationwide plan, guided by the Italian government and with clear rules set by the regulator.

"We need a common, nationwide project that avoids costly duplication on civil infrastructure and allows Italy to make the leap forward it needs," Calabro said, adding that broadband investment may be a successful "exit strategy" out of one of Italy's worst recessions in recent years.

Calabro will also attempt to boost Italy's coffers through auctioning new mobile spectrum for the country's fourth generation mobile network, following in the footsteps of Germany, the Netherlands and the U.K.

4G technology will allow customers to receive and upload data faster on their mobile devices spurring a new wave of services such as high-definition mobile video.

The German auction netted EUR4.38 billion for the government in May and Calabro said the Italian proceeds may be used for much-needed broadband investment.

A recent study by Italy's business lobby Confindustria showed that high-speed broadband technology could help save up to EUR10 billion a year on the country's energy bills alone, Calabro said, while also reminding operators that the European digital agenda sets a 2020 deadline to bring an ultra-fast broadband connection to 50% of the region's families by 2020.

Recent European data show broadband penetration in Italy stands at 20.6% of the country's population, against a European Union average of 24.8%, he noted.

Telecom Italia recently dismissed calls to join a rival broadband project and said it will push ahead with its own plans to offer 100 megabits per second broadband to 50% of the Italian population by 2018, and to invest EUR7 billion in its fixed-line network upgrade in the next three years.

In the rival plan, Fastweb SpA (FWB.MI), Vodafone Group PLC (VOD), Wind SpA and Tiscali SpA (TIS.MI) aim to invest a combined EUR2.5 billion to bring broadband to Italy's 15 largest cities in the next five years.

AGCOM has repeatedly pushed for more coordination between Telecom Italia and the alternative operators on a project that aims to include the country's main operators as industrial partners and could involve public funds, possibly provided by state lender Cassa Depositi e Prestiti.

Responding to the regulator's call, Telecom Italia CEO Franco Bernabe said Tuesday the group is open to any project that spreads the cost of investment in fiber, while stressing that its plans are in line with EU guidelines.

Vodafone Italia CEO Paolo Bertoluzzo, meanwhile, said the alternative operators' plan is "concrete" and open to all. He said it is up to the regulator to set clear rules to encourage the switch from the old copper network to a new fiber one.

Calabro Tuesday also urged rapid action on wireless broadband in Italy, saying the current mobile network risks collapsing due to the rising popularity of smartphones and the increase in data traffic.

Telecom Italia's CEO, however, dismissed the warning.

"There is no such risk in Italy," Bernabe said, adding that Telecom Italia, like other operators, is already addressing such concerns by upgrading mobile network infrastructure.

-By Giada Zampano, Dow Jones Newswires, +39 06 69766925; giada.zampano@dowjones.com

(Carlo Renda, with MF-Dow Jones, contributed to this report)
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