Brattle Economists Author Report Analyzing a Co-investment Fiber Deployment Project in Italy
Economists from The Brattle Group today released a report analyzing co-investment projects around Europe and, in particular, a joint-venture fiber deployment project in Italy.
FiberCop has been established to build out and operate secondary fiber networks in large parts of Italy, and organized as a co-investment project under Article 76 of the European Electronic Communication Code (EECC). In the report for Telecom Italia (TIM), a team of Brattle consultants assesses the economic features of the FiberCop joint venture in light of the economic literature on co-investment in large infrastructure projects, with a focus on co-investors’ incentives to accelerate the rollout of fiber networks and to preserve competition between and on networks. The report discusses the features of FiberCop by evaluating it against fiber rollouts in other European countries and the competition concerns that have been raised by competition authorities in the context of co-investment projects.
While fiber deployment is socially desirable and contributes to economic growth and green objectives – due to its lower energy needs than prior technologies – it is also costly and financially risky. In order to increase the speed and coverage of fiber deployment while strengthening competition, the EECC favors co-investment projects that allow multiple companies to jointly invest in fiber networks. The objective of such co-investment is to allow the sharing of costs and risks associated with large infrastructure investment, while preserving long-term competition between multiple providers. The precise details of the co-investment project and specificities of deployment in a country influence the trade-off between (i) lowering deployment cost and accelerating rollout and (ii) the potential risk of reducing downstream competition either between networks or on networks.
The authors’ analysis shows that the FiberCop project is in line with the new provisions of the EECC and is designed around attributes that appear likely to materially increase fiber rollout speed in Italy while preserving wholesale and retail competition. The report, “Economic Analysis of the FiberCop Co-Investment Project,” is authored by Academic Advisor Professor Kai-Uwe Kühn and Principals Laurent Eymard and Konstantin Ebinger.