Insight: Italy's slow Internet set for reboot

Wed Sep 26, 2012 4:55am EDT
 
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By Danilo Masoni and Leila Abboud

MILAN/PARIS (Reuters) - IMM Hydraulics, a small exporter of hoses for industries such as agriculture and mining, is the kind of firm that should be at the center of Italy's efforts to rekindle its stagnant economy.

Instead, the company, located in the Abruzzo region of central Italy, is wrestling with a basic impediment to profitability: a woefully slow broadband connection. With just 2 megabits (MB) per second, IMM Hydraulics' broadband connection lags behind the 5 MB typical in Italian cities, which in turn is well behind an average of 12 MB in France and 16 MB in Germany.

"It takes us days to process an order whereas it could take half an hour," said finance director Marcello Di Campli. "Broadband is one of our biggest problems, probably just after our access to credit."

Europe's fourth-largest economy has long been an Internet laggard, its creaky networks stunting the development of online commerce and banking. Italians pay among the highest prices in Europe for broadband speeds on a par with Estonia or Cyprus. As a result, only half the population uses the Internet at least once a week and Italian firms generate 5.4 percent of sales on-line compared to 13.9 percent elsewhere in Europe.

Now the reformist government of Prime Minister Mario Monti has identified better broadband as a national priority to spur growth and reduce Italy's 11 percent unemployment and bulging deficits.

"The statistics on e-commerce are chilling ... The broadband gap constrains growth by reducing the competitiveness of export-oriented companies," said Paolo Gentiloni, former communications minister and member of a group of deputies that has made proposals to support online commerce and government services.

In the government's sights is one-time monopoly Telecom Italia, which it believes has long thwarted competition and put off investing in its domestic network because of its huge debts.

Monti's government has enlisted state-backed finance body Cassa Depositi e Prestiti (CDP) to work out a plan with Telecom Italia and its rivals to create a nationwide super-fast fiber optic broadband network.   Continued...

 
A man looks at his iPhone in Rome September 11, 2012. Italy has long been an Internet laggard, its creaky networks stunting the development of online commerce and banking. Italians pay among the highest prices in Europe for broadband speeds on a par with Estonia or Cyprus. As a result, only half the population uses the Internet at least once a week and Italian firms generate 5.4 percent of sales on-line compared to 13.9 percent elsewhere in Europe. Now the reformist government of Prime Minister Mario Monti has identified better broadband as a national priority to spur growth and reduce Italy's 11 percent unemployment and bulging deficits. REUTERS/Max Rossi