Italy dangles €3.7 billion in broadband funding

Italy has launched a major ultra-broadband tender worth €3.7 billion just days after it failed to attract interest in its first attempt to allocate EU funding.

The government has launched the ‘Italia a 1 Giga’ project and interested parties have a couple of months to register, the Ministry for Technological Innovation and Digital Transition (MITD) announced.

There was some doubt over whether the scheme would get underway in January as scheduled, with certain factions in government calling for a postponement pending the outcome of the KKR takeover bid for TIM. In addition, the reported failure of the minor islands project could lead to changes in the terms and conditions applied to the allocation of broadband funding, which could also have led to a delay.

Financial newspaper Il Sole 24 Ore reported recently that the project to allocate €60.5 million in funding for high-speed broadband rollout in around 20 of Italy’s minor islands had attracted zero interest by the entry deadline in part due to onerous conditions, although as yet there has been no official statement from the government on that.

But the Italia a 1 Giga tender is significantly bigger and as such, higher profile. The €3.65 billion – as the final figure turned out to be – that is up for grabs equates to more than half of the €6.7 billion Italy has earmarked for broadband, including fixed, 5G and satellite, under its Covid-19 recovery plan. The plan, known as the National Recovery and Resilience Plan, or the PNRR, is backed by €191.5 billion in EU funding plus some tens of billions more to be supplied by the Italian government.

Italia a 1 Giga is split into 15 geographic lots, with various different amounts to be allocated for each. Sardinia is top of the list, with €356.27 million available to provide connectivity to nearly 664,000 addresses, with Puglia coming in second and other regions following, right down to Trento and Bolzano in 15^th spot, where €34.48 million is on offer for covering close to 63,000 addresses.

In total, the project aims to bring high-speed Internet to 7 million addresses throughout Italy. Operators have until 16 March to apply for funding through the tender, which is managed by state body Infratel Italia. Parties may apply for as many lots as they like, but are permitted to win a maximum of eight each.

Each winner will be required to contribute at least 30% of the cost of the project, with the state funding covering up to 70%. There is also a series of obligations on the winners, including the requirement to provide wholesale access to the new infrastructure based on existing guidelines from regulator Agcom.

More pertinently, winners will also be subject to, in the MITD’s words, “half-yearly coverage objectives and a system of penalties” that can be imposed in the case of delays in rollout or failure to cover all addresses.

This is to ensure that all works are completed by the end of June 2026, the MITD explained. That makes sense, but given that severe financial penalties are one of the reasons given for the failure of the previous tender to attract interest, the government is risking alienating would-be participants before the works are even able to begin.

That said, there are billions of euros on offer, which should prove to be some incentive, and the state will be keen to avoid a repeat of the previous tender. So it’s a fair bet that the various parties will come to some arrangement should they need to.