TIM finds competition watchdogs growling at its low-cost contracts

Telecom Italia has found itself upsetting Italian overseers as an investigation has been launched into anticompetitive activities at the organization.

L’Autorità Garante della Concorrenza e del Mercato (AGCM) is currently investigating whether the incumbent has been directly obstructive to competition across the country, either by locking customers into long-term, unprofitable contracts, or by delaying government tenders for network deployments across the country with counter-productive appeals.

The watchdog hasn’t directly said it, but a pessimist might comment such activities from TIM could be efforts to create monopolies in certain regions. Telecoms.com of course sits on the fence, and wouldn’t weigh into either side of the argument, but others might comment that offering such low-cost contracts is a long-term move to prevent any newcomers from getting a foothold in one of Europe’s largest economies.

Of course, TIM has unleashed its widest eyes, fluttered its longest eye lashes, and insisted it has done nothing wrong.

“TIM, as already proven in the past, is certain to have acted in compliance with the rules and will demonstrate it in the appropriate venues,” the telco has stated. “TIM is confident that, already when the case is under investigation, the rightness of the Company’s operations will emerge.”

The first accusation from the watchdog is that TIM has purposely slowed down the rollout of government infrastructure in some of the more rural regions. The infrastructure would have aided additional players to enter the market through a wholesale agreement, though appeals from TIM has faltered the tender process to build said infrastructure.

Last year, the Italian government drafted in Enel to assist with the rollout of the infrastructure across the country, hinting that TIM was dragging its feet. There has been a perception that the Italian digital economy will suffer due to the readiness of national infrastructure in comparison to the rest of Europe. Obviously TIM has not received such comments well. Since then, there has been a race between the two organizations to roll out infrastructure as quickly as possible.

Secondly, TIM is supposedly offering contracts which could not be feasibly matched by competitors. An organization the size of TIM can afford to swallow cost-price contracts, while making profit elsewhere. A challenger however, especially one which is trying to justify its existence would look at such a scenario and immediately back away.

The investigation has just begun, so don’t expect a result any time soon, but keep an eye on this space. Things could be about to heat up.