ROME (WiMAX Day). The Ministry for Communications (MoC) in Italy announced on Wednesday that it intends to award licenses for 3.5 GHz spectrum in June 2007, although no definitive indication was given concerning the number of licenses that will be awarded, or if licenses will be awarded at auction. The Italian telecommunications regulator Agcom recently launched a public consultation to address these issues, and responses are due in February 2007.

This week’s announcement, made jointly by Arturo Parisi, Minister of Defense, and Paolo Gentiloni, the Minister of Communications, follows an earlier statement made this month by the two ministries that they had settled a lengthy dispute concerning the 3.5 GHz spectrum, which is currently occupied by radar systems under the Ministry of the Defense, and will be re-allocated to the MoC.

The MoC stated that an initial frequency band of 35+35 Mhz would be made available, and furthermore that the current agreement between the two ministries is the first phase of a total plan which will “triple the first allocation of frequencies for WiMAX.”

The MoC further stated that both national and regional licenses will be made available, and “WiMAX services could therefore speed the development of national broadband, and above all, in areas where it is more difficult to deploy new technology infrastructure.”

WiMAX will be a market mover
Immediately following the MoC decision on Wednesday, numerous Italian companies announced their interest to obtain the licenses. In a report by Reuters, Mario Mariano, the head of alternative telecom provider Tiscali, said “Tiscali has successfully tested WiMAX technology and sees with favour the opening up of frequencies.”

In the same report, a spokesman for Italian broadband provider Fastweb noted that WiMAX “fits very well with our existing fixed-line broadband technology.” It is also expected that Telcom Italia and Vodafone will be amongst the other local bidders for licenses.

Several analysts have speculated that licenses for 3.5 GHz spectrum in Italy should net to government from €100 million to €200 million Euros. This amount is well within the range of prices paid per Mhz POP at recent auctions in France and Germany this year.

WiMAX will also add significant value to the broadband market in Italy. An analyst at Cortina Private Equity in Milan noted that there is considerable room for expansion in the Italian market. Broadband penetration in Italy stood at 26.7%, or 7.4 million connections, in March 2006, according to Deutsche Bank. The market is dominated by DSL and FTTH, where Italy is one of the most advanced countries in Europe for the use of fibre to the home, especially in densely populated areas.

Previous WiMAX Trials
Despite the uncertainty in the last two years of when licenses for WiMAX spectrum might be awarded, many companies, in addition to Fastweb and Tiscali, have been testing WiMAX services, under the guidance of the Ministry for Communications and the Fondazione Ugo Bordoni. The companies, among others, include Marconi, IBAX, Assomax, Italtel, Infotel, SELEXCommunications, Eutelia and Essentia.

Given the level of testing done already in Italy, and the presence of equipment vendors such as Navini, Airspan and Alvarion working with previous trials, competition for licenses next year no doubt will be amongst the most competitive in Europe.