Tiscali: Consolidating a Level Playing Field in the Telecom Market

Tiscali is an Italian telecom company founded in 1998 in Sardinia. After the liberalization of the telecom market in Italy, Tiscali became one of the main alternative operators in Europe. From March 1999 onward, the company offered Tiscali Free Net, a subscription-free internet service where customers only had to pay for the time they were online. This pushed other Italian providers to abolish their fixed subscription fees and made the internet more accessible to people in Italy. Tiscali sees itself as an independent telecom operator, and this characteristic has contributed greatly to its success. What makes Tiscali such a strong player? Where are the growth opportunities for Tiscali today? Reporter Zhu Yiwen interviewed Andrea Podda, CTO of Tiscali.

Q: Could you introduce Tiscali?

A: Tiscali is one of the leading alternative telecom companies in Italy.  We provide individuals and businesses with a vast range of services, including dial-up and ADSL internet as well as voice, VoIP, media, value-added services, and other technologically advanced products. Tiscali was the first operator to provide free internet access in Italy following the liberalization of the telecom market in 1998. Since 2002, we have been involved in a pan-European campaign against the existing monopoly in the broadband market.

Q: Are there any differences between the Italian market and other European markets?

A: Italy is the fourth largest telecom market in Western Europe, with revenue of $43.8 billion in 2013. We expect to see overall market revenue in Italy remain flat from 2013 to 2018.  We expect telecom market revenue in Italy to be approximately $44 billion in 2018. There will nonetheless be significant growth opportunities in Italy, especially in the wireless market as operators focus on 3.5G. Increasingly, they will also turn to 4G and develop indoor/outdoor Wi-Fi.
WiFi, fixed broadband, and mobile data services will open up highly attractive revenue opportunities over the next five years and are predicted to generate about $102 billion.
In terms of internet usage, 56% of Italians uses the internet at least once a week, which is well below the EU average of 72%, and 34% of Italians have still never used the internet. This is significantly higher than the EU average of 20%.
In Italy, there continues to be a significant decline in voice revenues in the fixed-line market because of reduced rates and a progressive shift of voice traffic to mobile. In recent years, all operators have attempted to counter this phenomenon by increasing the penetration of ADSL and introducing innovative bundled voice, broadband, and services deals (double play). The environment is highly competitive and there is continual pressure to drop prices. The main fixed operators are now also offering mobile services, and some are becoming mobile virtual operators (MVOs).
In 2013, customers continued to migrate from fixed-line to mobile telephony and alternative communications solutions such as VoIP, messaging, e-mail, and social network chat. The impetus behind this migration has been the widespread diffusion of smartphones and tablets.
Italy does not have a cable market.

Q: Tiscali witnessed strong competition in Italian market yet remained a leading operator. What makes Tiscali such a strong player?

A: Tiscali has consistently striven for a level playing field in the telecom market. We believe that freedom of communication is a fundamental objective which, once achieved, must be protected and maintained.
In Tiscali, business and management decisions are always made with the future in mind. By continuously developing and implementing advanced technologies, Tiscali creates value for its customers. Through its IP and VoIP network, Tiscali is able to supply a wide range of high-quality services, such as DSL, VoIP, and advanced business services that make communications between a company’s different locations more efficient and secure.
Over the last few years, Tiscali has channelled its efforts and resources into raising our brand awareness. Our key assets are our strong brand, reputation for value, and significant ADSL customer base.

Q: What is Tiscali’s main focus this year?

A: The macro economy continues to be highly unstable, and consumption is decreasing. Tiscali is therefore concentrating on implementing our business plan and financial restructuring plan. These will ensure we have balanced equity and financial performance over the long term. From an industry point of view, Tiscali is continuing to improve its operational efficiency and innovate with its services.

Q: Where do you see the growth opportunities for Tiscali today?

A: Our commitment on innovation continues, with a specific focus on business services; cloud  services; the Indoona and Steamago products; unified communication suite; new search engine, called Istella; and Smart Cities solutions. Our Smart Cities solutions are based on our experience with local governments and best-in-class technology and applications. We are helping governments modernize their infrastructure, ensuring that new technology can integrate with a city’s legacy infrastructure and embedding intelligence into a city’s infrastructure using Wi-Fi, NFC and BLE solutions.
Tiscali’s management is also committed to defining and implementing a restructuring plan so that we achieve a financial and capital structure consistent with our expected cash flow and hit our business targets.

Q: What is your strategy to keep Tiscali’s advantage in the market?
A: Despite the competitive and challenging marketplace over the past few years, our results confirm our commitment to optimizing our traditional businesses and innovating with new services. In this challenging market, growth in the number of customers accessing our fixed network testifies to the strength of our brand and validity of our distribution strategy. It also validates the actions we took to secure a larger part of the telecom supply chain and focus on innovating on OTT services and digital media.

Q: ZTE and Tiscali have already collaborated on several businesses. What are your expectations for future cooperation?

A: Tiscali is now working with ZTE to migrate all B2B fixed users to our IMS platform, including IP Centrex service, implemented in the IMS SSS itself. When the migration is completed, Tiscali will build a unified communications solution for the enterprise market. We will create a seamless, secure collaboration environment where employees in different offices of a company and roaming employees can communicate efficiently using any available means.
Most smartphone users are running mobile apps over Wi-Fi networks. Smartphone users favour Wi-Fi for data consumption. Tiscali is paying attention to this trend and is pushing to build a proprietary nationwide Wi-Fi network starting in Sardinia.

Q: Do you have any advice to ZTE?

A: Tiscali needs to ensure maximum return on each investment. Flexibility and interoperability with other systems and vendors is a key concern. Interoperability and flexibility are the cornerstones for successful IMS platforms. A truly interoperable system will give Tiscali the flexibility to deploy business services based on applications developed in-house and meet the needs of our business customers.

Q: In your opinion, what will drive the evolution of the telecom sector?

A: Software-defined networking and network function virtualization are the trends because they boost application performance and management flexibility. They are used to connect virtual machines and servers to any resource in the data center. They help address the explosive capacity demand of fixed and mobile traffic. They can also reduce the capex and opex of service providers by decreasing the reliance on expensive proprietary hardware platforms.
While the benefits of SDN and NFV are well known in the enterprise IT and data center world, both technologies also bring hosts of benefits to telecom service providers.
Another area to focus on, I believe, is the development of smart city projects in some Italian cities. This involves working on projects in energy, transportation, healthcare, infrastructure, and governance that help a city run efficiently. The market potential of smart cities is estimated to be hundreds of millions of euros. These projects will involve the combined efforts of end-to-end service providers, network operators, product vendors, and managed service providers.