Italy's Barriers to Internet Are Falling

Barriers to use of the Internet in Italy are rapidly falling, and the number of Italian Internet users is expected to grow very quickly in the coming months.

For quite some time, access to the Internet for Italians was difficult and expensive, with too few points of presence, especially in rural areas; high costs of Internet subscriptions; a low installed base of PCs, and metered local phone calls.

Now the situation is changing rapidly as each of these barriers tumbles down.

First, annual subscription fees are rapidly disappearing. The first to open the road was the new telecom company Tiscali with its TiscaliFreeNet service that allows users to access the 'Net just for the cost of the local phone call. This strategy has now been adopted by Infostrada, another telecom company that offers service nationwide and recently launched its new Libero service. Feeling the competitive pressure, Telecom Italia Net (TIN) is now readying its free Internet service, the official launch of which is expected in the next few weeks.

These big ISPs (Internet service providers) are working to develop networks that will allow them to offer access at the same cost to all Italians wherever they live, in big cities or in rural areas.

Furthermore, it is now possible to get a 50 percent discount on all phone calls to ISPs, meaning that the cost of a dial-up connection of four hours will be about US$1. While the phone calls are still metered, the costs are falling rapidly.

More news will come next year when the Italian Telecommunications Authority will deregulate local phone calls, heating up competition among the various telecommunications carriers.

While there is still a low rate of penetration of PCs, Italians love cell phones and there are already on the market devices that are compliant with WAP (Wireless Application Protocol) and cost about $300. Internet content providers are expected to sign agreements with mobile telecom operators to offer Web content and services in the WAP format.

But the magic moment is not just for the users, but also for the industry that is facing two big opportunities. From one side there is the expected growth of Internet users, and from the other there is the flourishing in this country of venture capitalists.

For example, Technostart is a venture capital company that was created last January by Milan's tech university, Politecnico; Milan's business university Bocconi; and Mediobanca, a major financial institution based in Milan. Technostart has raised 100 million euros in capital that it plans to invest in the fields of telecommunications,telecommunications service, computer science, new materials and biotechnology.

"So now we have the users -- at least a fertile ground able to attract users -- we have the money to invest, we just need entrepreneurs with good ideas. The right moment has finally arrived in Italy too and now is the time to do things," said Gampio Bracchi Prorettore of the Politecnico di Milano.

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