Italy's Fastweb Joins Rivals as Broadband Prices Fall

Carsten Schloter, who was drafted as an emergency boss at Italian telecom company Fastweb SpA in April, is trying to figure out how to break through a wall the company has hit.

Over the past decade Fastweb has spent €5 billion, or about $6.34 billion, in laying its own fiber-optic networks, reaching two million homes in Milan, Rome, Turin and other big Italian cities. Fiber can carry large amounts of Internet traffic much faster than conventional copper wires, allowing Fastweb to offer “triple-play” packages that include phone, TV and Internet service.

Fastweb lured big-spending clients from Telecom Italia SpA, the former state-owned monopoly. These clients included Italian corporations and public administration offices, garnering more than 17 percent of Italy’s corporate broadband market.

But prices for broadband service have fallen in recent years, forcing Fastweb to rein in investments on fiber. To reach clients beyond its own network, Fastweb is stuck renting lines on the aging network of its larger rival, former monopoly Telecom Italia. Most of Telecom Italia’s lines, however, enter Italian homes in the form of copper wire originally intended for telephone traffic, meaning Fastweb can’t market potentially more profitable services, such as high-definition television.

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