As discussed in our previous entries on this data base, the regulation of communications in Italy is experiencing significant reform. This is a result of the evolution and merging of communication technologies, pressure from the European Union, the planned privatization of the State telecommunications company, and pressure from various social and political forces to open up broadcasting and telecommunications to the market. The present Minister of Post and Telecommunications, Mr. Antonio Maccanico, has submitted proposed legislation (the "Maccanico Proposal" or the "Proposal") for such reform, which has been approved by the Italian Council of Ministers. The Proposal presents significant differences from the proposals which the Parliament discussed in 1995, which were submitted by the previous Minister of Post and Telecommunications, Mr. Antonio Gambino (House Doc. 3180), and that prepared by the House Special Commission for the Reorganization of the Television Sector.

The Maccanico Proposal differs sharply from the previous proposals by asserting the fundamental principle that regulation must "take the technological convergence between the sectors of telecommunications and television into account" (Art. 1), and thus allows cross holdings between the two sectors (Article 3(12)). Companies planning to operate telecommunications networks, provide telecommunications services, or television broadcasting (ether, cable, and satellite) are subject to government license. Such license may be granted to companies from the European Union or from a country granting similar rights to Italians, organized in corporate form, with a capital equal to 10% of the value of the investment in Italy (telecommunications only), which observe all Italian technical and quality standards, and with directors who have not been subject to criminal detention exceeding six months (Arts. 3(9) and 5(3)). Other factors will be taken into account, such as the planned activity of the applicant, the amount of European programming, and employment created.

At present, the Ministry of Post and Telecommunications ("the Ministry") holds the power to grant all licenses for broadcasting and telecommunications activity. The Maccanico Proposal would reduce the political element in licensing by transferring most of this power to the new Communications Authority. The Authority would grant licenses for installation of extensive (non-local) cable networks and ether transmission networks, as well as ground stations for satellite transmission, and the use of such networks to provide telecommunications services (Art. 3). The Authority would also grant licenses for television broadcasting via cable and satellite and issue regulations governing the application process for ether broadcasting licenses, but the Proposal does not explicitly transfer this power from the Ministry to the Authority. Ether broadcasting licenses are at present the most politically sensitive aspect of broadcast licensing in Italy, given the market power and asserted political influence of the broadcasting group controlled by Mr. Silvio Berlusconi, and this may account for the exclusion of their delegation to the Authority. Licenses to provide telecommunications services would have a duration of up to fifteen years (Art. 3(10)), and those for television broadcasting a duration of six years (Art. 5(4)).

The proposal removes the State telephone company's exclusive right to lay cable networks as of January 1, 1997 (Art. 3(2)), and its exclusive right to provide voice transmission services as of January 1, 1998, but mentions the possibility of "authorized experimentation" in voice services by others before that date (Art. 3(14)).

Perhaps in reaction to the State telephone company's aggressive obstructionist tactics against the connection of private competitors to its networks, the Proposal establishes a positive guarantee for connection to and interconnection between networks at the local, national, and European level (Art. 4(1)). The Authority is instructed to issue regulations governing these connections, promoting a "competitive market of networks and services," giving "guarantee of interconnection," and "guarantee of communication between compatible user terminals" (Art. 4(1)). The Authority, not the carrier, may limit interconnection for reasons of security, protection of the network, technical incompatibility, or the protection of confidential information (Art. 4(2)). The Proposal also encourages interconnection between smaller, local networks by stating that: "The Authority, the Regions, and the Autonomous Provinces shall adopt measures suited to favor the constitution of consortiums between local area licensees . . . (Art. 6(4)).

The Authority would have the duty, under Article 8 of the Proposal, to review all acquisitions of shareholdings exceeding ten percent of the capital of companies that have telecommunications or broadcasting licenses and the parent corporations of such companies (Art. 8(1)). Shareholdings would also have to be notified to the Authority if they create direct or indirect control of such companies (Art. 8(1)), including through shareholders' agreements, which also must be notified shortly after they are signed (Art. 8(6)). Unless the Authority requests more detailed information, it is required to clear or prohibit the acquisition within 30 days after it receives the notice; the Authority's silence constitutes clearance (Art. 8(1)). In addition, every shareholder owning more than 0.5% of the corporate capital of a license holder or of the parent of a license holder must give notice to the Authority (Art. 8(5)), but it appears that the citizenship requirements discussed above do not apply to shareholdings that do not constitute control.

Regarding content, the Proposal cuts against the recently expressed European Union tendency toward national neutrality, by requiring that "more than half" of programming be "European works", and that one half of such works be produced in the last five years (Art. 9(1)). In addition, at least ten percent of the European works must be produced by companies which are "independent", that is, which are not controlled by or affiliated with broadcasting license holders (Art. 9(2)-(3)).

The content of this article is intended to provide general information on the subject matter. It does not substitute the advice of legal counsel.