The Italian way to functional separation: An assessment of background and criticalities

The paper describes the approach to functional separation followed in Italy. The analysis places the notion of functional separation in the context of the reform of the European Regulatory Framework in particular the Access Directive of the European Commission. It concentrates on the two main aspects of functional separation in the Italian telecommunications market: (i) the creation of an Open Access unit and (ii) the undertakings suggested by Telecom Italia and approved by AGCOM with the Decision 718/08/CONS. The paper shows that even if these measures are primarily aimed at fostering transparency, promoting equal access and non-discrimination practices, some doubts remain with respect to the impact of functional separation on incumbency of Telecom Italia. It proposes that the outcome of functional separation will have to be determined by joint efforts of regulation by AGCOM and changes in the strategy of Telecom Italia.