Italy Urges EU To Offer Tax Breaks For Companies Building Fiber-Optic Networks

by Ulrika Lomas, Tax-News.com, Brussels

23 August 2002

Italy has called for the European Union to offer tax breaks to companies building fiber-optic networks, according to a Bloomberg report.

Speaking at a telecommunications conference on Wednesday, Communications Minister, Maurizio Gasparri explained that: 'The networks are infrastructure like freeways and trains, and we need tax breaks to encourage companies to build where they otherwise might not because it's not economically feasible.'

Italian telecoms companies such as E.Biscom SpA are suffering losses in their attempt to best former monopoly provider Telecom Italia, it emerged at the conference. E.Biscom and its fellow competitors are having to absorb the expense of laying new fiber-optic cables, whereas Telecom Italia has reduced its costs by improving on existing underground copper wire networks.

However, as E.Biscom's Chief Executive Officer, Silvio Scaglia explained, customers outside of the cities are losing out as a result of the prohibitive cost of creating new networks: 'In towns with less than 50,000 people, it's economically not possible to build our network. Beginning with that assumption, one needs to reflect on what to do and tax breaks are one possibility.'

The Italian Communications Minister explained that tax breaks are necessary on a Europe-wide level, as selective tax credits would violate EU subsidy laws, and disadvantage European countries without fiber-optic networks.

'In the past nobody would have thought of building a factory or apartment building where there was no electricity or running water,' Bloomberg quoted Mr Gasparri as observing. 'Soon it will be like that with fiber-optic networks. Nobody is going to want to build anything unless the network is in place.'

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