Fastweb (a subsidiary of Swisscom, and Italy's second largest fixed-line operator, providing ICT integrated services) delivered a strong 2018 financial report. The company's strong performance is proven by an 8% increase in overall revenue and continued growth for 22 consecutive quarters. This growth is also attributed to the excellent performance of enterprise connectivity and wholesale services. Enterprise service revenues increased by 10%, and market share reached 31% following a 2 percentage point increase. Wholesale service revenues increased by 11% compared with 2017, accounting for 13% of Fastweb's total revenue in 2018. In the past few years, enterprise connectivity and wholesale services have been the fastest growing areas of Fastweb, accounting for over half of total revenue and becoming Fastweb's primary profit generator.
The analysis of France-based Natixis confirmed the outstanding performance of Fastweb at the EU level. Compared with the major telecom operators in the "Big 5 countries" (France, Germany, Italy, Spain, and the United Kingdom), Fastweb is the fastest growing operator in EU and has become the industry benchmark. The good operating result also confirms the market trend research of Mediobanca R&S on Italy's telecom market: In Italy, Fastweb is the only telecom operator achieving revenue growth.
Differentiated Services As the Key to Win the Private Line Market
Differentiated Private Lines Become the Anchor of Service Growth in the Fledged Home Broadband and Mobile Markets
The mobile communication market in Italy is relatively mature, with the penetration rate exceeding 137.5%. The Italian government launched the "ultra-broadband" project to create people-benefiting broadband service and drive economic growth. The broadband market is growing steadily but Fastweb is aware that breakthroughs can be achieved by developing new business models and implementing differentiated competition strategies.
With the development of economic globalization, informatization, and cloudification, enterprise private line connections and acceleration requirements increase rapidly. Fastweb has a wealth of pipelines and fiber resources in over 1100 Italian municipalities. The private line service is the focus of Fastweb in the enterprise B2B segment.
Focusing on Wholesale and High-Value Industries and Identifying Key Requirements of Market Segments
Using market analysis, combined with its own advantages, Fastweb decided to focus not only on the consumer market but also on wholesale and high-value industry customers and implement differentiated market development strategies.
Fastweb provides wholesale services for all Italian mobile operators and other OLOs (ISPs, MNOs, and regional operators). The service traffic is growing dramatically, especially when it comes to the international connections between Europe, Asia, the Middle East, and Africa through Italy. In the past three years, service traffic has increased by 40% to 50% year over year.
With the development of enterprise digitalization and cloudification, private lines have become the cornerstone of business development for enterprise customers, high-value customers (including government bodies, financial organizations, OTT players, and large enterprises) have even higher requirements on the quality of private lines and are willing to pay for network quality and differentiation.
To quickly expand market share and better serve customers, Fastweb identifies customers' key service requirements from the perspective of end users rather than network technologies.
In the 5G and cloud era, traffic is no longer static, but dynamic and elastic. The tidal effect of the data center bandwidth is obvious. In cases of data backup, CAD file upload and download, image transmission, file storage, and telepresence conference, network bandwidth must change in real time.
Low-latency lines are needed for business transactions in the financial industry, DC disaster recovery, virtual machine migration, relay protection lines in the electric power industry, security monitoring systems in the mining industry, and image transmission in the medical industry. Real-time interactive services deployed in DCs, such as online gaming, HD video surveillance, telepresence conferences, navigation, and electronic transactions have very high latency requirements.
Identifying E2E Service Weaknesses and Competing with OTT Players and Other ISPs
With many rivals in Italy's B2B market, Fastweb faces competition from traditional fixed network operators, new wholesale service providers, and OTT players (such as Amazon and Netflix). An operator who can provide enterprise customers with more flexible service tariffs and better after-sale services will be in a better position to seize market opportunities.
Based on analysis of differentiated private line experience requirements and E2E service weaknesses, Fastweb believes that the three most important capabilities to achieve differentiated competition are fast provisioning and flexible BOD, intelligent traffic analysis and prediction, and real-time visualization of network resources and performance.
Fast service provisioning is a common requirement of enterprise customers. Fastweb used segment-based network management for both domestic and international networks. Service provisioning can be slow, with service resource confirmation and acquisition cycles taking several weeks. Additionally, when customers' service requirements change, the adjustment period can be long. The long TTM becomes a barrier to market expansion.
Historically, Fastweb would manually forecast private line requirements on a monthly basis, causing low accuracy. Before a new service was issued, resources would be found to be insufficient, resulting in emergency capacity expansion. The E2E service provisioning cycle is roughly two months, which affects market expansion and user acquisition.
Based on after-sales satisfaction surveys, Fastweb found that real-time network performance query is a common requirement of customers and may affect service subscription renewal. In the past, after a user subscribed to a service, the user could view network data only in the monthly report provided by the operator. Network data could not be viewed in real time. A real-time network dashboard allows users to evaluate the network in a timely and objective manner and accurately raise new service requirements.
Enhancing Service Innovations and Differentiated Competitiveness to Support Rapid Growth of Service Revenues
Fastweb focuses on providing differentiated services for wholesale service providers and high-value customers.
Fastweb collaborated with famous sprinters and the Italian air force demonstration team in brand marketing, aiming to continuously build its brand images of "fast" and "best-in-class network performance".
In terms of network performance optimization, Fastweb deployed a high-performance, nation-wide 200G optical network that features flexible scheduling. The flattened network allows one-hop connections for user services with optimized network latency. In response to frequent fiber cuts in southern Italy, Fastweb used ASON technologies of different protection levels to enhance service availability (over 99.99%, with the interruption time less than 52 minutes each year). In addition, physically isolated high-security connections protect business customers and public administrations from cyber attacks.
In terms of E2E service SLAs, Fastweb introduced the network cloud engine (NCE) to achieve visualized network management, automated service provisioning, and dynamic service adjustment. This helps Fastweb build the "fast" image during private line operations, allowing Fastweb to be ahead of rivals in private line sales, provisioning, and upgrade adjustment of the dedicated line to provide customers with E2E differentiated experience.
- Fast response to private line application resources: NCE centrally manages resources on the entire network to visualize resources such as bandwidth and latency. With diversified path computation policies, private line sales engineers can confirm the available network resources based on customers' SLA requirements and quickly respond to users' service requests.
- Agile private line provisioning and hitless adjustment, with TTM reduced from months to days: The entire network is managed in a unified manner, reducing cross-department work order driving and cooperation. The system supports various service templates. The service SLA parameters are predefined in the templates, which reduces configuration complexity and repetitive work and improves service provisioning efficiency. The hitless bandwidth adjustment technology is used to meet enterprises' temporary or planned adjustment requirements. The TTM of private line services is reduced from months to days.
- Resource analysis and prediction to reduce emergency capacity expansion: The intelligent resource forecasting improves the precision of network device procurement and allows resource allocation to be planned. Emergency capacity expansion is reduced and the service provisioning period is shortened. Additionally, a waste of resources that are continuously idle due to early deployment is avoided.
Through key activities such as brand marketing, network performance optimization, and E2E service SLA improvement, Fastweb significantly improves market competitiveness in government and enterprise private line and wholesale services. The differentiated private line services with higher quality and better experience bring stable and profitable revenue growth for Fastweb. Based on the new premium OTN network, Fastweb has won orders from Italy's third largest retail and enterprise banking group BPM and the third largest electric power company A2A.
Continuous Innovation to Enable Intelligent Private Line Services and Extend Service Landscape
Fastweb is constantly researching new applications (such as OVPN, real-time SLA visualization, health prediction, and fault diagnosis), integrating lifecycle automation with IT systems such as OSS/BSS, and transforming the network from a simple infrastructure to a modern optical network as a service (ONaaS), aiming to quickly complete the transformation of intelligent and Internet-based network.
"We successfully developed first trial on the optical transport domain, achieving tangible results, and now we are evaluating how to extend this experience to Access and IP domains."