§ Major GLYNasked the Secretary of State for Foreign Affairs if His Majesty's Embassy in Rome may be instructed to prepare a short Report on the existing 199W telephone system in Italy, what were the terms on which the former State telephone service was taken over, and how far, if at all, has the transfer been for the benefit of Italian trade and commerce as regards rates charged, and to what extent have maintenance charges been reduced?
§ Sir A. CHAMBERLAINThe Italian telephone service was transferred from the State to private enterprise on the 1st of July, 1925. An Italian Royal Decree No. 399 of the 8th February, 1923, was issued, which empowered the Italian Government to transfer the telephones to private enterprise and prescribed the conditions under which this transfer could be made. The following are the principal conditions laid down in the Decree:—
(a) The duration of the contract to be 25 years.
(b) The capital to be mainly Italian.
(c) The concessionnaires to pay to the State an annuity of not less than 5 per cent. of the gross takings and to pay in addition a share of the net profits of the capital when such profits exceeded 7 per cent. These additional payments were to be calculated on the following basis:
If the net profits or dividend exceed 7 per cent. but not 8 per cent., one-third of the excess to be paid to the State.
If the net profits or dividend exceed 8 per cent. but not 9 per cent., one-half the excess over and above 8 per cent., in addition to the excess payments mentioned above, to be paid to the State.
If the net profits or dividend exceed 9 per cent., three-fifths over and above 9 per cent., as well as the two preceding excess payments, to be paid to the State.
If the net profits or dividend exceed 10 per cent., a reduction in tariff rates must be made in favour of the public.
(d) The State grants to concessionnaires who take over the working services the use of the buildings and the property of the plant required for such services, the concessions to be made against either (1) payment of the value of the plant ceded, or (2) participation in the capital of the companies to whom concessions are granted.
In the case of (1) the payments, with the exception of the interest, which must be paid annually, may be postponed to 200W the end of the concession to form part of the compensation to be granted against the value of the plant and buildings. All may be accounted for in annual sums in a period which should not exceed the duration of the concessions and not in any case exceed 25 years.
The value of the plant taken over is to be established by a committee of three experts.
In the case of (2) the concessionnaire companies will have to cede to the State a number of shares proportionate to the value, as estimated, of the materials ceded to the companies, and the latter will be called upon by decrees granting the concessions to include in the articles of association of the companies a special clause relative to the nomination of the auditors, the directors and the presidents as a guarantee for the rights of the State.
The concessionnaire must pay an adequate rent for the buildings and must pay eventually another annuity for the hire and upkeep of the lines granted to them by the State, when such lines are placed upon telegraph posts belonging to the State which also carry other lines which are the property of the State.
(e) Every concessionnaire must deposit an adequate guarantee, the amount to be fixed by the Ministry of Posts and Telegraphs, as a security for the pledges undertaken.
At various times amendments to this Decree of a minor character have been made.
For the purpose of carrying out the scheme provided for in the Decree, the country was divided into five regional zones and particular attention was paid in the selection of the concessionnaires, not only to their financial stability and technical ability to carry out the work, but also to their being in a position, through connections with affiliated concerns, to produce in Italy the material required for the anticipated vast extension of services. Separate agreements were drawn up between the Italian Government and the Societa Telefonica Piemontese, Turin; the Societa Telefonica della Venezie, Venice; the Societa Telefonica Italia Media Orientale, Bologna.; the Societa Telefonica Tirrena, Florence; and the Societa Esercizi Telefonici, Naples, to meet the needs of each zone.
201WThese agreements were eventually approved and rendered effective by Decrees dated 23rd April, 1925, and private enterprise took over from the State on the 1st July, 1925.
A sixth zone, covering inter-provincial, inter-regional and international communication, is still operated by the State.
Since the system was transferred from the State, the internal urban rates have remained the same as fixed by the Government in the contract of the cession to private enterprise.
202WThe inter-urban rates have been reduced on the lines retained by the Government, that is to say for some of the main trunk calls.
By Ministerial Decree, dated the 24th August, 1927, a Committee, composed of five members, is appointed for the purpose of drawing up the necessary regulations for the revision of the contract prices of public works, supplies and engagements with the postal, telegraph and telephone departments, and to make the said revisions.