Venice Canals to Channel £42m Cable Link

Jostling for space among the vaporetti water buses and motor launches, the gondoliers of Venice face a new obstacle - canal-bottom cable congestion.

The Milan broadband provider e.Biscom will today announce a business plan in which €60m (£42m) has been set aside over three years to run fibre-optic cables through one of Europe's most beautiful and environmentally sensitive cities. Local authorities have welcomed the initiative as a step towards removing unsightly aerials from the roofs of a city famed for its skylines.

Emanuele Angelidis, chief executive of e.Biscom, said market research had shown that, because of the difficulties of getting around their city, Venetians had a keener interest than most in the possibilities offered by cyberspace.

"They have a limitation in terms of movement, so they can use the internet to get at services instead of moving themselves," he said.

The company had fixed a target for Venice of 20% to 25% market penetration within "no more than five years", Mr Angelidis added. Nuovo Mercato-listed e.Biscom is a child of the late 1990s technology bubble. With the aid of €1.6bn, raised at an initial offering in March 2000, only weeks before the global collapse in tech share prices, e.Biscom set about turning Milan into the world's most densely fibre-optic cabled city. It now has a market share there of more than 20%.

E.Biscom has also cabled sections of six other Italian cities and, although it is still losing money, has shown impressive recent growth. Preliminary results for the first nine months of 2003 recorded turnover up 70% on the back of a customer base that had almost doubled to 290,000 homes and businesses.

Earlier this year, the firm was given an unexpected boost when EU regulators - fearing a Murdoch monopoly of satellite television in Italy - ordered Sky Italia to share its football rights with e.Biscom's service, which is marketed as Fastweb. The company has since managed to make its selection of Serie A and B matches available over DSL as well as fibre-optic links.

Having sold its German broadband unit, HanseNet, to Telecom Italia this year, e.Biscom is now focusing on expanding its operations in Italy. Venice and its twin city of Mestre on the mainland are among four centres where cabling is due to start next year.

Mr Angelidis said that in Venice his contractors could take advantage of about 150 kilometres of existing ducts, many of which were laid in the 1990s for a cable TV project which was later abandoned.

How much more e.Biscom would need to dig would depend largely on the demand for the firm's fibre-optic connections, he said. Venice, he added, would be his company's biggest challenge since tackling Genoa with its steep, narrow alleyways.

Cables are sometimes run along the edges of canals, but when they have to be laid along the bottom, the canal is drained, usually by erecting large metal barriers at either end and then pumping it out.