Telecom Italia (TIM) is set to become the biggest IPTV player in Italy this year, finally overtaking rival and early mover Fastweb SpA (Milan: FWB), according to a new report from Pyramid Research .

In the report, "Communications Markets in Italy," Pyramid analyst Stela Bokun notes that FastWeb, which launched its IPTV service as long ago as 2002, commanded a 46 percent share of the Italian IPTV market at the end of 2008. With the number of Italian IPTV subscribers totaling 863,000 at the end of last year, that puts FastWeb's telco TV customer base at almost 400,000.

Telecom Italia, meanwhile, ended the year with 329,000 IPTV customers, giving it a market share of 38 percent. That represented major growth in 2008, during which the incumbent added around 250,000 IPTV users.

One of the main catalysts for that growth was a clarification of the carrier's strategy: Light Reading noted last year that the operator's IPTV ambitions had stalled for years during a prolonged spell of indecision over its technology choices. (See Telecom Italia Rejects Microsoft IPTV.)

The third main Italian IPTV player is Wind Telecomunicazioni SpA , which ended 2008 with about 80,000 telco TV customers, giving it a 10 percent market share. Wind launched its service in late 2007. (See Wind Joins Euro IPTV Surge.)

(Italy's fourth broadband player, Tiscali SpA (Milan: TIS), abandoned its IPTV service at the end of 2008 after a single fruitless year of operation, during which it attracted only 50,000 telco TV customers.)

Bokun believes Telecom Italia, which added 36,000 new customers during the first quarter of this year to extend its total to 365,000 at the end of March, will continue to boost its IPTV subscriber base and command market leadership this year.

That view tallies with the national operator's own outlook: In its three-year strategy document issued late last year, Telecom Italia said it was aiming to have 1.5 million IPTV customers by the end of 2011. (See T Italia Targets IPTV Ramp.)

Pyramid's Bokun believes the Italian IPTV market in general will experience significant growth in the coming years, reaching about 4 million, or 43 percent of the total Italian pay TV market, by the end of 2014.

There are no cable operators in Italy, so the telcos' only pay TV competition is the direct-to-home satellite TV service from Sky Italia, which commanded 85 percent of the overall pay TV market at the end of 2008. Mindful of that market dominance, Italy's three main IPTV players formed an industry group earlier this year to help boost their collective potential. (See Italians Form IPTV Group.)

— Ray Le Maistre, International News Editor, Light Reading