Better late or never
By : Roseanne Gerin
She had waited four years for a phone. Had it been during Poland's communist era, such patience would have been considered unremarkable. But these were the 1990s. And getting phone service was only the beginning of her problems.
"One time my telephone kept giving a busy signal even though the line was free for incoming calls," said Edyta Baranska-Sasak, a glass and textile designer based in Wroclaw, who finally got phone service last August from Poland's state telephone monopoly Telekomunikacja Polska (TPSA). "I tried to call Telekomunikacja Polska for an hour that evening, but their phone was constantly busy too."
After the Great Flood of 1997 devastated roads and phone cables in Silesia, TPSA could provide only radio wave-based service to Baranska-Sasak and her Wroclaw neighbors. "TPSA told me then that in two months they would give me a normal line, and I'm still waiting after more than half a year," she said. "Nothing has happened. I have to change my (local service provider) because it's very slow, and it's not good for my work," she said, adding that she has chosen Telefonia Lokalna's Dialog.
Fortunately, her business hasn't suffered. Baranska-Sasak, who spends a considerable part of her time in Warsaw and Lodz and on the road, depends on her expensive mobile phone (about zl. 1000 a month) for contact with her clients.
Baranska-Sasak's case illustrates the current state of Poland's telecommunications sector: an inefficient network for fixed-line calling and internet access, and a growing preference for and dependence on mobile phones, especially for business use.
Fixed line skipping 7 decades
While Poland's telecom infrastructure is underdeveloped and fraught with operational problems, improvements are being made, albeit very slowly. The new local service providers rely on digital technology instead of antiquated analog switches. Some lines are made from the latest fiber-optic cable technology for faster transmission.
But the modernization now underway benefits mainly major cities and delays in phone service often arise from connecting 21st century and 1930's technologies. Local phone companies serving outlying areas must tie their digital equipment into old TPSA analog switches with which they may not be fully compatible. Meanwhile, basic phone access remains a problem in some remote areas of the country.
Fixed-line penetration the number of fixed lines per 100 people as a percentage of the population grew from 23% in 1998 to 26% in 1999 and should reach 29% in 2000, according to International Data Corp. (IDC), a global IT research firm that forecasts IT markets and tech trends.
In comparison, the average fixed-line penetration in Western Europe last year was about 45-50%, said Jill Finger, a telecom analyst for Eastern Europe at the IDC's Prague office.
Outcome of reforms unclear
One major factor slowing Poland's development of telephone technology is the reign of TPSA, whose monopoly is gradually being dismantled. The government held a tender offer earlier this month to sell a 23-25% stake of the company. Although the winner has not been announced, the strategic investor will most likely be a large Western European telecom concern.
But Poland's unstable and vague regulatory situation vis-a-vis the telecom industry has made foreign investors leery, according to sources. Some uncertainty surrounding the regulatory environment should be cleared up later this year if Parliament passes a new telecommunications bill.
The new law would eliminate TPSA's monopoly on international calls by the end of 2002, establish an independent regulatory body for the sector and eliminate some of the licenses required to offer telecom-related services. De-monopolization and the general reform of the telecom law are the basic goals of the government's efforts to liberalize the sector to meet European Union mandates. Full liberalization is set for January 2003.
"The new telecom law will remove some obstacles, but in itself cannot perform miracles," said Tomasz Kulisiewicz, a scholar specializing in Poland's telecommunication and IT sectors at Warsaw's Adam Smith Research Centre and editor in chief of Teleinfo, a magazine focusing on IT and telecommunications. "It is the big money and the presence of international players which is needed. It's strange now because big money is concerned about the future January 2003 when the market will be fully open."
Foreign investors are not eager to pay high licensing fees now because the rules will change and the market will be deregulated in less than two years, Kulisiewicz said. "Poland opened its telecommunications market five years too late with deregulation," he said. But the obstacles, which include the high cost of modernizing infrastructure and high license fees, have not put off some local firms. Operators that have popped up in the 1990s include Netia, Szeptel and Telefonia Lokalna.
Poland's late start in privatizing its old communist monopoly left it lagging behind its neighbors in modernizing its fixed-line network. Because the Czech Republic and Hungary privatized their national telephone monopolists Cesky Telecom and Matav, respectively in the mid-1990s, they now have higher densities of fixed lines, sources said. While Poland's fixed-line penetration rate in 1999 was 26 phones per 100 people, its two neighbors have already reached densities of 36 to 40 phones per 100 people, according to Kulisiewicz.
The mobile: status symbol no more
The somewhat stagnant situation of the fixed-line sector has been good news for Poland's cellular operators Polska Telefonia Cyfrowa (Era GSM), Polkomtel (Plus GSM) and PTK Centertel. Poles are more prone to walk to their local mobile phone store and get hooked up for service the same day than to wait weeks or months for a fixed line, Kulisiewicz said.
While Poland's telecom industry remains backward, some sources say the country has leapt over stages of development, not only because of the great popularity of mobile phones, but also on account of more rapid data transmission for internet users thanks to new lines being installed by independent local operators.
Mobile phone subscriptions have increased at a faster rate than the numbers of fixed-line phone internet users, jumping from 5% of the Polish population in 1998 to 11% in 1999. The figure should hit 17% in 2000, just short of the current Western European average of about 23%, according to Kulisiewicz. But he points out that the gap in mobile phone usage is not that huge considering Poland has had GSM service the standard mobile operating system used all over Europe for only four years.
Consumers have increasingly turned to mobile phones out of necessity rather than because the phones are status symbols. "Now the situation is that mobile operators are not so much a substitute (for fixed-line service), but that they are starting to live life on their own," Kulisiewicz said. "Mobility and convenience count now, not the gloss of owning one."
And high fees have not deterred Poles, especially those who need a mobile for work, from signing up. "It's the same phenomenon all over Eastern Europe," said Kulisiewicz. "If they've been waiting years for fixed phones and can buy a mobile phone in a matter of minutes, they'll buy mobiles. And especially for small businesses, they're not so costly."
Internet: still a limited market
Since internet access still depends heavily on fixed-line networks, the obsolete equipment that has retarded the development of Poland's fixed-line phone sector has also limited internet potential. As smaller telecom companies, and even TPSA, install modern equipment, internet service will improve. Poland will soon be using internet protocol on digital, high-speed phone lines, said Finger.
But there is more than this. Clearly the cost of a personal computer and the exorbitant cost of browsing the internet while TPSA's clock is ticking has prevented many Poles from going online. The purchase and use of PCs is still somewhat restricted to businesses and academic communities. "Polish people pay zl. 2000- zl. 3000 for a PC, which is expensive," said Kulisiewicz. "Companies are in a different situation. Both small and big businesses need them. It's the normal evolution all over the world. Individual users lag behind."
Thus, Poland has seen only modest growth in internet access and usage. PC penetration the percentage of the population who have computers was 5% in 1998, 6% in 1999, and should reach 7% in 2000, according to IDC. The share of the population using the internet also grew from 3% in 1998 to 4% in 1999 and should hit 5% in 2000, IDC says. Similarly, paying subscribers for internet services constituted 2% of the Polish population in 1998, 3% in 1999 and should reach 4% in 2000, IDC figures indicate.
But given Poles' penchant for mobile phones, local telecom companies will likely introduce a wireless application protocol (WAP), which would access the internet via a special handset using wireless networks, similar to those on which mobile phones operate. But while WAP technology is already being introduced on the market worldwide, said Finger, it's too early to tell whether such new gadgets will dramatically increase internet usage here.
