Calling on Sferia

By Timothy Sifert

Phone operator Sferia, a new market entrant, boasts three qualities that its management says will slide it comfortably into a niche of the country's landline sector: cell-phone portability, fixed-line rates and no red-tape delays.

Sferia has acquired about 1,000 customers since its operations were formally launched by paging service Polpager at the end of last year. And while marketing director Edyta Wiącek-Różycka says that Sferia's customer count thus far equals initial success for the firm, some market watchers wonder about the viability of the firm's business model - especially since it operates in a country well-known for its consolidated telecom market.

Analysts are also quick to note that former monopolist TPSA controls most of the market, much to the dismay of struggling alternative providers.

Warsaw-based Sferia provides wireless home and office phones and service as well as Internet access via CDMA (Code Division Multiple Access), the cellular phone standard used in the United States and Asia. Here and elsewhere in Europe, mobile phones run on the GSM (Global System for Mobile) standard.

Phones operating on the CDMA standard look like bulkier landline phones, but are completely wireless, with less of a roaming range than other mobiles.

"We would like to be in the market with something new," Wiącek-Różycka said of the company's decision to use mobile phone technology to launch a de facto landline phone. "It's a stationary phone ... for people who move very often or even for where the monopolist (TPSA) cannot provide the cable networks."

Sferia says that it provides services that, at least in terms of local calls, are cheaper than TPSA's tariffs. Wiącek-Różycka said one of the firm's selling points is to ask skeptical customers to compare prices.

In addition, Wiącek-Różycka pointed out that on the whole it is a quicker and easier process to buy and hook up a Sferia phone than one from other operators.

"The huge benefit of our network is that you go to our shop, you sign an agreement with us and when you go home the phone should be on air," she said. This, she added, is a stark contrast to the lengthy process of procuring a stationary phone from TPSA.

TPSA's press department did not return an e-mail seeking a response for this article.

Sferia's entire operations are more user-friendly compared with TPSA's, Wiącek-Różycka argues.

"The huge benefit is that our service is very fast," she said. "If you need (something), we will get it. None of this waiting. Right now for this same phone you could even wait a few years (with TPSA). But you couldn't go to the sales point of TPSA and buy a phone and a number and have it in one day."

Wiącek-Różycka also pointed out that customers believe Sferia's phone number portability option is a deal-sealing asset. "The same phone at home; the same phone at work," she said, noting that business clients could tote the phone with them to keep the same number.

She was also quick to point out that by promoting Sferia's phone mobility, the company is in no way aiming to compete with mobile operators, especially since the two products are fundamentally different on account of different calling costs. Sferia's rates are around zł. 0.36 per minute during peak calling hours and zł. 0.26 per minute during off-peak hours, compared with mobile operator Polska Telefonia Cyfrowa's rates of zł. 1.74 per minute during peak calling times and zł. 0.84 per minute during off-peak hours.

"You have the mobile kind of portability, but based on stationary prices," Wiącek-Różycka said.

While Sferia is pushing a niche-oriented business model, analysts question the staying power of its model.

Eugene Popov, senior analyst at Pyramid Research in London, said that a similar model had been initially instituted in Russia and Romania, but it was too early to estimate any definite success. Companies such as Sferia, he added, are too small to put a material dent in the market.

"We have to see yet," he said. "There aren't any big players on the market."

Fixed-line calling service in the country is probably still inexpensive enough that it would be difficult for a company like Sferia to snap up much of the market.

"Overall, I wouldn't be too optimistic," Popov said.

Yet, Sferia is continuing on with plans to invest in more base stations to balance out its Warsaw-area coverage. Its executives are also deliberating over its future business model in expanding beyond the capital, according to Wiącek-Różycka.