Communications competition can spark revolution

Hundt was in Warsaw to take part in World Trade Organization negotiations on telecommunications and lobby for open access into the market. The countries involved - Poland, Ukraine, Lithuania, Slovakia, the Czech Republic and Hungary - are looking at creating a framework for allowing international investment and competition into their communication markets. The goal is to arrive at a common position that each country can adopt as telecommunications policy.
The FCC, which Hundt has headed since November 1993, is the regulatory body for communications in the United States.
Hundt said that six years after going through a democratic and economic revolution, Poland is entering the communications revolution.
One of the greatest problems many countries face in a communications revolution, Hundt said, is an alliance between the government and an incumbent monopoly that resists change. "This is the problem we face in the United States with our cable monopoly and our telephone monopoly."
So, even the United States is revising its communications laws, which are expected to be approved by Congress in a few weeks. The new laws should foster competition in all communications markets, Hundt said.
"Everyone will benefit if all markets are open to competition," Hundt said, adding that "what is virtually certain is that the economies of these countries will thrive from these changes."
If Poland opens the communications market to new competitors, Hundt said, the country will see job growth, market capitalization and universal service, or better access to communications technology.
In turn, these changes will help sustain other reforms, such as in government and schools, Hundt said.
Poland now has about 15 telephones per 100 people, a number the government would like to double by the year 2000. The country's national operator is the state-owned Telekomunikacja Polska SA (TPSA), which has a monopoly on international telephone connections.
Non-TPSA companies serve fewer than 40,000 subscribers, while TPSA serves 5.7 million, Jerzy Kalinowski, director of Price Waterhouse Poland, said after the chamber breakfast.
Kalinowski said reaching less-populated areas is one of Poland's challenges.
"Nearly a thousand villages do not have any access line," he said. "The key is how to provide telephone access to less-populated areas where the investment cost per subscriber is much higher." The connection is the most expensive component of a telephone network.
For example, in July, a subsidiary of Texas-based Polish Telephones and Microwave (PTMC) entered a joint-venture agreement to bring telecommunications to the Suwalki region in northeastern Poland (WBJ July 14-20). Statistics from February 1995 show that there are four telephones per 100 people in rural regions of Poland.
While Poland trails many countries in communications technology, it can benefit from recent advances. "All of the new technologies are offering low-cost technologies," Hundt said. Developing countries, therefore, can "leapfrog" all of the out-of-date technology in forming their communications infrastructure.
That's an infrastructure Poland needs to build for social and microeconomic development, Kalinowski said.
"I believe Poland has the potential to be one of the leaders in developing the services industry," he said. "The service industry really requires the access to the right information, by the right people, at the right place, at the right time. ... The question is, can Poland develop a global information infrastructure to facilitate the explosion in the service industry?"
The key challenge is to raise the necessary financing, Kalinowski said. "The strategy for telecommunications development in Poland should be more focused on attracting investors."
Hundt referred to the Global Information Initiative, unveiled by Al Gore in 1992, as a guideline for opening the communications market. The initiative calls for privatizing telecommunications, setting a date for introducing competition, recognizing that competition has effective rules that further competition, setting up an independent rule-making authority with clear procedures, and lowering barriers to foreign ownership.
Devin Brougham of AirTouch International said Hundt's message was important not only for Poland but for Europe in general.
Brougham is the managing director for international business development for AirTouch, which is part of the Polkomtel SA consortium bidding for a GSM operators' license.
He agreed with the FCC chairman's call for an independent body overseeing telecommunications and ensuring that rules are equally applied to all in the market. There "need to be clear rules of procedure," he said.