Embryonic local phone competition brings mixed results so far
In an ironic development, prices in Poland's partially liberalized and competition-driven local calls market have risen since the days when Telekomunikacja Polska (TPSA) had the market to itself, perhaps leaving subscribers wondering where the progress is.
In those times, TPSA found it more profitable to charge exorbitant long-distance rates while offering minimal rates for local calls. When competitors entered the market in the early 1990s, they began lobbying the state monopoly to raise its local tariffs. "With those prices, we had no chance to earn money," said Jolanta Ciesielska, spokesperson for Netia.
The European Union (EU) wants candidate states like Poland to rebalance tariffs by adjusting long-distance rates downward and let local calls become more expensive. After a series of increases on local rates, "the tariffs are more and more according to EU principles," Ciesielska said. But Poland retains from its communist period the distinction of charging some of the highest long-distance tariffs in the world, she said.
Netia has just won, jointly with Telefonia Lokalna, only the third local license for the Warsaw market. The firm hopes to be able to offer lower local rates when it gets access to the lucrative domestic and international long distance arenas, said Ciesielska the same strategy the communist TPSA used. Netia has already won the right to a license when Poland's inter-city domestic market is liberalized in July. International calling will remain a TPSA monopoly until 2003.
Poland is divided into 49 local license areas retaining the boundaries of the former voivodships. In the early 1990s Netia (known as RP Telecom until 1996) and other operators were only awarded licenses for small towns, Ciesielska said. In 1997 the Communications Ministry began considering tenders for major cities like Poznan, Katowice, Krakow and Gdansk. All telecom operators sign connection agreements with TPSA under which they yield some 30% of their revenue in exchange for use of its telephone lines, Ciesielska said.
For now, Ciesielska said, "almost all local operators charge the same prices." Netia was TPSA's first competitor and provides local service in 23 of the 49 phone service districts, she said. The firm's "blue" tariff matches the standard TPSA rate, she said, a monthly charge of zl. 20 and calls charged at zl. 0.27 per phone pulse roughly every three minutes. Netia's other option for subscribers, the "green" tariff, costs zl. 23 per month and zl. 0.26 per pulse.
In a country with a telephone density rate of only 25%, TPSA takes 97% of the subscribers, with 40% of its revenue generated in Warsaw. "Our tariffs are always based on TPSA's tariff ... We can't fight with such a big brother," Ciesielska said. "They are huge and they are very powerful. I think they have the same services we have even more."
Despite the negligible technical differences between competing services, Poles nevertheless place great significance on the liberalization of the telecom industry, Ciesielska said. "The most important thing is choice," she said. "It's the customer's decision which operator is better."
Andrzej Binkowski, Szeptel's managing director, argued however that his company beats TPSA in service quality and price, citing 10-20% discounts for corporate clients and unlimited internet access at zl. 50 a month.
Szeptel has some 16,000 subscribers in the former voivodship of Lomza in eastern Poland and expects to have 30,000 by year's end. The company, which started operations in 1998, recorded a 300% increase in revenue last year. For corporate clients, Szeptel offers fiber-optic lines and free switchboards for telephone receptionists, Binkowski said.
Commenting from New York, where he was in talks with potential investors, he described the TPSA monopoly as "very wrong for customers" and said he looks forward to the day when Poland's telecommunications industry is more like Manhattan's. Binkowski estimates that Manhattan alone has more than 100 phone providers offering free local calls and a plethora of discounts and incentives.
But "no worries," he said. "I know that competition in Poland will increase very fast because it's (good) for the customer and for the market." TPSA currently has a backlog of more than 1 million people waiting to receive phone service, Binkowski said.
He added that Poland has made a commitment to the EU to have both local calls and domestic inter-city service fully liberalized by January 1, 2001. "I know that Parliament is working very hard on the new telecom statute," he said.
