Era gets O.K. for voice over internet; TPSA hardly wounded
While the Communications Ministry's decision last week to allow Polska Telefonia Cyfrowa (Era GSM) to continue international dialing via the internet will cause Telekomunikacja Polska (TPSA) pain in the short term, it will not cripple the company, analysts said last week.
"I don't see it as a threat," said Zbigniew Lapinski, an IT analyst with Deutsche Bank Research. He said that TPSA has such a dominant position on the market the company provides telephone service to more than 90% of the population that it will take a long time for competitors to gain any real ground.
Last Thursday, Era GSM requested that the ministry allow it to continue offering international dialing through its network, a practice that the ministry had condemned only weeks earlier. The ministry last week said that Era could continue the service until the end of May. At that time, regulators will again look at the issue and existing legislation.
"Era's example showed the need to move toward new technology," Jaroslaw Nowrotek, an adviser from the Communications Ministry said last Friday about Era's service.
Despite the ministry's allowing Era's service to continue, TPSA still technically has a monopoly on international calls until the end of 2002. However, the ministry may draft legislation that will allow for new technologies such as voice over the internet.
In early February, the National Telecommunications and Postal Inspection Office (PITiP), an arm of the Communications Ministry, sent a letter to Era GSM, requesting that the cellular provider end its international dialing service. The letter also stated that Era GSM had violated its internet service provider license. Era actually operates the service through its internet partner, Zephyr.
Era refused to stop the service, however, and on Feb. 8 asked the ministry to clarify its stance. The ministry responded by letting the service continue, at least over the short term.
"I think that the minister realized that there is no way to stop the new technology and solutions," Lapinski said. "I think voice over (the internet) is a done thing in terms of transmission of voice."
He said that he doubted the service would actually have a big effect on Era's profit revenue. He estimated that revenue from international dialing currently comprises only 5-6% of Era's overall sales.
While Lapinski said he did not expect that percentage to change dramatically, he did say that Era was poised to benefit from overall growth in the cellular industry. Roughly 11% of the population uses cellular phones, and that figure is expected to jump to 17% this year and to 23% by 2001.
Lapinski said that voice over the internet and other types of competition in the international calling arena could eventually erode TPSA's market share in that area by 30% in the next three to four years. Because international calling only accounts for about 10% of TPSA's total revenue, the overall effect of that competition should not be dramatic, he said. In addition, 5-6% of that revenue stems from incoming calls, he said.
"Customers that use internet telephony this is no competition for TPSA," said Johannes Weyringer, an IT analyst with Raiffeisen Capital & Investment.
Marcin Sadlej, head of research at CDM Pekao Securities, said that even TPSA may implement the technology to reduce its own costs. "The company that should benefit the most from introducing voice over (the internet) is TPSA," he said
