Funding delay slows rural telecom growth
By : Juliet D. Golden
Global village: Much of rural Poland still lacks the infrastructure needed for telcome.
Targets for improving telephone service in villages across Poland will have to be re-jigged following a March announcement that European Union (EU) funds earmarked for rural Poland will probably not be released this year, government officials said last week.
The Communications Ministry said last year that it would spend roughly zl. 7 billion ($1.7 billion) by 2004 to connect homes and businesses in rural Poland with basic telephone service and the Internet.
Part of that money was scheduled to come from the EU's pre-accession SAPARD fund. However, the announcement two weeks ago that the EU is holding back the release of SAPARD money means that ministry officials now have to recast their plans. The EU cited lack of preparedness in Poland for the receipt of these funds.
"If SAPARD has been rescheduled for sure this target will change," said Adam Pytlik, director of the rural telecommunications development office at the Communications Ministry.
Long anticipated in Poland, SAPARD is designed to provide the agriculture sector with much-needed capital for preparing the country for accession to the trade bloc. Through the fund, Poland would have access to E171 million annually until it joins the EU.
Part of that money is tagged for improvements in telecommunications infrastructure. Under SAPARD, individual villages would be eligible to receive up to E20,000 to improve basic telephone service and get residents online.
While access to telephones and the Internet has improved significantly for urban Poles, rural Poland lags sorely behind the national average. Roughly 16 out of every 100 rural inhabitants have a telephone line, well below the national average of around 32 per 100 inhabitants, according to the Communications Ministry. About 400 rural communities don't have any telephone access, Pytlik said.
"Telecommunications infrastructure in some rural communities is really poor," he said.
Pytlik estimates that about 70% of the total 2,435 rural communities in Poland intend to apply for SAPARD assistance.
A key barrier to speeding up investment in telecommunications infrastructure in rural Poland continues to be the high cost of initial installations for telecom providers and the slow return on that investment. The Communications Ministry has estimated the price to install one telephone line in a rural area at zl. 3,400-zl. 4,500, about 40% above the average cost in an urban setting.
To entice telephone companies to rural Poland, last year the government ruled that for providers installing new lines in communities with fewer than 7,000 residents, payment of government concession fees could be spread over a 10-year period.
"Normally providers would have to pay in the year the concession was granted," Pytlik said.
Despite the continuing divide between rural and urban Poland, during the past four years telephone access has increased significantly for small-town Poland. In 1997, only 9% of rural Poles had a home or business telephone line. That figure increased to 11% in 1998 and 14% in 1999.
It is also unclear how the delay in SAPARD funding will impact the planned rollout of the government's Telecentrum project. Patterned after a similar program in Hungary, the government this year had slated to launch 40 pilot Internet workshops in rural communities where telephone access is above 60%.
The idea of the Telecentrum program is not only to lead rural Poland out of the IT dark ages, but also to help retrain the rural labor force to better compete on the changing job market in the countdown to EU accession.
In Hungary the average cost to set up and manage the first year's operation of a village-based Internet workshop runs about $20,000, Pytlik said.
In the absence of SAPARD funding, ministry officials are scrambling for donations from the private sector to help launch the program.
