TP's bad reception

Telekomunikacja Polska (TP), Poland's leading fixed-line operator, is continuing to lose ground in various market segments. The fall is particularly visible in the long-distance and international sectors, where after the first six months of 2005 the telecom giant had a 76-percent and 65-percent market share, respectively. In comparison, back in December of 2003 TP had an 86-percent share of the long-distance market and a 90-percent share of the international-call market. Its shares in phone-to-mobile (F2M) calls have also dropped significantly. Independent IT and telecom expert Tomasz Kulisiewicz expects the trend to continue. "TP's market share will continue to decline, especially in the international sector." He mentions  two groups who are leaving TP. "The first are the poorest people for whom fixed-line subscription is a serious expenditure. They prefer to buy pre-paid mobile phones. The second group are the best and the most active entities - the rapidly growing medium-sized enterprises are switching to alternative operators." Kulisiewicz explained. 

Bad behavior?

However, TP is not giving up without a fight. At the beginning of October it raised the prices for calls made using the 0-708-1 prefix (which allows TP subscribers to switch to alternative telecommunications providers when making international and long-distance calls). Alternative operators offer much cheaper prices for long-distance and international calls. TP raised the tariff by 100 percent from the original 35 groszy per minute. TP's lowest tariff for international calls is 73 groszy per minute.

In response, The Office of Competition and Consumer Protection (UOKiK) has ordered the telecom provider to halt the price hikes. According to UOKIK's president Cezary Banasiński, raising the price of the 0-708-1 connections and simultaneously lowering the prices of TP's own international tariffs, is an attempt to eliminate the competition.

"The price change resulted from the need to make the service profitable. Previously it was provided at below cost," TP spokesperson Barbara Górska said. She claims that "it wasn't an anti-competition act aimed at other operators." Furthermore, she blamed the alternative operators for trying to force TP to provide services below cost. Górska underlined that although the company doesn't agree with UOKiK's decision and will challenge it in court, it will abide by it. However, if TP wins in court, Górska promised that it will seek financial compensation for losses caused by UOKiK's decision.

Fixed-line's future

The good news for TP is that though it has been losing clients to mobile operators when it comes to voice services, its fixed-line network has other profitable uses. "Fixed-line telephony is much cheaper and can still be used for data transmission. Cable and fiberglass have almost unlimited data transmission possibilities, while the mobile phone networks will become congested. [Cable and fiberglass] will be widely used for transmission using the Internet Protocol," Kaczmarczyk said, adding however that the service won't be generating huge profits.

Kulisiewicz sees broadband internet as the future for fixed-line operators, especially for commercial users. "This access can provide multimedia services, such as films. This will make them competitors for cable-TV providers. But the fixed-line operators have one huge advantage over their opposition - their lines reach almost everywhere in Poland," he said.

All in all, Kaczmarczyk expects fixed-line telephony to be supplementary to the mobile networks. "Perhaps something like the Blue Phone in the UK is the future - a mobile phone which at home is converted to use the fixed-line network," he concludes.