TPSA stands firm on competitive ground
Despite ongoing liberalization and an increasingly competitive telecom marketplace, state-owned incumbent Telekomunikacja Polska (TPSA) will remain the dominant telecom player, industry professionals said last week.
"TPSA will stay the strongest player for different reasons not only because of a better starting point, but also because it will be the first (telecom company) to protect itself in a regulated (marketplace)," said Piotr Rutkowski, managing partner of telecom consultancy Rotel, which advises Parliament on telecom regulatory issues.
The opening of the telecom market and the establishment of a regulatory regime are two of the conditions that countries poised to enter the European Union (EU) must fulfill. Poland's new telecom act, which will likely be signed into law this summer, will put into place clear-cut regulations for the telecom sector, including key provisions for an independent regulatory authority and a universal service fund to finance unprofitable lines to rural areas.
Liberalization of Poland's telecom market began in the mid-1990s when the government started offering licenses for local calling service to independent operators. This year marked the beginning of the liberalization of domestic long-distance service with the granting of three licenses to operators. Both local calling and domestic long-distance services will be completely opened to competition on Jan. 1, 2002, while international long distance will be fully liberalized on Jan.1, 2003.
Most industry professionals agreed that after liberalization is completed, TPSA will continue to control a major portion of Poland's telecom market, mirroring what has occurred in other European countries following liberalization. Rutkowski pointed out that incumbent operators have retained their lead positions in all European countries that have liberalized their telecom sectors. Furthermore, he estimated that TPSA would retain 60-70% of Poland's telecom market share after 2003. Steven Marshall, the president and chief executive officer of National Grid Koleje Telekomunikacja (NGKT), estimated that TPSA would control about 70-75% of the voice telephony market. NGKT was one of three consortia awarded a license last January to operate in the domestic long-distance voice market.
TPSA has about 10 million fixed-line telephone subscribers throughout the country. In 1999, the company controlled about 94.7% of the telecom market, according to TPSA figures. Netia, the largest independent telecom operator in Poland, has about 300,000 subscribers and expects to have an additional 100,000 by the end of the year, according to Jan Guz, the vice chairman of the supervisory board of Netia Holdings.
But despite TPSA's continued dominant position in the telecom market after liberalization, the company will face a number of pressures to outperform its competitors. "The most valuable factor of liberalization is that (TPSA) must transform itself for competitive challenges," Rutkowski said.
Although one of the major advantages for customers will be lower tariffs, industry professionals said that customer service will be the key area of improvement for TPSA.
"The most significant result of liberalization will be customer service this will be the strongest (area of change)," Guz said. "I have been a TPSA customer for many years, and I have seen improvements in customer service in the past. Still, I'd like to get services now that are not available, such as access to the internet with a higher speed and not having to wait a month for a second (fixed line) to be installed." He also pointed out that TPSA bills should itemize the actual calls that were made, the times the calls were made, the locations to where the calls were placed and the individual cost per call.
TPSA's strategic alliance with European telecom giant France Telecom will accelerate the company's transformation, industry professionals said. The Treasury Ministry selected a consortium of France Telecom and Poland's Kulczyk Holding last month as the winners of the tender for a 25-35% stake in TPSA. Negotiations are in the final stages and expected to be concluded by the end of this month.
"I see no reason why TPSA won't move from a situation where a lot of customers are not happy with its services to one where customers are looking up to TPSA in four or five years' time," Marshall said.
