Broadband Access and Local Loop Unbundling in Poland

1. Broadband Access and Local Loop Unbundling in Poland Anna Dybala, URTIP, Poland Local Loop Unbundling Conference, Bucharest, 5 July 2005

2. Legal environment Act of 16 July 2004 Telecommunications Law • Harmonised with New Regulatory Framework • Came into force on the 3rd of September 2004 • Secondary law under preparation / secondary law on previous act valid 12 month

3. URTiP’s objectives under new regulatory framework for electronic communications networks and services: • Relevant market definition List of markets which are subject to ex-ante regulation by the President of URTiP were set out in the Ordinance of 25th October 2004 of the Ministry of Infrastructure. • Market analysis Evaluating whether competition is effective by deciding whether one or more operators have significant market power in the relevant market. • Remedies Imposing, maintaining, amending or withdrawing specific regulatory obligations on undertakings designated of having SMP.

4. Polish Telecommunication Market • Although Poland has faced a rapid development of telecommunication sector and the increase of fixed lines penetration from 8,6% to 32,6% over last 15 years it is still a country with significant delays in development of Information Society. • The mobile penetration, measured as subscribers per 100 population has exceeded 50% in 2004. • As the availability of telecommunication services both voice and data transmission particularly in the areas with insufficient telecommunication infrastructure is still unsatisfactory our policy must be focused on encouraging new investment. • “The National strategy for the development of Broadband Internet Access for the years 2004-2006” was introduced as part of ePoland Plan in order to prevent the “digital divide”.

6. Broadband Access in Poland • Approximately 6% of DSL lines belongs to new entrants. • Currently TPSA’s major competitors in the field of broadband are the large cable TV companies such as UPC Polska, Aster City Cable and Vectra. • Broadband represents an important strategic pillar for TP SA as the level of fixed-line penetration is stagnant. • In 2000-2001 the share of cable modem was higher than of DSL on the Polish market. Year 2002 was the turning point in the broadband access as the number of subscribers using DSL technology exceeded the number of subsribers using cable modems. • At the end of 2004, TPSA’s Neostrada service had 631 000 subscribers. • Within last year the TP S.A. revenue from broadband services raised by 122%and the number of broadband subscribers grew by 185%. • 36% of households in Poland is equipped with PC. In thecities this percentage is around 42% while in the rural areas 25%. Source: BSR, November 2004

7. Broadband in Poland • Poland experiences one of the lowest broadband penetration rate in the European Union. • The main competitors for fixed network operators in the area of broadband access are cable operators. • Areas the most attractive for cable operators are limited (high rate of returnfrom investment, urban areas with dense population). • Since 1996 the number of cable operators was decreasing despite of increasing number of cable networks. It was the result of strong competition.

8. Present Regulation • Market: Fixed public telephone network supply • SMP undertaking: Telekomunikacja Polska S.A. • Obligations: - to provide access to local loop and related facilities(full, shared and bitstream access); - to publish the reference unbundling offer; - costing and pricing rules should be transparent, non-discriminatory and objective (cost calculation).

9. Reference Unbundling Offer (RUO)History • First RUO obtained from the incumbent in April 2004 – withdrawn due to new ordinance on local loop unbundling • Second RUO from August 2004 – rejected by president URTiP on the 1st of September 2004 • Proceeding ex officio on 2th of September 2004 • 28th February 2005 - the President of URTiP issued partly decision imposing a reference local-loop unbundling offer • Bitstream still proceeding

10. Decision on RUO • The offer covers full- and shared-access. • The decision was given a clause of immediate execution. • Proceeding based on previous Telecommunications Act (old framework regime) art.87 d • Ordinance on local unbundling from April 2004 applicable.

11. Reference Unbundling OfferFees • At the moment of issuing decision proces of aproving instruction and description of cost calculation model was still pending – fees based on European countries benchmark • All data from 10th Report of European Comission from 2nd December 2004 • One-off fees for full and shared access close to the benchmark – accepted by the President of URTiP

12. Reference Unbundling OfferFees

13. Reference Unbundling OfferFees

14. Reference Unbundling OfferFees • Monthly fees: • full access to local loop - 58 PLN (13,12 Euro), • full access to local sub-loop - 35 PLN, • shared access to local loop - 29 PLN (6,56 Euro), • shared access to local sub-loop - 17 PLN. • Monthly fee for full access close to European benchmark – accepted by URTiP • Fee for shared access – 50 % of full access

15. Decision on RUO • Six operators negotiating agreements • No application to solve dispute issued to the President of URTiP yet

16. Competition on broadband market • Penetration based on cable networks will grow in urban areas but cable networks are not likely to play a significant role in rular areas. In Poland cable operators are present mainly in bigger cities and it is not probable that they will have sufficient incentives to cover small cities and rural areas. • Competition will flourish in large urban centres and will be probably focused on “triple-play” strategies. • Broadband access based on radio technologies may play an important role in remote and rural areas. • Alternative infrastructures not always offer the same funcionality or ubiquity.

17. The future of Polish market • These are the broadband access to internet and mobile telephony that have experienced the biggest growth over last yearsand this trend is going to continue. • Due to the fact that all fixed incumbent operators will face additional competition for voice traffic through mobile substitution there would be no alternative for them to find other sources of income in order not to loose the great part of its market. • A wide range of services integrating the formerly separate worlds of broadcasting and telecommunications is going to be offered. • Both cable and fixed operators will have to focus heavily on increasing their revenue through „triple-play” and bound services. • It is also probable that the third generation mobile telephony (UMTS) will play an important role in order to expand competition and reduce the current dominant position of fixed operators on the broadband access market.

18. The principles of regulation: • be based on maintaining sector specific regulation in parallel with competition policy and abolishing it once objectives have been met; • be based on clearly defined policy objectives; • be the minimum necessary to meet those objectives further enhance legal certainty in a dynamic market; • be technologically neutral;

19. Thank you for attention Anna Dybala URTiP Poland, Department of Telecommunication Market ul. Kasprzaka 18/20 01-211 Warsaw E-mail: A.Dybala@urtip.gov.pl