Strategies to achieve Broadband For All: is the US the only answer? Renata Kowalska

1. Strategies to achieve Broadband For All: is the US the only answer? Renata Kowalska Lisbon, 17th June 2010 US and broadband strategy in Poland

2. Fixed telephony in Poland – market trends SourceUKE/Comm.Institute In spite of the introduction of US mechanism in Poland in 2004/2006 and otherincentives fixed market has never grown in size to the levels recorded in EU15

3. Mobile telephony in Poland – market trends Source: UKE

4. Fixed-line broadband penetration in Poland is much lower than in other EU countries. This distance to EU avrg. did not contract over the last few years. Market conditions did not encourage investment in fixed network, esp. in rural areas. In spite of lower purchasing power of the households in Poland – the penetration of mobile Internet is relatively high. Source:15th EC implementation Report

5. Elements of USO: connection of a single network termination point at a subscriber’s main location, excl. ISDN maintaining the subscriber line with a network termination point referred to above ready for providing telecommunications services national and international telephone calls, including calls to mobile networks, incl. facsimile and data transmission and called-in access to the Internet provision of directory enquiry servicesand directory of subscribers provision of facilities for disabled persons provision of public pay telephones. Current status of the universal service in Poland Single USP: Incumbent operator (Telekomunikacja Polska SA, FT Group) designeted for the wholenational territory in respect of all USO elements until May 2011.

6. Why do we need to re-shape US mechanism in Poland? • Amendments to the Universal Service Directive (USD) needed to be implemented to the national law by May 2011 • Decreasing number of fixed telephony subscribers (mobile-fixed substitution effect), although there are still „white gaps” on the map of US • Scarce interest in paper directory of subscribers – in 2009 only 28% of ordered and published copies were distributed • Diminishing demand for public pay phones, mainly due to high mobile telephony penetration and affordability • Wide scope of the US may negatively affect market competition due to the US financing scheme (sector fund)

7. implements the provisions of the amended USD allows for multiple USPs limits the scope of US does not consider broadband access to Internet to be an element of USO changes the approach towards price affordability requirement New US concept: Future shape of the USO in Poland - UKE’s concept

8. NRA’s concept - Scope of US Future shape of the USO in Poland - UKE’s concept Scope of US: connection(enablingfunctionalaccessto the Internet) at a fixedlocationand maintainingthisconnection ready for providing telecommunications services (Art. 3 and 4 USD) national and international telephone calls, including calls to mobile networks, incl.facsimile and data transmission and called-inaccess to the Internetand/ortheirfunctionalequivalents provision of directory enquiry services (Art. 5 p.1a) USD) directory of subscribers (DS) inprintedor electronic version optionally (yet to be decided), provision of public pay telephones. MultipleUSPs - providingdifferent elements of the universal service - and/orin different areas of national territory, if and wherepossible and justified

9. provision of public pay telephones (PPT) should ultimately be excluded from US because of scarce demand and availability/affordability of mobile phones services 1-year transition period - local goverments in regional districts entitled to veto the operator’s decision to liquidate PPT and, in that case, to cover losses facilities for disabled persons – provided by all companies offering public telecommunication services preferably no social tariff plans – direct financial support for low-income families Future shape of the USO in Poland - UKE’s concept • directoryenquiry services (DES) and directory of subscribers (DS) • key role of comprehensivesubscriber/numberingdatabasecurrentlydeveloped by NRA – PLICBD aimed to be readyin 2011/2012 • DES fullyopened for the market competition

10. Future shape of the USO in Poland - UKE’s concept • Financing scheme • net cost calculated as currently (Art. 12 USD) but as a result of proposed changes to the mechanism of US should be minimized • compensation from the public fund (obligatory for additional services not listed in the current scope of US) or the sector fund • companies contributing to the sector fund will have the insight to audited accounts of USP(s) applying for compensation (Art. 14 USD)

11. It is assumed that market forces will not be sufficient to satisfactorily provide universal access to broadband. Broadbandaccess to the Internet isinitsinitialstage of development and does not fulfillthefundamental 2 assumptions of US because itisstill not available to most consumers (13.5% penetrationrate) and itmay, with an adequateincentivesin place, be provided by thecompetitive and free market. When extending the scope of the universal service to broadband the funding question becomes crucial. Itwould be financedfromthe public fund. Broadband to All – Yes, but not as a part of US – Why?

12. The use of EU funds for broadband and telecommunications infrastructure development with coordination by UKE (Poland’s NRA) at a national level Legal framework supporting investments in telecommunications infrastructure by regional authorities and utility companies – Act on supporting the development of broadband and broadband infrastructure – passed in May 2010 (coming into force in July 2010) Regulatory actions to support the development of wholesale services – LLU, BSA – and investment in access network based on LLU Agreement between UKE and TP (incumbent operator) signed in 2009 that obliges TP to invest in and deliver 1.2 million new broadband connections until Nov 2012 Broadband to All Strategy in Poland

13. Thank you! Renata Kowalska Deputy Director, Retail Telecommunications Department Office of Electronic Communications r.kowalska@uke.gov.pl