REPUBLIC OF POLAND - Office of Electronic Communications

Pursuant to the provisions of Article 192.3 of the Act of 16 July 2004 – Telecommunications Law (Journal of Laws No. 171, item 1800, as amended), hereinafter referred to as the Act or the TL, it has been prepared on the basis of information obtained from telecommunications undertakings, in the procedure referred to in Article 7 of the Act. Under this procedure, all the telecommunications undertakings must submit to the Office information on the type and scope of pursued telecommunications activity as well as the sales volume of these services, by 31 March of the year following the reporting year. At the same time, pursuant to the Act, the President of UKE is under obligation to publish this data in the form of a Report on the telecommunications market for the previous year, by 30 April of the year following the reporting year.

This Report has been developed on the basis of data sent by operators to the Office of Electronic Communications until 25 April 2008. This year, about 700 reporting forms have been registered in UKE until this date.

Furthermore, publicly available information and reports, as well as studies commissioned for the purposes of the Office, have been used in the preparation of this document. Such studies commissioned by UKE include the following: „The telecommunications market in Poland, 2006 - 2009” by PMR company, “Telecommunications market in Poland in 2007”, an annual consumer study developed by the INDICATOR Marketing Research Centre, and the 13th Report on the Implementation of the Telecommunications Regulatory Package by the European Commission, featuring data furnished directly by UKE.

The market information presented in this Report has first and foremost the form of share of telecommunications undertakings in specific areas of telecommunications activity. Data for 2007 is mostly presented in tables with data on the previous years.

This Report also includes summary studies on price changes for telecommunications services, which have already been posted on the UKE website.

1. Regulation Strategy

On the 4th of July 2006, the Council of Ministers approved the „Regulation Strategy 2006-2007”. How to speed up the development of the Polish telecommunications market, lower service costs for Poles and increase availability of modern solutions?” submitted by the Minister of Transport.

The main goals identified in the strategy are as follows:

• Support of economic and social development of Poland through increased use of telephone services, achieved by enhanced availability, choice and improved quality as well as service price reductions;
• Making up for the Poland’s lagging behind in civilisational terms through creating conditions conducive to faster development of Internet access and use due to cost reduction and enhanced quality and service diversity;
• Ensuring complete access to basic and advanced mobile services for the general public.

When publishing the „Strategy”, the Regulator was planning to achieve the aforementioned goals in a number of activities, the most prioritized being among others to:

• open narrowband access market (post-paid segment) in order to give more options to customers, decrease prices and give alternative operators the same bid options like the incumbent has;
• stimulate competition on the market of telephone calls for further reduction of costs for subscribers, increased usage and enhanced innovation and service quality;
• introduce real competition on the ADSL (Asymmetric Digital Subscriber Line) broadband access to stimulate the infrastructure development, increase availability for customers, thus improving penetration;
• put an end to the oligopoly controlling the mobile market, which should improve the availability of services and greater penetration of mobile telephony, as well as ensure level playing field for mobile and fixed operators.

2007 was the second year of the UKE President activities aimed at implementing the goals defined in the Strategy. On 1 February 2008, „Regulation Strategy Implementation Analysis” was published, confirming the positive developments that have taken place in the telecommunications market:

• both the value of the Polish telecommunications market and the number of its clients are on the rise;
• a dynamic drop of prices occurred in all market segments;
• in certain market segments, the quality of services has improved;
• in most market segments, the competition is becoming much more prominent.

2. Major results of the telecommunications market in 2007

Given the fact that UKE has not received reporting forms from all the telecom undertakings by the date of publishing this Report, the value of the entire telecommunications market cannot be defined.

According to forecasts by PMR analytical company, the value of the Polish telecommunications market in 2007 is going to amount to 38.8 billion PLN.
Specific market segments are briefly described below:

Fixed telephony

• Telekomunikacja Polska S.A. has remained the market leader in terms of revenue from sales of fixed services, whereas entities, whose market share exceeded 1% included: Netia S.A., Telefonia Dialog S.A. and Tele2 Polska Sp. z o.o.
• In 2007, there has been a significant drop in the share of alternative operators to 22.2%, while the incumbent has increased its share to 77.8%.
• As regards the value of the fixed market, a downward trend has continued for the last few years. In 2007, the market value dropped by about 11%.
• Telekomunikacja Polska had the greatest share in the number of subscriber lines in 2007, namely about  87%.
• In 2007, alternative operators had about 13% of the market measured by the number of subscriber lines. The biggest share in this respect, amounting to over 3.8 %, was held by Netia S.A.
• The revenue structure has been systematically changing, and the revenue share from subscription and installation of telephone lines has been growing. It results from the growing convergence of services and the popularity of bundle offers, owing to which the customer pays for the line rental and receives also packages of free call minutes.

Due to lower prices on the voice call market and the dropping interest in fixed services, telecom operators focus on maximizing revenues in the post-paid segment. Tariff schemes with free calls on specific hours or days are becoming more and more popular.

Mobile telephony

• In 2007, mobile telephony in Poland had over 41 million users, which meant a penetration of 108.6%. However, if we consider 17.7% of the so-called inactive users, the actual market penetration as at the end of 2007 was 90.9%.
• According to a report by the European Commission, in 2007 Poland was ranked 23rd among all the 27 European Union countries as regards market penetration.  The 97% estimated penetration for Poland was much below the EU average of 114% (October 2007).
• The value of the mobile telephony market in Poland measured with the telecommunications revenue generated by mobile network operators is still growing. In 2007, its value has increased by almost 7% as compared with the previous year.
• In 2007, like in the preceding years, the ARPU index (average revenue per user) was dropping. According to Analysys Research forecasts from September 2007, for Poland it amounted to 14.39 EUR (51.54 PLN) at the year end.
• As regards market structure, no major changes took place in 2007 as compared with the previous years, apart from a successful entry of P4 Sp. z o.o. to the market.
• In 2007, four new operators emerged in the national mobile market: P4 Sp. z o.o. (Play brand) – national roaming with Polkomtel S.A., Wirtualna Polska S.A. (WPmobi) – MVNO in cooperation with PTK Centertel Sp z o.o., Avon Mobile Sp. z o.o. (myAvon) – MVNO in cooperation with PTK Centertel Sp z o.o., MNI S.A. (Simfonia, Ezo) – MVNO in cooperation with PTK Centertel Sp. z o.o.
• Average mobile prices offered by national MNOs showed a downward tendency.

Internet access

• The number of persons using Internet access services (fixed and dial-up access) in Poland has reached 12.7 million in 2007, which constitutes an over 12% growth.
• There has been a significant drop in the number of persons relying on dial-up access.
• In 2007, neostrada tp, based on DSL technology or TVK cable modem, remained the most popular form of Internet access in households.
• The total number of users of Internet access in xDSL technology has grown in 2007 by about 460,000, which constitutes a growth by over 24%.
• The value of the Polish Internet access market in 2007 amounted to 2.64 billion PLN.
• Seven telecommunications operators dominate in services of broadband Internet access in Poland. Three of them, headed by TP S.A., are representatives of the fixed market, whereas the four others are the largest cable TV providers in Poland.
• In 2007, there was a clear tendency among the largest operators to significantly reduce prices in the promotions offered.

Retail leased lines

• At the end of 2007, the value of the retail leased line market amounted to over 370 million PLN.
• In 2007, the largest operators in the retail leased lines market in terms of revenue were the following: Telekomunikacja Polska S.A., Exatel S.A., Telekomunikacja Kolejowa Sp. z o.o., Netia S.A., Crowley Data Poland Sp. z o.o. and GTS Energis Sp. z o.o.
• In 2007, TP S.A. was a telecommunications undertaking with the greatest share in this market. Since 2002, this undertaking has been an undisputed leader, both in terms of revenue and the number of leased lines.
• Both in the segment of analogue lines and digital lines under 2 Mbit/s, the share of the incumbent is very high, both in terms of revenue and the number of lines,
• In the 2 Mbit/s lines segment, the incumbent in the retail leased lines market does not have such large share like in the case of analogue lines and lines under 2 Mbit/s.

Wholesale market

• The Office has been constantly working on solving disputes arising between operators, and following proceedings, the UKE President has in 2007 issued 38 final decisions, 17 decisions to discontinue the proceeding and 38 decisions on the deadline for completing negotiations between the parties involved in disputes.
• In April 2007, the President of the Office of Electronic Communications issued decisions on adjusting rates for call termination in public mobile telephone networks of the following operators: Polkomtel S.A., PTK Centertel Sp. z o.o. and PTC Sp. z o.o.
• One of the most important developments in the market of leased lines in 2007 took place on 31 March 2007, when the to-date TP S.A. Reference Offer concerning the reference terms and conditions of leased lines contracts concluded by TP S.A. with other operators was amended.
• In 2007, the largest operators in the market of wholesale leased lines – in terms of revenue and the number of leased lines – were the following: Telekomunikacja Polska S.A., Exatel S.A., Telekomunikacja Kolejowa Sp. z o.o. and Netia S.A.
• The incumbent had the greatest share in the market of interconnection calls; its share at the end of 2007 amounted to nearly 49%. The second was GTS Energis Sp. z o.o., with its 8% share in the said market.
• Settlement terms and conditions used by TP S.A. in interconnection agreements concluded in 2007 reflected terms and conditions stipulated in the Reference Interconnection Offer of TP approved by the Regulator and published in June 2006.
• In 2007, there were some changes in the level of M2F settlement rates used between fixed and mobile operators, as compared with previous years.
• As regards settlement rates for terminating in a mobile network a call initiated in a mobile network (M2M) in 2007, like in the previous years, there was a drop in rates, yet as of 2007, the three main operators, namely: PTK Centertel Sp. z o.o., PTC Sp. z o.o. and Polkomtel S.A. are using a flat rate for all the three tariff periods.
• On 3 April 2007, the UKE President issued a decision amending reference contract terms and conditions on access to the local loop and related facilities in complete and shared access.
• In 2007, the incumbent unbundled 77 local loops and subloops.
• By the end of 2007, 14 WRL decisions have been issued.
• On the basis of the Reference Bitstream Access Offer of Telekomunikacja Polska, introduced ex officio, by the end of 2007 16 interconnection agreements have been concluded, and UKE issued 22 decisions in this respect.

For more please read attached report.

NOTE: translation for information purposes. Only the Polish version is authentic.