The President of UKE has imposed regulatory obligations regarding market 8 on Telekomunikacja Polska S.A. (TP). The decision of the President of the Office of Electronic Communications dated 10 July 2006 finds the national market for call origination on the public telephone network provided at a fixed location uncompetitive, designates TP as an undertaking with significant market power and imposes regulatory obligations on this undertaking.
The market for call origination on the fixed network subject to analysis is composed of the following call origination services at the wholesale level:
TP’s market strength
TP has significant advantage in the market for call origination services over its competitors and clients. TP’s market strength is due to the fact that for a number of years it had been a natural monopolist in the telecommunications market. During that time it extended its infrastructure, continued to increase the number of users and enjoyed a protectionist state policy. Thus, with the market opening in middle 90’s, it had a huge financial and technological base and the majority of users at its disposal compared to its competitors.
Table 1. TP’s and other operators’ market shares based on revenues between 2002 and 2005.
In terms of the size of revenues, TP’s market share between 2002 and 2005 still increased by more than 3%. Thus, we are dealing with a totally different situation than expected in a competitive market where alternative operators are increasing their market share.
Table 2. TP’s and other operators’ market shares calculated on the basis of traffic volumes, i.e. the total number of calls originated on the fixed network by individual operators between 2002 and 2005.
Table 3. TP’s and other operators’ share in subscriber lines between 2002 and 2005.
According to UKE, the only operator that really counts in the fixed-line call origination market is Telekomunikacja Polska. Its market share shows that the situation does not differ much from that of a monopoly.
A significant problem in market 8 is investment burden related to the construction or extension of fixed-line networks. Thus, the regulatory objective of the President of UKE is to make TP’s network available to telecommunications providers so that they are able to provide retail services based on pre-selection and carrier-selection. At present, 41 operators have been assigned a network access code (commonly referred to as a prefix) and may run telecommunications activity with regard to the provision of telephone calls. Thus, they are potential recipients of a call origination service in market 8.
Another problem identified by the President of UKE in the retail market is no direct “wholesale access” to TP’s subscribers preventing alternative operators from offering line rental combined with free minutes on a competitive basis.
The analysis carried out by UKE indicates a stable situation in this market in terms of market shares over the last few years. The evolution of the market to date does not permit UKE to expect the situation in the retail market as outlined in the above to change without wholesale ex-ante regulation.
Regulatory obligations imposed on TP as listed in the decision of the President of UKE include, inter alia:
The decision of the President of UKE is immediately enforceable.