The Office of Electronic Communications has analysed the fixed-line Internet access market in Poland between 2002 and 2006.
This analysis allows the conclusion that the broadband access market in Poland has significantly developed over the last year. The data held by UKE shows that in October 2006 in comparison with October 2005 the number of lines serving always-on broadband Internet access grew by more than one million lines in total, which made a growth of 172%. The growth was caused both by the activation of new lines (over 800,000) and upgrading a certain number of narrowband lines to support transfer capacities in excess of 144 kbit/s (over 200,000 lines).
It should be stressed that only fixed lines with capacities in excess of 144 kbit/s are recognised as broadband lines. However, the category of fixed broadband lines also comprises lines with capacities below 144 kbit/s, i.e. 128 kbit/s access still very common in Poland.
Therefore, in October 2006 the penetration of fixed broadband lines per 100 inhabitants amounted to c.a. 4.5%, which contributes to a growth of 2.8 percentage points as compared to 2005. In turn, the penetration of lines supporting broadband access irrespective of the capacity offered, i.e. including still common 128 kbit/s lines, amounted in 2006 to 5.8%. In 2005 this rate was equal to 3.6%.
The gap between the total number of lines and the number of broadband lines has also significantly diminished. Thanks to the most comprehensive telecommunications network and numerous promotions based on long term contracts Telekomunikacja Polska S.A. is currently an operator that managed to win significant advantage over other entities providing broadband Internet access. TP S.A. has more than a half of all broadband lines in relation to all lines offered by the biggest telecommunications undertakings active in this market and the most comprehensive offer in terms of prices and service options. Alternative operators, in particular cable operators, which at the end of 2006 had in total 900,000 lines with Internet access are competitors to TP S.A.
Despite dynamic growth of broadband lines, Poland continues to be a country with low penetration rates in this regard. In comparison with other EU Member States in July 2006 Poland ranked second-bottom in terms of broadband lines penetration (lines in excess of 144 kbit/s), like the year before, while as of 1 October 2006, Poland ranked third-bottom. This result proves that despite significant growth in the number of broadband lines equal to more than one million lines within the period between October 2005 and October 2006, Poland has much to make up for in this regard. The European countries won’t wait for latecomers, but continue to increase Internet availability, leaving us much behind and the activities that are undertaken are not fully effective. Even investment that may be expected from the EU financial programmes will not change the broadband scene in Poland over the next two years to such an extent that the gap between Poland and European average significantly diminishes. The effects of investment will be rather postponed in time.
Having regard to slow development of penetration levels in TP S.A.’s network (with some 10 million subscribers) and limited prospects for competitive infrastructures with nation-wide or at least regional coverage to be deployed soon, UKE in 2006 enabled alternative operators to compete with TP S.A., which has resulted in the price reductions reaching as much as 60% over the last year.
Before the market became really competitive TP S.A. had undertaken anticipatory measures and offered within the last half a year significantly lower prices and the whole range of different promotions. The reduction in prices concerned in the first place offers involving long-term contracts concluded for up to 36 months. The subscriber who has signed a long-term contract cannot terminate it without incurring additional costs linked to a compensation for premature termination of a contract. If the subscriber wanted to sign a contract for Internet access services without long term commitments, the price of the service would be much higher than in the case of loyalty contracts. Due to a considerable price difference between standard and promotional (loyalty) offers, most contracts for the provision of Internet access services concluded with telecommunications undertakings are contracts for a specified period of time, as a rule for 24-36 months.
In the President’s of UKE view, relatively high price levels that continue to exist in addition to long term contracts prevent the growth in the number of new connections supporting fixed broadband access and Poland climbs the EU rankings too slowly.
Due to insufficient effects of wholesale regulation and the absence of clear prospects for an alternative offer available to the public over a foreseeable period of time and also due to problems in the retail market, such as discrimination of certain groups of subscribers, unfair terms and conditions in contracts and rules and regulations, the President of UKE decided to impose additional regulatory obligations on the incumbent by including xDSL lines in the market for access to the public telephone network at a fixed location for residential and non-residential customers. These lines constitute an element of the telecommunications infrastructure, which in technical and functional terms may be used to provide telecommunications services for different purposes: traditional voice telephony and broadband Internet access.
On 10 January 2007, the European Commission vetoed draft decisions notified by the President of the Office of Electronic Communications. The position of the President of UKE on this matter was published on the UKE’s website. The President of UKE will continue to take all measures in order to improve the situation in the Polish Internet access market so that the service becomes more available to end users. Broadband access, in particular the one that is provided by means of lines supporting advanced Internet services, is one of the priorities of the Polish regulator.