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The Warsaw Voice » Business » July 1, 2009
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Telecoms 'Not Competitive Enough'
July 1, 2009 By A.R.    
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Too little competition and too much red tape are the main barriers hampering the development of the Polish telecommunications market, experts say.

In a report called Barriers to the Development of the Telecommunications Market in Poland, analysts at the Adam Smith Center (CAS) say that Poland lags behind other European Union countries in almost all league tables comparing the development of the telecom sector across the EU. According to CAS, insufficient competition resulting from the continuing monopoly of TP SA, the Polish national telecom provider, is the key barrier to the development of this market in Poland. CAS proposes that TP SA should be split into a number of regional operators with the right to provide only local connections, and a company for long-distance and international connections.

The analysts say that problems in the development of the telecom market are also due to the special position of the regulator, the Office of Electronic Communications (UKE), which has the right to issue immediately enforceable administrative decisions. The experts say the non-transparent rules by which the UKE works hamper investment on the telecom market since operators and investors operate under increased uncertainty caused by the regulator.

The recent decision by TP SA to suspend investment proves that there is no competition on the fixed-line telephone market. "If competition had been there, TP SA would not have done such a thing," says Andrzej Sadowski, CAS vice-president.

Another reason behind insufficient competition is UKE's system of allocating frequencies for mobile phones. CAS also criticizes the fact that in recent tenders for mobile phone frequencies, preference was given to new players, who were supposed to increase competition on the market. "But contracts are awarded to companies which fail to start operations," says Aleksander Surdlej, professor at the Cracow University of Economics and one of the authors of the report.

The problem can be solved by changing the system for allocating frequencies. A rule could be introduced whereby one organization can have only one license or equal treatment should be ensured for all market players. Additionally, the license should be revoked if the operator does not start operating by the deadline set under the terms of the contract.

Another barrier to the development of the telecom market is asymmetry in rates charged between operators. This is higher than elsewhere in Europe. The CAS experts propose that the asymmetry should be removed because it is equivalent to unjustified subsidies for private companies.

A major constraint is also excessive regulation and bureaucratic barriers in the development of telecom infrastructure. "Radical changes are needed in this respect by removing many unnecessary laws and concentrating telecom regulation in two laws at the most-one for small investment projects and concerning building law, and the second one for large projects and concerning infrastructure law," Sadowski says. "If we want to be among the world leaders both in terms of the availability and prices of telecom services, we have to liberalize the market. It is also important to remove barriers and stimulate real competition."

The experts also criticize the government's plans for a "free internet for all." They say the project will benefit only companies involved in it, will contribute to a drop in private investment in infrastructure and may turn out to be of little use. CAS points out that real competition among private organizations operating on the telecom market is the only way to ensure cheap access to the internet for all.
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