October 1999

Poland Update Memo

The following report outlines new developments in the past three months and the state of on-going developments.

1. Introduction

There have been no alternative networks in public utilities operating in Poland during the last quarter of July-October 1999. However, the government has taken further steps to realising its plans for alternative network provision, through its general programme of liberalisation of the utility and telecommunications sectors in Poland.

The process of providing alternative networks is closely linked to the process of liberalisation of the telecommunications network and services. In order for new service providers to enter the telecommunication market, steps must be taken to reduce barriers to entry in the telecommunications sector. In Poland, the ability to obtain a license to operate is the main barrier to entering the public telecommunications network. Domestic long-distance telephony services are currently partially liberalised, therefore there are fewer barriers to entry. However there is the proviso that at least 51% of domestic long-distance telecommunications operators must be Polish-owned companies. Greatest liberalisation occurs in the mobile telecom sector. The barrier to competition in the international communication sector will persist until 2003, when the TPSA monopoly on this service ends.

During this quarter, July-October 1999, there were further developments in preparation for alternative network provision by the railway system. The developments in this the alternative network sector are ongoing and it is expected that there will be more utilities providing such services in the future in Poland.

2. Attitude of the incumbent operator towards alternative network providers

The main barriers to entry in the public telecommunication network arise in the acquisition of licenses from the Ministry of Posts and Telecommunications. This sector is currently partially liberalised through the privatisation of the TPSA. Further privatisation began in August 1999, when 25-35% of TPSA shares was sold. This will reduce the control of the public telecom network by the Ministry of Posts and Telecommunications. However, TPSA will continue to have a monopoly on international connections until 2003. The analogue mobile operator Centertel and the largest cable operator Polska Telefonia Kablowa are partially owned by TPSA.

3. Inventory of the major "public" utilities with a potential for use in IS applications:

• Railway networks

The first reading of the governmental project on commercialisation, restructuring and privatisation of Polskie Koleje Panstwowe (PKP) [The Polish State Railway System], elaborated by the Ministry of Transport and Maritime Economy, will take place at the beginning of October 1999 in the Polish Parliament. Privatisation is scheduled to begin at the end of 1999. It is planned that PKP enterprise will be divided between a few stock share companies, and up to 15% of shares will be offered to PKP employees. PKP are going to bid for the tender for domestic long-distance telephone operators jointly with the telecom company.

The other potential long-distance telephone operators are: Polskie Sieci Teleenergetyczne (TEL-ENERGO), Elektrim Group and Netia. It is presumed that Deutsche Telekom and British Telecom will also participate in this call for tender.

• Gas networks

The Jamal-Europe gas pipeline transition system (680 km in Poland) is one of the largest investments in TENs framework. On 23 of September 1999 EuRoPol GAZ s.a. successfully installed the first pipeline. Alcatel Polska S.A. is responsible for the telecommunication system for pipe gas investment. Alstom Polska Co Ltd. provides computer services.

• Energy supply networks

The full liberalisation of the energy supply sector has been planned for 5 December 2005. From this date foreign investors will participate in the Polish energy supply market without any limitations. Therefore swift privatisation of the energy sector is necessary, and is scheduled to begin in 2002 according to a statement by the Economic Committee of the Council of Ministers. The privatisation strategy is supported by the Central Europe Trust for distribution and by DGA (a consultancy company from Gdansk) for energy production.

• Types of operators using the networks

The use of alternative networks is still at the preparative stage of development, therefore it is not yet possible to state which operators will make use of the alternative network provision. However, potential long distance telephone operators using the railway network provided by Polskie Koleje Panstwowe (PKP), which are in the process of calling for tender, are: Polskie Sieci Teleenergetyczne (TEL-ENERGO), Elektrim Group and Netia. Deutsche Telekom and British Telecom may also participate in this call for tender.

• Types of services offered by the operators on the networks

Alternative networks are not yet in use in Poland, therefore it is not yet known what types of services will be offered by potential operators. However, the railway network is expected to offer long distance telephony services.