ESIS extension / Poland / Regulatory Developments / Update Memo 5

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

In this quarter, the main regulatory developments are connected with the approval of the new Telecommunications Law by the Polish Parliament and the privatisation of Telekomunikacja Polska SA.

The state of art and development plans in sector of computer and telecommunications industry and in IS related services for citizen were presented during the European Ministerial Conference "Information Society. Accelerating European Integration" in Warsaw on 11-12 May 2000. Progress report of EU-CEEC High Level Committee since the Third EU/CEEC Information Society Forum presented a comprehensive overview of governmental contribution to IS development in Poland.

The new Telecommunications Law is fully harmonised with aquis communautaire provisions and provides for full liberalisation of the telecommunications market in Poland, although TP S.A. still holds a monopoly over international voice telephony services.

To date the Law is waiting for the signature by the President. It is envisaged the Telecommunications Law to be effective from 1 January 2000.

Key measures	Objective	Date
Law on Telecommunications (in the process of the signing by the President of Republic of Poland)	Main principles regulating the telecommunications sector harmonised with European Communities Laws	12 May 2000
Law on Posts and Telecommunications as amended in 1995	Main principles regulating the telecommunications sector	23 Nov 1990 11 May 1995
Decree on the Conditions of Provision of Public Network Services	General conditions of telecommunications services provision	8 Feb. 1996
Decree on the Quality of Services	Quality of service	9 April 1997
Decree on Interconnection	Regulation of interconnection conditions	26 Oct. 1995

Following the results of the Third Information Society Forum for EU and CEEC in Brussels in October 1997, the State Committee for Scientific Research (KBN) together with the European Commission organized the Ministerial Conference ‘"Information Society: Accelerating European Integration" on 11-12 May 2000 in Warsaw.

Information society development on regional and local level, applications of ICT technologies for communication between public administration and citizens are monitored by the "Cities in Internet" Association.

Following e-Europe initiative the nationwide self-government organizations signed the "Self-governmental Agreement for Information Society" during the "Cities in Internet" Conference on 16 June 2000.

In the beginning of 2000 the National Telecommunications and Postal Inspection Office stated that Internet operators can offer voice transmission only between Internet addresses not between telephone lines. (TPSA holds monopoly over voice telephony until the end of 2002.) The example of Era GSM (Polska Telefonia Cyfrowa) caused controversy as to whether its operation violates existing law. The Ministry of Posts and Telecommunications permitted Era GSM to provide VoIP for limited number of users and limited period of time as "experimental" testing. In May 2000 the Ministry stated that voice over Internet (VoIP) services will be allowed in nearest future this year despite TP S.A. monopoly.

Statistics of the Polish Internet users, based on April analysis of SMG/KRC Net Track 2000 is as follows: 60% male, 40% female. 66% are under the age of 30. Among permanent users, 75% are of age 20-50. 40% are pupils and students, and the upper-middle class dominates users among employees (60%). The average of Internet users lives in big cities, a small percentage lives in rural areas.

The number of Polish portals and vortals is still growing. The oldest is Wirtualna Polska wp.pl (Centrum Nowych Technologii - 49%, Prokom - 40%, Intel - 6%), the next: onet.pl (Optimus Pascal). The yoyo.pl is dedicated teenagers (Internet Idea). Arena provides the Polish Infoseek service: arena.pl (Internet Ventures Poland). The Mother. Ship Poland Co is the owner of ahoj.pl cooperates closely with "Wprost" journal. There are more portals which are in fact an online version of journals as gazeta.pl ('Gazeta Wyborcza") or rzeczpospolita.pl ("Rzeczpospolita"). TP Internet of Telekomunikacja Polska S.A. started portal.pl and is going to invest 500 mln PLZ.. New portals are looking for strategic investors, because in three years it is estimated that leading portal in Poland will achieve 3000 million USD.

From 16 June, when Polska Telefonia Cyfrowa (Era GSM) implemented eraWAP service, all three Polish mobile operators provide access to Internet using WAP protocol.

Use of electronic commerce increases. Dynamic development of B2C model is observed. According to Global Marketing analyses in April 2000, there are already 650 e-commerce retailers. Internet supermarkets are: e-market (Onet of Optimus and Polsat TV).

Sun, Oracle, Softman and Web Lab recently initiated szop.pl providing e-commerce software and resources for SMEs. Now szop.pl cooperates with about 100 SMEs and offers 2000 products.

One of the most popular Internet shops is Wirtualny Megastore of Empik and an Internet bookshop www.merlin.com.pl. B2B model of e-commerce is still in initial stage, but main IT companies present at Warsaw Stock Exchange will start B2B e-commerce activities.

At present, there are three incubators for Internet start-up companies and individuals looking for investors in Poland. The oldest is Internet Investment Fund of Cracow Enterprise Incubator. The next is E-Incubator, the joint initiative of big IT companies: Sun, Oracle, Cisco, RSA Security and DNS Poland. The third is Red-Stars.com. IT is still marginal sector in capital investment. The only fund dedicated to IT, Internet and e-commerce is MCI Management, which is interested in early stage investment.

The new PIONIER computer infrastructure based on optical network project for research community in Poland for 2001-2005 have been created and presented on http://www.kbn.gov.pl/analizy/pionier/index.html. The PIONIER project was approved by the State Committee for Scientific Research at the end of June 2000, with some amendments concerning financial aspects.

After announcement during CEBIT2000 that Germany is going to invite computer and telecommunications specialists from CEEC, official representatives of IST institutions and organizations in Poland have made a lot of statements. (Example: Statement of the Polish Chamber of Computer and Telecommunications - PIIT , 20 March 2000 http://www.piit.org.pl/cgi-bin/komunikaty/list_pr.cgi?act=note&type=0&id=112 )

On average, this is regarded as a possible brain-drain. The Polish economy needs qualified, highly educated labour resources to develop. Such exodus of the best IST engineers and technicians would affect adversely the Polish economy.

During the European Ministerial Conference "Information Society. Accelerating European Integration" the Polish Computer Society signed an agreement with the German Computer Society expressing negative opinion on the initiative to employ the Polish computer specialists in Germany. Co-operation and technology transfer is welcome, but telework solutions should be implemented instead of temporary migration.

Netia estimates that 20% of telephone lines have no technical feasibility for direct carrier pre-selection in long-distance telephone connections. Such a lack is a disadvantage at the initial phase of long-distance telephone services.

The local voice telephony is provided on a duopoly basis, i.e., TPSA and only one other operator for local telephony in each local area. There is no foreign investment limitation for local voice telephony. About 70 licences for local voice telephony have been issued. On 7 June 1999, a local telephony licence for the Warsaw area was granted to Elnet. After that grant, the duopoly in the local voice licences in each region was reached. Additional licence later was granted to Netia. Elnet (Elektrim) complains such a solution.

Government Plenipotentiary for Rural Telecommunications, Mr Jaroslaw Okragly, presented an amended version (1.06.2000) of the "Telecommunications Development Strategy of Rural Areas for 2000 - 2004" project including comprehensive overview of current conditions, illustrated by maps, statistic tablets and schemas. It is accessible at http://www.ml.gov.pl server.

A special fund, Fundusz Uslug Powszechnych (Universal Service Fund), which is a directed fund independent from the national budget, is established to increase access to universal telecommunications services in less developed regions of Poland, especially rural areas.

The new Copyright Law has been accepted on 9 June 2000 and sent to the President of RP.

3. Market: Privatisation, foreign investment, mergers, acquisitions, call for tenders

The privatisation of the public telecommunications operator TPSA is in its final stage now.

A new tender for TP S.A. privatisation was called in early January 2000. Two foreign telecom operators, France Telecom (whose offer in former tender was rejected) and Telecom Italia, have been on the shortlist. Their offers have been comparable (about 40 PLZ per one share). At the second half of May 2000 Minister of the Treasury, Mr Emil Wasacz, decided to continue further negotiations with the consortium of France Telecom and Kulczyk Holding. Probably FT will cover 25% shares and Kulczyk Holding 10% of TP S.A. shares. The reconstruction of the Polish government after the resignation of ministers recommended by Unia Wolnosci former coalition party could postpone final negotiations. By 2001 the strategic investor will be able to increase its shares in TPSA to over 50%.

Please note that this report has been prepared under the sole responsibility of the ESIS II contractors.
It does not necessarily reflect the views of the Commission, nor does the Commission accept responsibility for the accuracy or completeness of information contained herein.
The ESIS Team of contractors welcomes any additional information or corrections.