1. Strategies to achieve Broadband For All: is the US the only answer? Renata Kowalska Lisbon, 17 th June 2010 US and broadband strategy in Poland

2. Fixed telephony in Poland – market trends Source UKE/Comm.Institute In spite of the introduction of US mechanism in Poland in 2004/2006 and other incentives fixed market has never grown in size to the levels recorded in EU15

3. Mobile telephony in Poland – market trends Source: UKE

4. Fixed-line broadband penetration in Poland is much lower than in other EU countries. This distance to EU avrg. did not contract over the last few years. Market conditions did not encourage investment in fixed network, esp. in rural areas. In spite of lower purchasing power of the households in Poland – the penetration of mobile Internet is relatively high. Source:15th EC implementation Report

5. Elements of USO: 1.connection of a single network termination point at a subscriber’s main location, excl. ISDN 2.maintaining the subscriber line with a network termination point referred to above ready for providing telecommunications services 3.national and international telephone calls, including calls to mobile networks, incl. facsimile and data transmission and called-in access to the Internet 4.provision of directory enquiry services and directory of subscribers 5.provision of facilities for disabled persons 6.provision of public pay telephones. Current status of the universal service in Poland Single USP: Incumbent operator (Telekomunikacja Polska SA, FT Group) designeted for the whole national territory in respect of all USO elements until May 2011.

6. Why do we need to re-shape US mechanism in Poland? Amendments to the Universal Service Directive (USD) needed to be implemented to the national law by May 2011 Decreasing number of fixed telephony subscribers (mobile- fixed substitution effect), although there are still „white gaps” on the map of US Scarce interest in paper directory of subscribers – in 2009 only 28% of ordered and published copies were distributed Diminishing demand for public pay phones, mainly due to high mobile telephony penetration and affordability Wide scope of the US may negatively affect market competition due to the US financing scheme (sector fund)

7. implements the provisions of the amended USD allows for multiple USPs limits the scope of US does not consider broadband access to Internet to be an element of USO changes the approach towards price affordability requirement Future shape of the USO in Poland - UKE’s concept New US concept:

8. 1.connection (enabling functional access to the Internet) at a fixed location and maintaining this connection ready for providing telecommunications services (Art. 3 and 4 USD) 2.national and international telephone calls, including calls to mobile networks, incl. facsimile and data transmission and called-in access to the Internet and/or their functional equivalents 3.provision of directory enquiry services (Art. 5 p.1a) USD) 4.directory of subscribers (DS) in printed or electronic version 5.optionally (yet to be decided), provision of public pay telephones. NRA’s concept - Scope of US Multiple USPs - providing different elements of the universal service - and/or in different areas of national territory, if and where possible and justified Future shape of the USO in Poland - UKE’s concept Scope of US:

9. provision of public pay telephones (PPT) should ultimately be excluded from US because of scarce demand and availability/affordability of mobile phones services 1-year transition period - local goverments in regional districts entitled to veto the operator’s decision to liquidate PPT and, in that case, to cover losses facilities for disabled persons – provided by all companies offering public telecommunication services preferably no social tariff plans – direct financial support for low-income families directory enquiry services (DES) and directory of subscribers (DS) key role of comprehensive subscriber/numbering database currently developed by NRA – PLICBD aimed to be ready in 2011/2012 DES fully opened for the market competition Future shape of the USO in Poland - UKE’s concept

10. Financing scheme net cost calculated as currently (Art. 12 USD) but as a result of proposed changes to the mechanism of US should be minimized compensation from the public fund (obligatory for additional services not listed in the current scope of US) or the sector fund companies contributing to the sector fund will have the insight to audited accounts of USP(s) applying for compensation (Art. 14 USD)

11. It is assumed that market forces will not be sufficient to satisfactorily provide universal access to broadband. Broadband access to the Internet is in its initial stage of development and does not fulfill the fundamental 2 assumptions of US because it is still not available to most consumers (13.5% penetration rate) and it may, with an adequate incentives in place, be provided by the competitive and free market. When extending the scope of the universal service to broadband the funding question becomes crucial. It would be financed from the public fund. Broadband to All – Yes, but not as a part of US – Why?

12. Broadband to All Strategy in Poland The use of EU funds for broadband and telecommunications infrastructure development with coordination by UKE (Poland’s NRA) at a national level Legal framework supporting investments in telecommunications infrastructure by regional authorities and utility companies – Act on supporting the development of broadband and broadband infrastructure – passed in May 2010 (coming into force in July 2010) Regulatory actions to support the development of wholesale services – LLU, BSA – and investment in access network based on LLU Agreement between UKE and TP (incumbent operator) signed in 2009 that obliges TP to invest in and deliver 1.2 million new broadband connections until Nov 2012

13. Thank you! Renata Kowalska Deputy Director, Retail Telecommunications Department Office of Electronic Communications r.kowalska@uke.gov.pl