- Working groups
Ahead of the ETNO General Assembly to be hosted by Orange Polska in Krakow on 25-26 October, Maciej Witucki, CEO of Orange Polska, shares his views with ETNO Digital on the main challenges for Poland in achieving the Digital Agenda objectives and on the regulatory approach.
Maciej Witucki: Developing modern fibre-optic networks is a significant part of the European Union policy. In accordance with the development strategy, by 2020 all the EU citizens should have access to the Internet of capacity of 30 Mb/s or more, and half of them should have access of capacity of at least 100 Mb/s. Therefore, a big challenge in the area of achieving the Digital Agenda targets is ahead of us. However, without a proper regulatory policy creating investment incentives, the accomplishment of those targets will not be possible. As Orange Polska, we declare our support to the Digital Agenda tasks. Yet, we cannot deny that investment conditions are the decisive factor of profitability of any action, and those conditions include the regulatory environment. The European Commission can also see the increasing need to change the regulatory approach in the field of NGA networks.
A private investor is not able to carry out a national-scale investment on their own. Additionally, there are legal issues: only state administration may improve legal provisions and create appropriate conditions for such investments. To accomplish the targets of the Digital Agenda, therefore, strategic actions must be taken: cooperation between service providers needs to be supported in the area of building the infrastructure, and regulation incentives ensuring competitiveness need to be offered.
Maciej Witucki: Legal conditions stemming from the EU directives and the Telecommunications law are of general nature and are not a decisive factor in the issues directly influencing investment profitability. What determines the actual conditions for the activities of enterprises (and particularly those subject to regulation) are the specific solutions usually included in administrative decisions. And there are still too many question marks here. For instance, the reference offer has still not been approved while it specifies the terms and conditions of contracts for access for alternative operators to our infrastructure, including related access fees.. Furthermore, we still do not have an ordinance specifying the technical conditions for interior telecommunications installations. Moreover, the final shape of the currently amended provisions of the telecommunication and investment acts (Megaustawa) on symmetrical obligations referring to access to interior cabling or cable duct system remains unknown. These solutions have a real influence on the profitability and, as a consequence, on development of investments. The lack of detailed solutions makes it impossible to determine the impact of new legal regulations on the development of infrastructure.
Maciej Witucki: The announcement of the commissioner Kroes referring to possible changes in the regulatory approach to next generation networks is very promising for us. Our experience to date shows that strict regulatory policy is not favourable for investments in the next generation access networks. Development of investments in fibre optic networks in Europe (not only Poland) is definitely worse than in Asia, Americas or Russia. We hope that the European Commission will draw conclusions from the current situation
However, it is too early to judge whether the new attitude will be really perceptible. It is worth mentioning that the announcement of the new approach coincided with the Commission’s recommendation on the method of regulation of the BSA market in Poland (the so-called market 5). The Commission did not approve the lack of cost obligations for the FTTH technology despite the fact that Orange Polska does not have any such lines. This as well as the need to create investment incentives were the reasons for the Polish regulator’s decision to temporarily not impose cost obligations on FTTH networks, yet maintaining the obligation of access to the network as well as the non-discrimination obligation. The Commission, however, contested the decision. In such circumstances, it is difficult to speak specifically about the change of the of the Commission’s approach towards the FTTH regulations. Therefore, we are waiting the commissioner Kroes’s announcement to be reflected in tangible regulatory actions. We do hope that this announcement will be put into practice.
Maciej Witucki: There is one condition indispensable to spur private investment. It is to find a compromise between the regulations and the competition. Regulatory environment actively supporting correlated inter-sector investments (e.g., telecommunications and power industry, public utility companies, road infrastructure developers etc.) may have a significant impact on decreasing the costs of construction and modernisation of networks. Everybody understands that investments will not be profitable for single service providers. We must invest together and we need to create a model of costs sharing and information system on investment plans so that they are not doubled. In order to increase the scale of the implementation of broadband access networks we also need to use the experience of other countries where broadband networks are widely available.
In my opinion, other basic requirements right now are to: permanently monitor the development; to check whether the implemented legal and economic solutions support technological development; to educate broadly on the possibilities to use the EU funds for infrastructure; to give space to networking between local self-governments and the operators or other enterprises engaged in digital projects.
Moreover, investments in the next generation access networks need also to take into consideration various sources of financing, so that the built networks all fit together. We need to remember that the means out of which broadband networks are built in Poland, as well as the applied technologies are diversified. We have both the European Union funds for construction of, in particular, distribution and core networks, and private funds of telecommunications service providers and cable operators used mostly for the so called last mile or mobile Internet. All of the above mentioned investments contribute to completion of the Digital Agenda. Yet, it is important to make them complement each other and optimise their use as much as possible.
Maciej Witucki: Orange Polska, as an important market player and a socially responsible company, supports the development of broadband access networks and services in less accessible areas and the areas where commercial investments are not profitable. Therefore, as far back as in 2007–2008 we concluded arrangements on cooperation for development of broadband infrastructure with most of regional self-governments. The arrangement specified the conditions of cooperation and coordination of tasks connected with the construction of broadband access networks. The development of the infrastructure will include urbanised areas, small towns and villages (including some of the so-called “white zones”). Cooperation with public units to develop broadband networks is currently carried out as a part of the Broadband Network Development Programme. Such solutions translate into specific social benefits. They provide Internet access for inhabitants of digitally excluded areas, providing them with the most modern services available and giving the regions a chance to facilitate their economic development. Furthermore, such solutions reduce the digital exclusion in villages and small towns and equalise chances between regions, increasing competitiveness of smaller towns.
Maciej Witucki: The current challenge for service providers is not as much to enable free access; it is more to offer content. The magic of devices such as a smartphone or a tablet results from a possibility to use countless applications and programmes via permanent Internet access. Therefore, attractive content will be the driving force . The future lies in solutions combining media and telecommunications. Today, the Internet is not just another medium, but a hybrid combining radio, press, television, entertainment with one more key factor determining its strength – the interactivity of the users. The business model for modern media is to be multidimensional. This is what the customers expect.
Furthermore, the services rendered by telecommunications companies will become more and more integrated with other, currently completely separate branches, such as power industry. Smart grid projects give fantastic opportunities for the ICT sector as it is ICT that will enable the networks to be “smart”. A vast market is being created for suppliers of network automatic control engineering equipment, network parameter measurement systems, smart meters, teletransmission networks and databases data processing applications. Telecommunications solutions are certainly an important element in the development of smart grids, not to mention businesses such as insurance, banking or mobile payments that have so far been poorly penetrated by the telecommunications players. And I cannot imagine the economy development without telecommunications networks.
Maciej Witucki: First of all, the General Assembly has, as every GA, some statutory duties. So the meeting will be the occasion for ETNO members to hear the EB Chairman’s and Director’s reports, as well as to discuss a number of important matters such as the ETNO strategy for 2013 and the budget for the next year.
But it is also an occasion for ETNO members to discuss new challenges the telecommunication sector is facing and the opportunities we might seize. We meet at the year of the 20th anniversary of ETNO and it gives us a great opportunity to summarize its powerful impact on the European law-making process and protection of our common interests.