Privatization and Deregulation

  Privatization

The legal basis for privatization and deregulation stems from two important acts signed in 1989 and 1990.

-  The Act of 1 December 1989 on establishment of the office of the Minister of Post and telecoms.

-  The Act of 23 November 1990 on Posts and Telecommunications,(Communications Act), together with the modifications introduced by Acts of: 28 June 1991, of 9 October 1991, of 29 December 1992 and of 12 May 1995.

These acts brought an end to the monopoly of state in the field of telecommunications.  The new communications act sets out four levels of competitive activity in public telecommunications.                                                                                                                                                                                                 - The international telecom links and connections of any kind; here, the participation of foreign capital owners as operators is not allowed (it means that the international telecom services remain a monopoly of the Polish Telecom)                                                                                                                                                                                                        - The long distance telecom links and networks - the allowable participation of foreign capital is limited to 49%                                                                                                                                                                                                 -   The sound and television broadcasting transmitting equipment - the participation of foreign capital is limited to 33%                                                                                                                                                                                                 -   There is no limitation to competition at the local level however a license from the Minister of P&T is required 13                                                                                                                                                                                               

Privatization of the TPSA

The privatization of Telekomunikacja Polska S.A. (TPSA), the national telecommunications operator, will start in the second half of 1998 with the sale of minority shares in a public offering and may be combined with sales of shares to raise capital. The government approved the first stage of privatization in early September 1997. The government was then dissolved as the result of parliamentary elections, and a new government was appointed by the end of October 1997. The new government will make decisions as to the future privatization phases and their timing. These strictly political decisions will depend mainly on the results of the first stage of privatization and the need to support the budget in the upcoming reform of the social security system. A tender for an advisor to the Ministry of Treasury on TPSA's privatization opened in November 1997 with a six weeks time period for filing offers.

In the first stage of privatization planned for 1998, the Treasury would continue to hold the majority of TPSA shares. TPSA employees would receive free of charge up to 15% of the shares, as required by the Law of Privatization and Commercialization. A minority block of shares would be floated on the Warsaw Stock market open to both Polish institutional and private investors, as well as on international stock markets for institutional investors. The detailed privatization schedule and methodology plan is still under preparation. Polish government currently estimates the total TPSA value at $15-20 billion.  As of April 1, 1997, the ownership responsibility for TPSA was transferred from the Ministry of Posts and Telecommunications to the Ministry of Treasury. The intention was to make the Ministry of Posts and Telecommunications a regulator. The privatization is to be carried out jointly by both these Ministries. 14

  Competition Within the Cellular Market

The history of competition for the cellular telephone licenses presents a less rosy picture of the legal framework of Polish telecom. The licencing of mobile operators was the first real test of the new law. It caused international uproar over the governments attitude regarding the mobile phone license ternders, focusing attention on problems many of the new Eastern European countries faced. The main criteria of the adjudication by tender was the amount of the donation. Estimated at around 75 million dollars. However things are getting better. Considering the sacle of investment involved, the tender for GSM (Global Standard for Mobile COmmunications) licenses that took place in 1996 were a crucial event.  The Ministry of Communications handled the bid evaluation process efficeintly; as a result, thetwo operators who had been granted licenses were promptly announced. Both winner Polkomtel and Polska Telefonica Cyrfrowa immediately focused on network deployment and had signed up their first subscribers by the end of 1996.15                                                                                                                                                                                                 Market Competitiveness   

Competition between Telecomm service providers

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  Liberalization

 Local telephone services are completely open to foreign investors. The Polish telecommunication market would be liberalized after the privatization of TPSA. This is seen as a way for the government to ensure that TPSA shares are sold off at their highest value and contribute as much as possible to the state budget to support the reform of the social security system.  Current liberalization plans foresee that long distance voice services will be demonopolized in 1999, and international public services in 2003, although foreign ownership in these operating companies might be limited to 49%.

 Pricing

 I had difficulty in findig information on pricing.  From what I learned it seems that calls were subsidized locally for a long time and therefore are comparative to the US rates.  However international and cell phone rates are much higher.

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