International Benchmark

Poland

By Alessandro Mauro
To submit comments and updates: alessandro.mauro@telecomitalia.it

In 2007 the Polish NRA UKE launched a public consultation about the opportunity of a functional separation of the network of the incumbent operator Telekomunikacja Polska SA (TP SA).
During 2008, the Authority began working on a project aimed at breaking up the dominant operator Telekomunikacja Polska S.A. (TP SA) into a retail and a wholesale department. In order to prevent this from happening, the incumbent operator proposed a so called “Charter of Equivalence”, meaning a list of voluntarily adopted measures, aimed at eliminating discriminatory situations against alternative operators in accessing its network.

The contents of the "Charter of Equivalence" resemble those of Telecom Italia Undertakings: TP is required, for example, to ensure the "equivalence of output” (the wholesale products offered to OLOs and their prices must be sufficiently comparable to those offered to the incumbent commercial departments, and not necessarily identical), and not the "equivalence of input" as required by the Openreach model.

Main contents of the “Charter of Equivalence”
  • TP will create a separate wholesale division, with independent objectives, management and employee incentives.
  • The director of the wholesale division will also be a member of the board of directors of TP group; he will responsible for the timely and proper implementation of the non-discrimination principles.
  • TP will adopt a code of conduct for all of its employees in order to ensure that no discriminatory behaviour will be performed. An extensive training programme will also be set up for the employees.
  • The wholesale department IT systems will be fully separated from the systems used by other divisions of TP. Other divisions and subsidiaries of TP will not have access to wholesale information. OLOs and TP retail departments will have access to the same information.
  • A set of key performance indicators (KPI), agreed upon the  OLOS and the NRA will be published monthly and audited by an independent auditor, in order to monitor TP’s compliance with the non-discrimination principles.
  • Any wholesale product will be tested with the “price squeeze test”. The NRA, in cooperation with TP and the OLOs, will define the methodology and the parameters to be applied

Consequently, in October of 2009 the UKE suspended the separation process underway and reached an agreement with TP SA; the Authority’s commitment is not to modify access tariffs established by the operator to the OLOs. In exchange, the incumbent operator must carry out investments in order to improve the quality of the network.

The European Commission, moreover, looks very carefully at what is going on in the Polish market: in March 2010 it accused the incumbent of abusing its dominant position, as the latter did not formulate adequate offers   for its wholesale broadband services. On April, 17th 2009, the Commission already started a process as a result of certain complaints according to which TP was abusing its dominant position in the wholesale broadband market. The alternative operators were forced to a long and costly process for the access to the network of the Polish historical operator, which put in place delaying tactics and unreasonable conditions.

In 2012, the Polish Authority considered the possibility of raising the obligation of cost orientation for the incumbent NGAN bitstream services as a measure to stimulate investments in new generation optical networks. However, the Commission recommended UKE (Commission Recommendation C (2012) 5913 of 27/08/2012) not to raise the identified remedies, including the cost orientation obligation, "unless functional separation or other forms of separation have proved effectively to guarantee equivalence of access". In particular, according to the Commission, "the model which exists in Poland is characterised by the acceptance of voluntary commitments without establishing by way of direct regulatory intervention, a separate business unit that would supply access products also to the incumbent itself, therefore it might not qualify as functional separation. These arrangements appear to aim at enhancing the compliance with SMP obligations by way of commitments without imposing the rather intrusive remedy of functional separation".
The BEREC opinion is in line with the Commission position: it stressed that the agreement signed between TP and UKE expires in 2013, while a measure of functional separation is be permanent.

Useful links:
http://www.en.uke.gov.pl/ukeen/index.jsp?place=Lead01&news_cat_id=73&news_id=970&layout=1&page=text