Telecommunications operators’ spending on infrastructure development is increasing every year, and according to estimates by the analytical firm PMR, it reached nearly 12 billion PLN last year. However, the problem is not only capital but also legal barriers, such as obtaining property titles for real estate located in the area of planned investments or the lack of local spatial development plans. “In Poland, telecommunications investments are still hindered by the same obstacles as in 2006 or 2010, which we wanted to prevent with the so-called ‘mega-law,’ which facilitates investments in telecommunications,” says Anna Streżyńska, former Minister of Digitization.
“Key to the development of the telecommunications industry are infrastructural investments aimed at densifying the network, but also changing its quality, increasing its throughput, because then content services or digital services requiring more bandwidth can be packed there. On the other hand, we also need to stimulate investments that fill white spots and gaps in digital skills. These are actions that require not so much market development as political decisions about funding purely social goals,” says Anna Streżyńska, a telecommunications market expert, former Minister of Digitization, and former President of UKE, to Newseria Biznes.
According to a February report by the analytical firm PMR, last year the Polish telecommunications market grew by nearly 7% (compared to a 5% growth in 2022), totaling over 85 million services (total RGU), with more than half accounted for by mobile telephony, followed by pay television and internet services. Analysts indicated that telecommunications operators have consistently pursued a policy of raising service prices in exchange for improving service quality (more-for-more), which is also associated with higher expenditures on telecommunications infrastructure development.
This trend will continue in the coming years, contributed to by the 5G auction resolved last autumn for the 3400-3800 MHz frequency range (Polkomtel, P4, Orange, and T-Mobile each received one 100 MHz block, contributing a total of over 1.9 billion PLN to the state budget), which outlines new development prospects for the entire Polish telecommunications market. Operators’ preparations for launching 5G networks and investments in fiber-optic networks result in them incurring higher costs associated with their construction. According to the “Report on the State of the Telecommunications Market” by UKE in 2022, operators’ spending on telecommunications investments reached 11.24 billion PLN, an increase of 26.3% year-over-year.
However, expanding telecommunications infrastructure still presents challenges for operators. The problem is not only capital but also legal barriers, such as obtaining legal titles to real estate located in the area of planned investments. Municipalities often pose an obstacle, introducing direct and indirect barriers to telecommunications installations in local spatial development plans (such as direct bans on the construction of mobile phone stations in certain places or specifying a maximum building height which effectively blocks such investments). In the absence of local plans, operators are required to obtain location decisions, which can lead to protests from residents.
“Operators and construction companies indicate that procedures are still very lengthy, and the fee expectations from property owners, including public ones, for the right to use a road strip, for example, are still a very significant financial burden. This, considering the decreasing revenues of operators and the high costs of the investment itself, poses a big problem. Hence the necessity to subsidize such projects at the investment stage, not just at the maintenance stage of the network in terms of universal service,” says the expert.
As indicated, these problems were not even resolved by the so-called ‘mega-law’ introduced in 2010 aimed at supporting the development of broadband infrastructure.
“It is disappointing to state that in Poland, telecommunications investments are still hampered by the same obstacles as in 2006, 2007, or 2010, which we wanted to prevent then with the ‘mega-law,’ which facilitates investments in telecommunications,” says the former Minister of Digitization. “The fact that the regulations are still not adapted and do not favor the construction of this telecommunications world is very shocking to me 14 years after the introduction of the ‘mega-law.’ It seemed to me that, first, we had made a huge dent in formalities, and second, that this was just the first step, the letter A and further work on loosening formal requirements would be conducted with an understanding that telecommunications is simply the base on which we build our future.”
Access to ultra-fast broadband networks is a condition for building an information society and a modern economy – emphasized the Polish Chamber of Information Technology and Telecommunications in last year’s report, developed together with IDC, which shows that the Polish telecommunications industry has made a huge leap in the last 30 years. In 1992, the first Centertel network was established in Poland, and a few years later, the first 2G network in the GSM standard was launched. Today, the dominant generation of mobile networks is 4G, and the standard of radio communication is LTE – the first
LTE networks were launched in 2009, and Poland was one of the pioneers of their development worldwide. Currently, the 5G network is starting to play a leading role, which has an increasing number of commercial implementations, and thanks to features such as high transfer speed, low latency, or the ability to handle up to a million devices per square kilometer, it opens up completely new possibilities for the market. PIIT indicates that efficient introduction of 5G frequencies will enable the construction of an information technology network in Poland on completely new principles. This is also associated with the development of the Internet of Things (IoT) technology, which forms the basis of modern infrastructure for the digital economy.
Simultaneously, large fiber-optic investments are underway in the Polish market (just one of the operators, Orange Poland, will allocate a total of about 4.6 billion PLN for this purpose in 2021-2025). According to the PIIT report, Poland still has gaps to fill in this area. By mid-2022, 55.3% of citizens of the European Union and the United Kingdom were within the reach of FTTH/FTTB networks, this technology reached 126 million buildings and was used by 67 million EU citizens. Latvia led (91.5%), followed by Portugal (90.9%), Romania (88.5%), and Spain (87.4%). Meanwhile, Poland – with a result of 54.8% – was below average.
As Anna Streżyńska notes, work is underway to implement several European regulations in the areas of digitization, telecommunications services, cybersecurity, and innovations such as artificial intelligence. Among them is the European Digital Services Act and the implementation of the program “Path to the Digital Decade,” adopted in January last year, one of the goals of which concerns digital infrastructure, assuming, among other things, covering all users in the EU with a gigabit network before the end of this decade.
“In the regulatory environment, everything is changing. And if everything is changing, every player in this market expects to quickly and precisely know what these changes concern so that they can plan their activities, and the financial burdens and contributions that market entities make to the administration do not increase because multiplying these formal and financial burdens simply harms the business,” says the expert.
As she emphasizes, the telecommunications industry is open to new regulations that support consumer protection and improve the conditions for competition in this market. However, in recent years, projects for new laws and regulations have often been created without consultation, disregarding the voices and comments from market entities, who expect this to change now.
“The role of the regulator, which has so far been strictly limited to regulating, to counteracting the abuse of market power, both in relation to competitors and consumers, will also change. Now, the regulator will be the center of strategic and implementation activities, which are fundamental to the development of the entire ICT market and all other industries in which digitization occurs,” says Anna Streżyńska. “It depends on the regulator’s skills, his knowledge, speed of response, ability to integrate various fields whether the strategic goals we set for ourselves, such as the development of the country and being a digital leader, benefits for citizens and entrepreneurs from this, will occur at all, because it is the regulator who will implement all these regulations.”
The authors of the report under the auspices of the Digital Poland Foundation “Time for a Digital Economy,” among whom, apart from Anna Streżyńska, were other former ministers of digitization and over 40 industry organizations, advocate creating an electronic market regulator.
“With the subsequent regulations, such as DSA, DMA, AI Act, it is necessary to determine the market regulators responsible for proper supervision. In order to build one center of competence and knowledge, it is recommended to create anew or combine, for example, with UKE, a new electronic market regulator,” they assess in the publication.
“We propose to undertake work on the strategy and cause the regulator to have a strictly defined scope of tasks, responsibility from them, and additional funding so that the regulator can use the best possible experts and a professional staff composition, that this will be provided for in this law directly. Because the telecommunications market earns very large money for the regulator, paying billions of złoty annually, but this money does not return to the regulator but goes to general budget purposes,” says Anna Streżyńska.
