What lies ahead for the telecommunications market

We need to think about what to do to make the market grow and how to finance this growth. Telecoms cannot alone bear the costs of investments that also benefit a dozen other sectors, according to a debate held in the 'Rzeczpospolita' Salon during the Economic Forum in Karpacz.

Key moment

"Today's discussion comes at a crucial time. There are important milestones in every sector, after which you can stop for a while, look at what has been and make further directional changes," said Dariusz Standerski, Deputy Minister of Digitalisation.

He was referring to the law adopted by the Sejm in July - the Electronic Communications Law. It introduces changes to improve the operation of the telecommunications market and better protect consumers. The electronic communications law covers a wide range of issues that affect the telecommunications market and introduces two European directives.

At the same time, the deputy minister pointed to the need for further changes to facilitate investment in the industry, such as the infrastructure construction law. "We often encounter absurd restrictions on transmitters, the construction of masts or the placement of transmitters on buildings,” he stated.

He added that it was also necessary to talk about the future of funding, including regulators.

"The role of regulators is expanding. During many discussions on funding, questions are raised as to why the telecoms sector is funding activities that affect not only it, but also about the supervision of the entire market. In recent years, the telecommunications sector has been the only client of the Office of Electronic Communications. But once the law re-regulating copyright law comes into force, if the Sejm, in the proposed form still being finalised by the government, adopts the implementation of the Digital Services Act, the queue to the UKE will be much longer. Therefore, the question is whether other participants in this broad market should also participate in this process so that the regulator operates efficiently,” he said.

Financing growth

Małgorzata Zakrzewska, executive director for corporate affairs and member of Play's executive committee, president of the Freedom of Choice Foundation, emphasised that the Polish market is one of the most competitive in Europe. It is also one of the heavily deregulated markets, which is a good direction. However, thought must be given to its future.

"I look at the telecoms market as an ecosystem. You cannot analyse the market without thinking about the consumer. And I see the consumer as a citizen, a state, an economy. With the consumer's interest in mind, market stakeholders should think about where we want to be in five years' time," said Malgorzata Zakrzewska.

There is no doubt that telecoms companies need to ensure service availability, quality and security for their customers. These three pillars are essential. However, they require a huge investment. Zakrzewska noted that revenues in the telecoms market were declining slightly, while capital expenditure was clearly increasing. Last year, they increased year-on-year by 26%.

"This money has to come from somewhere. I'm not going to say that we should suddenly raise our prices, because that's what the market is competitive for, not to raise prices to absurd levels. We pride ourselves on the fact that Poland has some of the lowest prices in Europe. But we should talk about investment, because market growth is in our mutual interest. The debate should focus on answering the question of how to ensure this growth and where to obtain funding.”

Jacek Oko, President of the Office of Electronic Communications (UKE), highlighted the development of the market in recent times.

"What changed in the supply chain was the access to the telephone system, then the data transmissions started to appear, then the data behind the system. We have reached a situation where the data behind the system is bigger than the system itself. The question is whether other market participants, such as big techs, should also participate in financing the market, investments, and driving technical and technological development," said Jacek Oko. "Of course, this is a difficult task. If you've been operating for a number of years without being so heavily involved in infrastructure funding, it's going to be hard to come to terms with that. It would be good if this was not a decision of the regulator, but of the market participants themselves. This would probably be the best mechanism to stimulate development. It cannot be the case that only infrastructure operators bear the costs since this is how they make a living. They are getting less and less out of it. This is where the danger arises that the market could stop growing."

He stressed that the situation was changing dynamically. The speed of information processing, processing techniques, algorithms, the amount of information is growing very rapidly. It should not be the case that industries that benefit from this will continue to receive services without any development costs.

Telecommunications prospects

Prof. Konrad Raczkowski, UKSW, pointed out that competitiveness in Poland is at a very good level. The fact that we have low prices is also good news from an economic point of view.

"If, at these low prices, the sector performs in such a way that we ensure a 10% increase in the use of telecom services, we will see a 1.6 percentage point boost to GDP. This is an incredible value. From an economic standpoint, we should aim for the sector to remain relatively affordable while still leaving a margin," he said.

"Which direction will the industry take next?

We will continue to invest in the development of both fixed and mobile infrastructure," said Małgorzata Zakrzewska.

"Play has significant experience in this area, building a thousand base stations a year and successfully overcoming investment barriers. However, much work remains to be done. It will certainly be necessary to continue investing in broadband and to focus on eliminating white spaces.

Technological changes will drive the need for more solutions and ideas," said Jacek Oko. "It is also essential to optimize the infrastructure we have already established. Eliminating white spaces is a key priority, but we must also ensure that where we have built structures, everything operates as efficiently as possible."

Deputy Minister Standerski emphasized that the future of the industry will be shaped by innovation. "In the past, there were concerns that market saturation would lead to a growth ceiling. However, new innovations have continually emerged, unexpectedly driving further development," he pointed out.

Who should regulate the market?

The UKE chief stressed that the evolving market needs regulation. "A number of issues need to be addressed, and participants must be engaged in this process. The challenge is to regulate without overregulating."

Jacek Oko advocated for the introduction of a self-regulatory mechanism. "In my view, the market should generate proposals and ideas, while demonstrating responsibility and an ethical approach, even if that means occasionally limiting its own benefits.

The regulator, by itself, will only consider its own perspective and may not implement market-appropriate solutions. The closer we get to solutions generated by an informed, responsible sector, rather than one driven solely by profit, the better it will be. If the regulator has to impose solutions on market participants, they may not be optimal," he said.

However, the industry is sceptical about taking the lead in regulation. Market players may be reluctant to incur higher costs. "Without regulatory intervention, this will not work," said Małgorzata Zakrzewska. Part of the solution could lie in the ESG reports that businesses will soon be required to publish. "This isn't just about greenwashing; it's about genuinely implementing good practices. Companies will need to report on their performance in terms of social and environmental responsibility, show progress, and demonstrate their impact on safety, the economy, and other factors. While this won't happen overnight, companies will ultimately have to take these factors into account."

Prof. Konrad Raczkowski emphasized the importance of compromise. "A dialogue should emerge. It is worth considering the formation of various teams and meetings between the regulator and the market, where the industry can also submit demands and legislative proposals in writing. Relying on experts to help develop solutions that balance the interests of all parties will also be beneficial. Let pragmatism and economic calculation guide us. Regulation is unavoidable, but let's approach it in a way that reduces bureaucracy," he urged.

Dialogue for development

Deputy Minister Dariusz Standerski stressed that the Ministry of Digitalisation maintains a strong relationship with the sector.

"For the past few months, it has felt like we are operating within a respectable, mature democracy. In important discussions and when working out difficult solutions, the sector, community organizations, and the Ministry of Digitalisation are on one side, with the Minister of Finance on the other. It is clear that we share similar challenges in many areas and are reaching a consensus on how to address them," he said. "The biggest challenges still lie ahead. First, the electronic telecommunications law that has been enacted should be properly concluded. It needs to be implemented effectively, and when it comes into force, it should pave the way for a new chapter through an amendment to the mega-law."