25th October 2004
Thursday, September 2nd, 2010
Goodbye telephone
Domestic Internet portal O2.pl is about to launch the first voice-over-broadband service in Poland that can make calls to fixed-line phones, and it's cheaper than traditional fixed-line. So how soon before big guns like Telekomunikacja Polska and Netia will follow suit?
With some of the highest fixed-line and mobile telephone prices in the world, it's clear that Poland is looking hard for any cheap alternatives to present themselves. Well, one such alternative is about to arrive in the form of VoIP (voice-over-internet protocol), as top internet portal O2.pl is set to launch Tlenofon, a VoIP system that can also make calls to fixed-line phones and is 50 percent cheaper than regular Telekomunikacja Polska (TP) fixed-line service.
"You don't need a telephone anymore," declares Jacek Świderski, co-owner of O2.pl, who is understandably excited about their new offering, which adds on to their already successful instant messaging service called Tlen (Polish for 'oxygen').
"All you need is an Internet connection, and a headset-which you can get for 15 or 20 zloty," he says. Users can even get a traditional phone number, which costs about zł.5 a month, but otherwise start-up is free.
And although Tlenefon's initial target market will be limited mainly to small- to medium-sized enterprises (SMEs) and young computer-savvy people looking to don headsets and save some dough by using their broadband access instead of a phone, it's hard to deny the broader market potential of the new product, especially considering the cost savings.
Of course it is already possible to have conversations using computers on broadband. But this service will allow computer users to have a dedicated telephone number and to call people who only have a landline phone.
With Tlenofon set to launch within a couple of weeks, Świderski expects they'll grab a few thousand clients by the end of the year, and 50,000 users by the end of 2005. Considering that O2 already has 100,000 using their standard computer to computer voice-over-broadband service, these projections hardly seem over-ambitious.
The narrow band of broadband
With the 50 percent savings over traditional fixed-line, it's a wonder why all of Poland wouldn't jump at this offer. But one look at Internet penetration rates in Poland supplies the answer: According to Rzeczpospolita daily, the number of broadband users in Poland was 410,000 in June of this year, which means over 98 percent of Poland can't realize the benefits of a service like Tlenophone.
On the other hand, the potential growth in this area is tremendous. The same Rzeczpospolita report says that broadbrand growth over the trailing 12 months was 664 percent. To add to this, none other than Poland's notorious telecom monopoly TP are set to release an independently prepared report on worldwide broadband usage next week, which, among other things, cites Poland as having the fastest broadband usage growth in the world.
"If you take into account broadband access in Poland, it will be at least a few years before VoIP will be a real factor," says Magdalena Muszyńska, an analyst for TP.
So when will TP answer up to O2's brave new offer? "It's hard to say when TP will introduce VoIP for residential clients," says Muszyńska. "The market is not mature for this yet, taking into account very low broadband penetration and relatively low PC penetration as compared to other European economies."
"The VoIP market for residential clients in Western Europe is also in its relatively early stages of development," she goes on to say, mentioning that in France there are a number of operators that offer a VoIP service, including France Telecom, 9telecom and Iliad-Free, while in the UK there are few commercial residential VoIP offerings other than that of the incumbent, BT.
But Muszyńska nevertheless recognizes that voice-over-broadband is the way of the future, saying that eventually "it will move all the way into mobile or to voice-over-broadband. Some analysts say in 6 years there will be 60 percent voice-over-broadband."
Krzysztof Kaczmarczyk, a telecom analyst with Deutsche Bank, agrees: "IP [Internet Protocol] technology is the future of telecom."
Mind the echoes
Yet another issue is that of quality. Many cheap phone cards, even the ones available in most Polish post offices, use similar VoIP technology, sending packets of data rather than the steady stream provided by traditional lines. Anyone using these cards can attest to the missed words, gaps and echo effects that occasionally result.
"When I speak to friends in London [using VoIP], the quality is awful. I miss every sixth word," says Kaczmarczyk. "The point is that it is very far from being perfect."
Besides its shakiness in terms of reliability, Kaczmarczyk says VoIP's quality issue comes down to three main problem areas: delay, missing words, and often an echo sound, all of which can be thoroughly distracting when trying to have a phone conversation. "Although sometimes the quality is better," he admits.
These kind of quality and reliability concerns may be a big reason why TP has yet to jump in the game, as they surely want to rigorously test their own offer and make certain they've mastered the medium's quality and reliability issues before entertaining any thoughts of launch.
To O2's credit, however, the interview with Mr. Świderski for this article was conducted from Świderski's PC to our fixed-line connection via Tlenofon technology, and the quality was decent, similar to that of a cheap phone card-and no missing words.
Follow the little leader
So if and when TP eventually unleashes its own VoIP offering, will a small player like O2 be able to compete? The answer is yes, according to Kaczmarczyk, who points out that an Internet-focused firm like O2 isn't weighed down by the costs of fixed-line networks.
"Everyone will find a place," he says. "Even mobile is testing this technology."
Świderski, meanwhile, says: "We have to [compete]. It is our destiny. TP is the one who has to take the step now. We don't expect them to act immediately. I don't know what they think of us as a competitor."
Just days before this issue was to go to press, Świderski says Netia, the country's biggest alternative fixed-line operator, paid him a phone call. It seems they'll be offering a similar service just a few weeks after Tlenofon's launch, but they nevertheless congratulated O2 on being the first. And although competitors like Netia may follow quickly on their heels, O2 certainly deserves kudos for paving the way.
From Warsaw Business Journal by Michael Lars White
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