The Internet in Poland is well developed in the business sector and is beginning to penetrate the consumer and household sector. The low level of Internet use by households, typical of e-commerce development in much of Central and Eastern Europe and in other emerging economies, is due partly to the poor quality of existing fixed-line telephone networks and the high costs of accessing the Internet. However, the business community and the government are committed to removing the bottlenecks to further growth of e-commerce.

Certain market structure and cultural barriers to consumer development of the Internet still exist. In Warsaw, one does not see the Internet cafes or price competition for telephone access that can be seen in European cities such as London, where telecommunications has been liberalized. Many people in Poland lack confidence that credit card information can be protected on the Internet. As yet there is no high-speed Internet access, such as digital subscriber lines (DSL) for consumers. And at a cost of $500 to $1,000, computers are still expensive for many individual households.

While government has been slow to develop and articulate explicit information society policies, Poland has a strong entrepreneurial spirit, and business has been quick to take up the Internet. More active government policies are under consideration, and rapid growth of the Internet, e-commerce, and e-government can be expected in the next few years.

INTERNET USAGE

While Internet development is still getting under way in Poland, it is growing rapidly. Industry sources estimate that there were 1.5 million Internet users in Poland in 1999 -- including 4.1 percent of all households -- out of Poland's 38 million population. By the end of 2000, about 7 percent of Poland's households will own computers, and 5 percent will have access to the Internet. These sources anticipate that there will be 4 million Internet users by 2003.

These are low numbers for Internet usage. Consumer sales over the Internet are still small -- $3.2 million, or about $2 per Internet user last year. In contrast, last year 10 percent of households in the United Kingdom and 17 percent of households in the United States made purchases over the Internet.

The picture for business usage in Poland is quite different. There are 10,000 commercial Web sites, and 80 percent of businesses in Poland use the Internet on a daily basis. Fifty-seven percent of companies have their own Web sites, and 320 companies are selling through the Internet. Companies such as Microsoft, IBM, Intel, and Cisco conduct nearly all of their large and fast-growing businesses over the Internet.

Use of the Internet by different levels of government also is growing, although the information available to users is sometimes limited. Municipal government Web sites often show documents used for municipal government and samples of standard letters to request services. There are sometimes opportunities for Internet users to give "feedback" to the government through comments on pending budget and planning decisions.

Central government ministries post addresses, biographies, current policy statements, and electronic versions of basic documents. In an unprecedented action, Poland's Ministry of Posts and Telecommunications last year posted a draft law on telecommunications, in Polish and English, and requested comments. The draft law was subsequently revised in light of the comments before being submitted to the parliament. Parliament often posts draft laws and new legislation on its Web site (www.sejm.gov.pl), sometimes in both Polish and English.

ENCOURAGING INTERNET DEVELOPMENT

A number of actions under way or under consideration by the private sector and government would encourage Internet development in Poland.

Access Pricing and Telecom Liberalization: As noted above, one factor that holds back Internet usage is high access pricing. According to the Polish press, Poland has the second highest Internet access pricing in the world, after Japan. TPSA, Poland's dominant, government-controlled telephone operator, charges per minute for connection to an Internet service provider (ISP) at the same rate as for a local phone call. This makes long sessions of browsing the Web expensive.

The single greatest factor in lowering the costs of Internet access prices would be deregulation of telecommunications, which likely would introduce greater competition into domestic phone service; this, in turn, would increase total investment in facilities and lower prices for consumers. Some liberalization has taken place or is under way. However, implementation of legislation promoting further liberalization of domestic phone service is scheduled to be delayed until the end of 2001 to enhance the equity position of TPSA, which is being sold to a strategic investor.

Education and Training: Poland currently has a modest shortage of trained professional network technicians, and this shortfall is expected to increase. At present, the supply of engineers skilled in the administration of Internet protocol (IP) networks is estimated by industry sources at 18 percent below the demand -- a somewhat narrower gap than in most EU countries. But this shortfall is expected to grow to 40 percent by the end of 2003 -- the highest in Europe -- owing mostly to expected rapid Internet development in Poland.

To meet this challenge, private sector firms are running training programs and partnering with technical universities to put in place courses and laboratory equipment that will rapidly increase the supply of network engineers. Cisco Systems, for example, is discussing such partnerships with five technical universities.

Internet in Schools: With both public and private support, Poland has taken steps to provide Internet access for all universities and schools. Private donations through institutions such as the Soros Foundation, coupled with substantial government spending, have given Internet access to all high schools in Poland, and intermediate-level schools are expected to have access by the end of this year. One limitation on Internet usage in schools, apart from high access fees, is a shortage of professional information technology training for teachers and others.

New Laws and Regulations: Poland's Parliament, professional groups such as the Polish Bankers Association, and others are considering what new laws and regulations may be required to encourage Internet development and usage in Poland. Their activities include developing legal procedures for digital signature and digital documents. Digital signature is a system whereby users would have a digital identification code that could be verified by a third party in a transaction. Digital documents, properly verified, could have the legal force of signed original documents. Other laws governing electronic fraud and other criminal conduct need to be created or reinforced.

e-government: In addition to continuing to expand the ways the public can be kept informed, the government could consider a variety of other measures to lower its costs and encourage economic growth through greater Internet use, including electronic payment of taxes and government procurement.

While Poland's business people have been quick to embrace the Internet because of its clear ability to increase productivity and facilitate economies of scale, the government has been slow to move on "information society" issues. Information society issues include fostering economic growth as well as social and political objectives, such as improving access to many kinds of information by citizens and groups. With all governments under budget pressures, there is a need for greater public and private sector cooperation in achieving information society goals.

With such cooperation in mind, a ministerial-level meeting on the Information Society of EU candidate countries took place in Warsaw in May. The Polish Agency for Foreign Investment (PAIZ) is planning a conference later this year on information infrastructure as a catalyst for new investment. In addition, legislation for e-commerce might be enacted before the end of the year. That should give e-commerce entrepreneurs the type of support they need to expand their operations and provide a significant boost to the Polish economy.

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Comments on this article are welcome. Warren Clark can be reached at [email protected].

Note: the views expressed in this article do not necessarily reflect U.S. policy.