VZCZCXRO5054
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHWR #0735/01 0850805
ZNR UUUUU ZZH
R 260805Z MAR 07
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC 3756
INFO RUEHKW/AMCONSUL KRAKOW 1643
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 WARSAW 000735 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EUR/NCE, EUR/ERA, EEB/CIP 
EUR/NCE FOR DKOSTELANCIK, BPUTNEY 
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS, JKIMBALL, MWILSON 
TREASURY FOR MGAERTNER 
 
E.O. 12958: N/A 
TAGS: ECPS ECON EINT EINV PL
SUBJECT: Polish e-commerce: Challenges, but Solid Fundamentals. 
 
REF: WARSAW 000688 
 
WARSAW 00000735  001.2 OF 002 
 
 
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Summary 
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¶1.  Poland's e-commerce sector appears to be doing well 
although some challenges remain in the level of internet access, 
business IT investment, and government e-commerce initiatives.  The 
business-to-consumer segment of the market has already reached 4 
billion zloty ($1.4 billion) annually, while estimates put the 
business-to-business segment at 60 billion zloty ($20 billion).  The 
continued growth in Polish e-commerce should provide plenty of 
opportunities for U.S. companies.  End Summary. 
 
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Fulfilling E-Commerce Prerequisites of... 
------------------------------------------ 
 
¶2.  What conditions need to exist to promote healthy e-commerce? 
Based on internet research and conversations with a leading reporter 
on technology matters and the spokesperson for the predominant 
Polish on-line store, we identified three:  access to computers and 
high-speed internet; investment in IT infrastructure; and the 
presence of a permissive regulatory and policy environment. 
 
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Internet Access 
--------------- 
 
¶3.  Access to the internet is increasingly available and affordable. 
 Polish computer sales increased by 38% last year, compared to 10.5% 
worldwide.  By the end of 2006, 37% of all Poles had access to an 
internet connection, which is expected to increase to 50% by 2010. 
Of these, close to three million users have access to broadband.  In 
addition, costs are falling - for example, many companies now charge 
less than 1 Polish Zloty ($.33) per month to host an internet 
domain.  The ability to participate in e-commerce is now within 
reach of the average consumer and small business. 
 
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Infrastructure Investment 
------------------------- 
 
¶4.  Corporate, private, and public investment in information 
technology (IT) is substantial and increasing, helping to create an 
e-commerce ready economy.  The Polish market in IT goods and 
services reached nearly 20 billion zloty ($680 million) last year, 
an increase of 14% from the previous year.  The IT market supports 
an estimated 10,000 Polish IT firms.  The GOP plans to provide an 
extra boost, with a six year plan to spend up to 3.5 billion zloty 
($1.2 billion) on IT procurement and service contracts between 2007 
and 2013. 
 
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Permissive Regulatory and Policy Environment 
-------------------------------------------- 
 
¶5.  In the governmental arena, one positive development has been the 
adoption of the first national IT plan, which consolidates many 
previous IT-related strategies that caused some degree of confusion. 
 The government now appears to have a policy framework in place that 
permits the continued development and growth of Polish e-commerce. 
In addition, our e-commerce contacts told us that they could not 
come up with any examples of government regulations or practices 
that were hindering the development of e-commerce in Poland. 
 
------------------------------- 
Leads to Growth and Opportunity 
------------------------------- 
 
¶6.  The result: in 2006, the business to consumer (B to C) 
e-commerce market reached 4 billion zloty ($1.4 billion), or 4% of 
the B to C market as a whole - an increase from just 1 billion zloty 
($340 million) 4 years ago.  While there is less information on the 
business to business (B to B) e-commerce market, estimates suggest 
that it is approximately 60 billion zloty ($20.3 billion).  Both of 
these segments of the e-commerce market should see continued robust 
growth over the next couple of years, with estimates of the B to C 
market reaching 16 billion zloty ($5.4 billion) by 2010. 
 
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But There's Still Room for Improvement 
-------------------------------------- 
 
 
WARSAW 00000735  002.2 OF 002 
 
 
¶7.  While the building blocks for successful Polish e-commerce are 
largely in place, there are still challenges that remain in each of 
the conditions we identified as necessary for healthy e-commerce. 
 
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Internet Penetration Below EU Norms 
----------------------------------- 
 
¶8.  Poland lags in internet access when compared to western and 
northern Europe.  The proportion of the population with access is 
just half the 71% in the United Kingdom and also falls behind the 
50% for the EU as a whole.  However, Polish internet access, while 
below that of the EU average, is already higher than Italy (25%) and 
Spain (19%).  Costs for hosting sites may be falling, but for other 
essential e-commerce components remain high.  This is especially 
true for telecommunications, where dominant player Telekomunikacja 
Polska S.A. controls two-thirds of the market and is uniformly 
criticized for high connection fees and monthly access charges. 
 
--------------------------------------------- ---- 
Infrastructure Investment Dominated By Foreigners 
--------------------------------------------- ---- 
 
¶9.  Investment in Polish IT is still primarily by foreign companies 
- with big names such as Microsoft, Oracle, IBM, and SAP all amongst 
the largest investors.  Homegrown companies have yet to contribute 
significant resources to the continued growth of e-commerce.  While 
the GOP will provide a boost to this for in the first half of its 
six year IT plan, it is front loaded: investment for the second half 
will fall to 1 billion zloty ($340 million) between 2010 and 2013. 
Even many of the largest contracts awarded to date have been delayed 
by litigation by companies that did not submit winning bids. 
 
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GOP Initiatives Lacking 
----------------------- 
 
¶10.  While our sources could not identify any regulatory obstacles 
to successful Polish e-commerce, neither could they identify any 
successful government initiates designed to act as catalysts to 
e-commerce growth.  Certain government projects that could propel 
growth in the business-to-government market segment, such as 
e-signatures or e-filing of taxes for corporations, have suffered 
from repeated delays and cost overruns. 
 
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Comment 
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¶11.  Polish e-commerce faces challenges, but post believes this is 
because Poland is earlier on the growth curve than its neighbors and 
not because serious obstacles will prevent sustained development of 
e-commerce.  Most of the building blocks for robust growth in 
e-commerce already exist.  Stories about continued IT investment by 
large companies abound in the press.  Government initiatives in 
e-signatures and e-taxes, while delayed, are still making progress. 
U.S. companies should find ample opportunity to invest and grow with 
Poland's e-economy. 
 
ASHE