US embassy cable - 05WARSAW3178

UNCLAS SECTION 01 OF 02 WARSAW 003178 
 
SIPDIS 
 
DEPT PASS TO USTR J. HALE 
 
E.O. 12958:  N/A 
TAGS: ETRD, PL, ECCP 
SUBJECT:  POLAND:  U.S. PROVIDER SEEKS TO OFFER VOICE 
-         SERVICES 
 
 
SENSITIVE BUT UNCLASSIFIED: THIS CABLE CONTAINS BUSINESS 
PROPRIETARY INFORMATION.  NOT FOR INTERNET DISTRIBUTION 
 
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SUMMARY 
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1.  (SBU)  California TOK, a Delaware-registered firm, is 
making ambitious plans to enter the Polish telecoms market 
with inexpensive international voice services.  Although the 
service will rely on an individual customer's existing 
broadband connection, the company eschews labeling its 
service voice over internet protocol (VOIP).  A major appeal 
of the service in addition to the low price, believes the 
firm's representative here in Poland, is the ease of use and 
setup, factors that have been missing from some VOIP 
services.  End Summary. 
 
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DON'T SAY VOIP, SAY "TOK" 
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2.  (SBU)  Econoff met with Stanislaw Lewak (protect), 
general manager of California Tok to discuss the company's 
plans to introduce its calling service for the Polish 
market.  Lewak began his presentation by emphasizing that, 
as far as marketing his service goes, he never, ever says 
"VOIP."  "People hear that word, and their eyes glaze over," 
Lewak said.  "I want our customers to have an absolutely 
trouble-free experience with our service, right from the 
moment they set up."  California TOK uses a Cisco VOIP 
router that connects directly to a standard telephone RJ-11 
jack and to the Ethernet port on a broadband modem. 
 
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SMALL INVESTMENT, (POTENTIALLY) BIG REWARDS 
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3.  (SBU)  Lewak said that TOK's current investment in 
Poland is about $500,000, although he expects to see that 
amount double when service is officially launched.  He 
emphasized that TOK saved tremendous amounts of time and 
money by establishing a branch office, rather than a legal 
subsidiary, in Poland.  The paperwork for a branch office is 
much less than that required for a subsidiary, and for TOK's 
purposes, at least, gets the company all the legal presence 
it needs.  Lewak said that his firm got approval from the 
Polish telecoms regulator (URTIP) as both a voice service 
and a "telecommunications (read data) provider," and was 
surprised (as was Econoff) at URTIP's openness to TOK's 
application.  The firm plans to offer 100 minutes of talk 
time anywhere in Europe and North America for 49 Zloty 
(about 15 dollars) per month, with per minute charges after 
that of less than 10 cents per minute.  This is far and away 
cheaper than rates charged by Telekomunikacja Polska (TPSA), 
which still dominates the telecommunications market in 
Poland, and offers the most popular DSL-based broadband 
access in Poland.  And that presents a major challenge for 
TOK. 
 
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TPSA MODEMS AND TOK SERVICE: GEEKS NOT INCLUDED 
--------------------------------------------- -- 
 
4.  (SBU)  TPSA's DSL service is primarily delivered through 
universal serial bus (USB) DSL modems.  These modems have no 
Ethernet ports; rather, they plug right into the computer 
and, utilizing the "plug-n-play" abilities of Microsoft 
Windows, set up a direct connection to the internet.  In 
order to use TOK's VOIP box (or any other router-based 
application, such as a wireless network access point), the 
customer must use an Ethernet modem.  Currently, TPSA 
charges twice the amount for an Ethernet modem as it does 
for its cheapest USB option.  In addition, TPSA has also 
rigged its Ethernet modems to block VOIP traffic. 
 
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KICKOFF WITH A LAWSUIT? 
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5.  (SBU)  California TOK plans on launching its service 
officially in Poland in September.  In addition, it is 
looking seriously at suing TPSA for violating EU antitrust 
regulations because of the Ethernet modem issue.  Lewak 
confided that, in reality, it has no effect on his business. 
Subscribers to TOK are hooked up by a visiting technician 
well-equipped to bypass the TPSA access limitation.  In 
fact, Lewak said, he hopes that the publicity of a lawsuit 
may actually help TOK in its ad campaign, set to begin soon 
in cooperation with a Warsaw radio station (and investor) in 
the service. 
 
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TOK IS CHEAP . . . 
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6.  (SBU)  Time will tell if TOK really becomes a viable 
voice services provider in Poland.  But if it does, it will 
be a prime example of how for very little money, innovative 
U.S. firms can exploit technological advantages in 
restrictive telecoms markets to challenge stultified 
incumbents and make a profit as well. 
 
HILLAS