Czech ISPs Dissatisfied With ILEC

Internet service providers in the Czech Republic publicly expressed their discontent with the level of commissions provided by local incumbent telecommunication operator Czech Telecom for generating phone traffic.

by Petr Koubsky
Prague, 26 September 2000

This so-called connection fee — basically, degree of sharing revenue between ISP and Czech Telecom — has been increased from the previous level of 20 to 30 percent to 20 to 45 percent, depending on the volume. These are still low numbers in comparison with Western Europe. For instance, British Telecom shares 60 to 70 percent of revenues generated with local ISPs.

Shared revenues are especially important for free ISPs, for whom connection fees from the telecommunication operator are only source of direct income. There are three "free" ISPs in the Czech Republic: Czech On Line (owned by Telekom Austria), Contactel (partly owned by Tele Danmark) and World Online. These three ISPs, in addition to other Czech ISPs, joined the consortium NIX.CZ in accusing Czech Telecom of delaying the development of the Internet in the Czech Republic.

They found the increase of the connection fees inadequate and also criticized tariffs for end users as still too high.

"The Internet Service Providers of the Czech Republic are disappointed by the still-minimal efforts of Czech Telecom to make Internet access affordable and available for the broadest number of consumers," said the joint statement of ISPs.

According to the OECD report "Local Access Pricing and E-commerce", Czech prices for Internet usage (including telephone tariffs and VAT measured in terms of purchasing power parity) are the second highest among 29 countries included in the survey.

For 20 hours of peak time Internet access, Czechs have to pay US $109.93 in PPP adjusted terms. Hungary is the only country with higher prices.

It is generally expected that the situation will improve immediately after the liberalization of telecommunication market beginning January 1, 2001. Czech Telecom, however, will retain several important privileges.

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