Privatization and DeregulationWith more than 80% of businesses privately owned (21), privatization is taking place or has been completed in all areas of the Czech economy. This page provides information on the latest movements in privatization and deregulation for the following areas:
In 1994, the Czech Government set January 1, 2001 as the date for official deregulation of the telecommunications market in the Czech Republic. However, there has been a push for an earlier opening of the industry both from politicians and trade representatives, as well as from the market itself.SPT TelecomSPT Telecom currently has a near-monopoly with 3.4 million customers throughout the Czech Republic. Fifty-one percent of the company is government owned and 27% is held by Telsource, a joint venture between the Dutch KPN and Swisscom. This leaves only 22% free-floating shares, which are highly desired among Czech investors.(22)
Despite SPTs plans to invest 32 million in new technology, the fact that approximately 300,000 households are still waiting for telephone service is causing concern that SPT will be unable to meet the growing demand quickly enough. For this reason, Group 98, a telecommunications trade association and the Social Democrats (CSSD) are calling for an earlier opening of the market. Included in this plea is proposed legislation which will provide guidelines for managing competition in a free market. (23)
In anticipation of future competition, on October 29, 1998 SPT announced plans to modify tariffs on its telecommunications services. These changes were made in agreement with the Ministry of Finance and the Ministry of Transport and Communications on order to enable SPT to financially prepare for 2001. The tariff modifications will force SPT provide more efficient services. STP is increasing productivity levels by reducing the ratio of telephone lines per employee.
An additional aim of the new tariff structure is to eliminate subsidization of local calls through revenues from international calls. This is part of a long term goal of "rebalancing tariffs," or assessing charges for individual services based upon the cost of their provision. Rebalancing tariffs is a requirement set for European Union member states and the EU has recommended that the Czech Republic begin this process.(24)
Following are a list of proposed changes for SPT's residential and business customers beginning January 1, 1999:
These modifications to current tariffs on regulated telecommunications services will increase overall by 3.9%, below the expected rate of inflation for next year. (25)monthly rental fee increase from 100 CZK (3.33 USD) to 135 CZK (4.50 USD) increase in price per pulse to 2.60 CZK (0.09 USD) and reduction of time per pulse which will result in an average increase of 25% increase in price per pulse for public pay phones to 4 CZK (0.13 USD) for the second long distance zone, there will be a slight decrease in price for peak hours and an over 10% decrease during off-peak hours for the third long distance zone, consumers will see a 10% decrease for peak hours and a more than 40% decrease for off-peak hours.
Other Telephone ProvidersAlthough SPT Telecom dominates the market, other providers have been able to offer service to limited areas of the country. Three companies have been identified as SPT's competitors: Kabel Plus, Telecom 21 and Aliatel. Kable Plus began providing telephone services in November 1993 and currently has over 3,500 customers in Liberec, northern Bohemia. It is expected that Telecom 21 will have 14,000 customers by the end of 1998, after beginning service in June of the same year.
Telecommunications providers must apply to the government for a license to offer wireless service. In 1990, Eurotel (a joint venture between SPT Telecom and US West-Bell Atlantic) was issued a 5 year license to offer mobile service. In accordance with the Czech government's 1994 decision on privatization of the telecommunications industry, this license has been since renewed and another mobile services provider, RadioMobil was also issued a license. Both licenses were granted for a period of 20 years.(26)
Competition has been allowed in the Internet access market since 1995. In the past three years, many Internet service providers have entered the market. This has reduced costs to users and forced many ISPs to offer rates for unlimited use. In April 1998, the SPT Telecom began offering ISP services as well. However, other ISPs are not concerned by the competition. They feel that by partnering with each other they will be able to provide more comprehensive services to their customers.(27)More information on Internet service can be found at this site's page on Internet Activity.
Broadcast spectrum which was previously used by the Czech military will soon be released for use by the cable television market. The signal will reach customers in Prague, and will cover about 60% of the Czech population. Bidding for a license to use the spectrum was scheduled to begin in August, 1998. While the bid was open, Galaxie TV, a regional television station in Hradec Kralove is expected to win the bid. This new station will provide true competition for TV Nova, which currently has 52% of the market. The only other privately owned station, Prima TV, has a mere 9.15% share in the market.(28)
Ceské televize (Czech Television) and Czech Radio are the Czech Republic's public television and radio stations. Although they are financially independent, they have a mission to promote the public interest and are associated with the Czech government. Ceské televize and Czech Radio are also limited in their ability to advertise and to perform other activities to promote business. (29)While Ceské televize and Czech Radio are the primary providers of radio and television in the Czech Republic, other providers do exist. Companies who wish to provide radio or television services must apply for a license from the Council for Radio and Television Broadcasting in the Czech Republic.
There are currently 150 radio stations, with over 70 licenses having been granted. Radio Free Europe, BBC World Service, Radio Europa 2 and Radio Frekvence 1 are some of the most well known stations in the Czech Republic.
There are 118 broadcasting stations in the Czech Republic, for which 52 operating licenses have been granted. In addition to two state television stations, two privately owned television stations exist (Nova and Prima). Nova, the first of these to receive a license, began operation on February 4, 1994. (30)
Privatization of most large state-owned telecommunications producers and other technology manufacturers occurred between 1992 and 1994. These companies were divided into smaller independent companies through "coupon privatization and direct sales auctions. Most of these companies produce simple switches, branch exchanges and mechanical components for network installations. Because they do not have resources for major research projects, these companies are not in the production of new, high-tech technologies.(31)
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Created by Brooke Snoberger
Last updated December 17, 1998
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