Free Internet Starts in the Czech Republic

Joining other European companies, Czech telecommunication operator Contactel this week began offering a
free Internet access package, Red Box, included in the price of a PC.

It was touted in recent ads as the country’s first free Internet access
offer, but other companies got in the game before Contactel.

The Czech subsidiary of well-known European Internet service provider Video
On Line launched, which offers
free Internet access without having to purchase a PC or make additional
investments. The company said it expects to make money both from
advertisements and from sharing revenues with
telecommunication operators.

Another early bird on the field is local PC assembler
and vendor AutoCont. On September
3, it began selling its new PC model, AutoCont Alivio 2000, with two
years of free Internet access included. Its business model is exactly
the same as in the case of Contactel.

AutoCont is backed by SPT Telecom, the state-owned telecommunication
company. After liberalization of the Czech telecom market in 2001,
Contactel is expected to be the most serious competition for SPT Telecom.

Both AutoCont and Contactel — which cooperates with other local
assemblers, namely Comfor and Libra — set almost the same prices for
their “subsidized” PCs. The PC of entry level configuration (Intel
Celeron processor, 4,3 GB HDD, faxmodem 56 kbps, 32 MB RAM etc.) is sold
for 27.000 Kc (about $800). Two years of Internet access included in
this price would cost about 11.000 Kc ($320) otherwise.

Czech customers generally welcome these offers, but are not going after
free Internet so madly as one may expect. The reason is simple: ISP
fees make no more than 20 – 25 percent of total costs of Internet
access. The rest goes to telecommunication operators — and this is true
for “free” Internet as well. Despite this shortcoming, which will be
solved only after liberalization, free Internet access helps the Czech
Republic make another
important step towards widespread usage of Internet.

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