ISPs Demand More Money From Czech Telecom

[Prague, CZECH REPUBLIC] 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.

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.

Sharing revenues is especially important for those ISPs who provide
connection to the Internet for free. Connection fees from the
telecommunication operator is the only source of direct income for them.
There are 3 “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 with other Czech ISPs joined the
consortium NIX.CZ and publicly
accused Czech Telecom of delaying the development of the Internet in the
Czech Republic. They not only found the increase of the connection fees
inadequate but also criticized tariffs for end users, still too high
from their point of view.

“The Internet Service Providers of the Czech Republic are disappointed
by the continuing 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 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 even 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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