 | Issue: | Europe II 2002 |
| Article no.: | 4 | |
| Topic: | Czech Telecommunications and European Union Accession | |
| Author: | Marcela Gürlichová | |
| Title: | Deputy Minister | |
| Organisation: | Ministry of Transport and Communications of the Czech Republic | |
| PDF size: | 20KB |
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Article abstract
The Czech Republic is part of the spectacular European Union enlargement. Czech telecommunications were state-owned and the infrastructure was neglected. More than 1 billion US dollars per year was spent to improve the infrastructure and services, the system was liberalised and privatised and a new regulatory structure and regulatory agency created to prepare for EU entry. The new regulations provided technological neutrality – services that comply with the law and technical parameters may be provided on any platform.
Full Article
Economic recovery after the collapse of communism The historical summit of the European Union in Copenhagen has paved the way for the most spectacular European Union enlargement in its history. The new members are mostly small countries that for more than 40 years had suffered under communist rule. One of these countries is the Czech Republic, a successor state of former Czechoslovakia, which between the two world wars was known as a pillar of democracy among the antidemocratic regimes in Central Europe. Its relatively high industrial level and development was interrupted by the WW II and subsequently by the communist centrally-planned economy. After the 1989 revolution the Czech Republic – Czechoslovakia was democratically split in 1993 – had to reassert itself in all areas. Building Modern Telecommunications The telecommunication industry was naturally no exception. Although the telecommunication operators in the European Union (EU) were also state-owned for a long time, the level of basic telecommunication infrastructure was disproportionately neglected in comparison with these countries. The key indicators, such as penetration, network modernization or waiting times for installation of a phone line, were very poor. However, the 90s saw huge investments (more than 1 billion US dollars per year) into telecommunications, promoted by the gradual liberalisation and privatisation in the sector and also by the predicted entry into the EU. Indeed, as the European Commission put it several times in its assessment reports, the Czech telecommunications policy was developed strongly along EU lines. After minor legislative changes in the early 90s a thorough revision of the legislative framework was made in 2000 with the adoption of the Telecommunications Act (“the Act”), aligning the Czech regulatory environment very closely with EU practice. By 1999 the chapter “Telecommunications” was provisionally closed in the negotiations between the Czech Republic and the EU. As already envisaged in the strategic document, National Telecommunications Policy, in 1999, the Act established an independent regulatory authority for telecommunications called the Czech Telecommunication Office (CTO). The CTO was entrusted with tasks similar to those of regulators in EU countries. Further, perhaps even more importantly, the Act abolished the remaining exclusive rights of the incumbent operator to provide voice telephony services. Also, universal service obligations were introduced as well as dates for the launch of competition enhancing services such as carrier selection and number portability. Successful development with obstacles A significant feature of the Czech telecom market in the last decade was the rapid growth of the mobile services. The penetration has already reached 80% in 2002 and is comparable to figures of EU member states. The three mobile operators have been forced to constantly bring innovations to the market in order to thrive in the highly competitive environment. In 2001 the UMTS licences were issued but the launch of its operation is only scheduled for 2004. The UMTS services should offer new multimedia services, including high-speed Internet access. Other than for mobile services, the impact of liberalisation was not that obvious. It is true that nearly 30 new licences have been issued for network operation and fixed network service provision, but the incumbent easily retained its dominant position. One reason for this was, as in the EU where the impact on the market was initially also limited, the monopoly over the local access (See below). The penetration of fixed lines has been stagnating for more than two years at about 38%; this is especially due to the ever-increasing use of mobile phones. But there have also been some remarkable achievements in this area. For instance, the wait time for phone line installation ten years ago was nearly a year and has now dropped to less than three weeks by the end of 2002. The modernisation of the fixed network of the incumbent operator has accelerated so that the core network is now fully digital. This enabled full introduction of the call-by-call carrier selection facility, while carrier preselection and number portability are to be launched at the end of 2002. The last year also witnessed a much-debated event on the telecommunication market – the renumbering of the fixed and mobile networks. The Czech numbering plans have thus been harmonized with those of the EU. Also, many new telecommunication services have been licensed and launched, even though some, such as FWA, have had only limited success. In addition, the share of data services as a part of total telecommunications revenues is growing. An example is the increasing use of the Internet, by more than a third of the population. A user-friendly FRIACO method however, has not been introduced yet. Realizing the importance of the Internet in education, the Government has started an initiative called “Internet to schools”, in the framework of which all schools should be equipped with the Internet by 2004. Another important Government decision concerns its strategic plan to switch from analogue radio and TV broadcasting to digital platforms by 2010. On the eve of EU accession As already mentioned, the Czech Republic has been formulating its telecommunication policy in accordance with the trends in the EU and so, indirectly, with the global environment. In April 2002 a series of new EU directives went into effect; they take account of the trends of convergence among (tele)communications, information technologies and media towards all inclusive “electronic communications” industry. One of the basic principles of the new regulatory framework is the technological neutrality which means that the electronic communication services may be – without any regulatory obstacle – be provided on whatever platform, on the condition that they comply with the law and technical parameters. One regulation of the new regulatory package was already adopted at the end of 2000 – a regulation providing for unbundled access to the local loop. The EU hoped to achieve an increase in competition in the fixed market by implementing this directive. So far, the results have been rather modest and only a relatively small portion of lines has been unbundled. The Czech Republic will have to transpose the whole new regulatory framework before EU accession, anticipated in May 2004. The works on the new Electronic Communications Act have already been started to avoid missing the target date. Even before, the Regulation on unbundled access to the local loop will probably have to be transposed by amending the current Act. The Czech Republic is following the trend of convergence on the electronic communications level and, as well, on the institutional level of the Government. That is why effective of 1 January 2003, a new Ministry of Informatics has been established combining the powers of different bodies in the areas of (tele)communications, information systems, electronic signatures, data protection and postal services. The tasks arising from the objectives of Europe+ should also be better coordinated now that there is a specific Ministry to do so. It is another proof of the importance that the Czech Republic has rightly decided to adhere to the emerging information society structures of the European Union and of other areas across the world. The role and proper functioning of the independent regulator will also be of utmost significance. The new regulatory framework gives the national regulatory authorities greater powers in some areas, although the European Commission reserves the right to override a regulatory decision of any regulatory body from a member state, in case that harmonisation rules should be threatened by such a decision. The national regulator CTO has benefited from a one-year Phare twinning programme designed to suggest improvements to the future functioning of CTO. Conclusion Many amendments concerning decision-making process, powers, remuneration of employees, financial resources and IT equipment have been suggested and their use will be considered along with the preparation of the new Electronic Communications Act. The reformed regulator and the new ministry should work together on creation of a competitive, transparent and non-discriminatory telecommunication environment, in which it should be possible, without heavy regulatory interventions, to offer the customers high-quality and affordable telecommunication services.
