5. Broadband Internet - Current Situation in the Czech Republic

Broadband Internet in the Czech Republic

The roll-out of ADSL services in the Czech Republic has been on hold since the end of 2001, as Czech Telecom has thus far failed to come up with a wholesale offer that would make it viable for alternative carriers to launch services.

In the fourth quarter of 2001, Czech Telecom was ordered by the regulator, CTU, to postpone the roll-out of its own ADSL services after an attempted launch, until it could come up with a wholesale offer that allowed alternative carriers to compete for end users. In its latest offer, Czech Telecom cut its previous wholesale prices by 25 per cent, finally making it financially viable for alternative providers to launch services.

Under current law, Czech Telecom does not have to give full access. This situation makes it difficult to offer more services and create competition. Recently, there has been new low proposed to allow the full access.

Cost of ADSL Service in the Czech Republic

Since March 2003 Czech Telecom has signed agreement with number of alternative operators over the provision of ADSL services. The high wholesale price makes it very difficult to create competitive offers. Recent study shows that the prices for ADSL service in the Czech Republic are 6 times bigger than in most EU countries. When price is calculated on buying power it is 12 times more expensive than in most EU countries.

Currently monthly cost of ADSL service is around 50 Euros fro 192 Kb/s downstream connection.

There is an attempt to regulate the wholesale price by the Czech telecommunication office.

Cable TV Broadband Internet Access

The situation in Broadband Internet access over the CATV is a little bit better. The average price is about 35€ a month for 300 Kb/s downstream connection.

Wi-Fi

There is a new trend using Wi-Fi and Czech Telecom is now installing Wi-Fi access points at gas stations. There are many alternative Wi-Fi providers and there are some community access Wi-Fi projects.

Penetration of Broadband Internet Users

Current situation makes it difficult to bring the ADSL services to more users. Czech Telecom is planning to connect 30.000 ADSL users by the end of year 2003. In the first 2 month, only 2.000 users have been connected.

AS of September 2003 Czech Telecom has reported 7.000 ADSL user and about 500 new users every week.

Broadband Internet Services

Currently the ADSL service is offered only in large cities – Prague, Brno and Ostrava.

Content

Since the very low penetration there has not been yet special broadband content services developed.

Czech Telecom has launched a pilot project for the VOD. This service will enable users download movies and pay per view.

As seen in other countries, the types of applications that will benefit most from broadband access are: media sharing, entertainment information, and short frequent spells of online activity.

It has been reported that the broadband Internet users occupy more than 50% of connectivity with movie and music file sharing activities.

The Future of Broadband Internet in the Czech Republic

Rolling-out ADSL services will provide a boost for the high-speed Internet access market. So far, the initial lack of broadband activity has meant that a new method of providing high-speed access has developed, such as Wi-Fi technology and, more frequently, through cable networks.

Opening up the ADSL market will enhance the range of choices on offer to subscribers. A competitive choice of providers will also help boost service uptake.

The market offers considerable growth potential. Recently fully liberalized, the telecom sector as a whole has been attracting international interest. Along with the carriers which have, or are in the process of, signing contracts with Czech Telecom to begin launching services, the high-speed Internet sector has attracted the interest of a number of other international and domestic providers, including Tele2, Aliatel, Contactel, Nextra, Czech On Line and Tiscali.

An estimated 80,000 current Internet users in the country are potential ADSL subscribers. Demand is clearly there - according to Czech Telecom, the introduction of ADSL technology could yield E6.5m in revenue for carriers in 2003, while by 2007, all services related to internet access in the Czech Republic could be generating up to E290m.