January 2001

Czech Republic Master Report

This report covers the whole period of the ESIS project surveying Czech Republic, October 1999 - January 2001 inclusive. 

1.1. Regulation of telecommunications and alternative networks

After the Velvet revolution in November 1989, Czech telecommunications were strictly state-owned, state-regulated and state-operated (together with postal services). The functioning of the whole telecommunications sector was defined by the than-valid Act on Telecommunications (Act no. 110/1964 Coll.), valid since 1964. The first step in opening the telecommunications market were made in 1992, when an amendment to the Act on telecommunications (Act. no. 150/1992 Coll., amending Act no. 110/1964) provided for the separation of postal and telecommunication services, for the separation of regulatory and operational activities, and prepared the basic conditions for a future privatization of the operator.

As a result of this first, on January 1st, 1993, telecommunication services were separated from postal services, with the creation of an independent telecommunications company (SPT Telecom, the national operator, in the form of a state-owned company). On January 1, 1994, SPT Telecom was transformed into a joint-stock company, SPT Telecom, a.s..

In 1994, the Czech government made a major decision concerning the development of the whole telecommunications sector. It introduced (in August 1994) a restructuring policy in a document called Main principles of telecommunications policy , aimed mainly at developing public voice telephony services. It included the following goals:

• more than doubling the number of main telephone lines between the years 1994 and 2000;
• partial privatization of SPT Telecom, the national carrier, with a strategic partner but retaining its voice monopoly for long-distance and international service until the year 2001;
• maintaining the integrity of SPT Telecom; keeping a minimum 51% state share of SPT Telecom
• introduction of competition, by licensing local telephony operators in 18 localities;
• licensing two GSM mobile telephone networks;
• creating a liberal regulatory environment;

Most of these goals were met:

The mobile telecommunications market was opened in 1996 - in March 1996, two mobile licenses were issued (to Eurotel Praha s.r.o. and Radiomobil a.s.

SPT Telecom a.s. retained its integrity, and obtained a strategic partner (TelSource) in 1995. SPT Telecom retained its monopoly on long-distance and international voice services, and a de-facto monopoly on local service - competition in local calls was permitted only in 16 small rural areas (through local alternative operators, with minimal success), and in 2 metropolitan areas (part of Prague and part of Liberec). Altogether, the alternative operators were able to gather only a few thousand customers (telephone lines).

The market for public data services (including Internet access) opened in mid-1995 as a side effect of an unplanned event. Still in 1990, the then-Federal ministry of communications issued an exclusive license to EuroTel (a joint venture of SPT Telecom holding 51% and Atlantic West B.V., holding 49%). This license was intended for the building of a nationwide public data network in a monopoly environment, and therefore it was an exclusive license. In mid 1995 SPT Telecom bought the data division of EuroTel (Nextel), and a new license had to be issued. It was issued as non-exclusive, which meant that other operators were able to apply for and receive a license for public data services. Later, for certain types of data services, and individual license ceased to be necessary. For example, for providing Internet access services, a general license was issued by the Czech Telecommunications Office in 1998 (G.P. 22/1997), and the applicant had only to register with the Office.

The market for long distance voice services was in fact (at least partly) liberalized in mid 1999, i.e. prior to January 1^st, 2001 - as a side effect of developments with Internet telephony. In 1998, Radiomobil (one of the mobile operators) started offering an Internet telephony service for international calls (from mobile phones to any type of phone). The Czech Telecommunications Office started investigating this service and at first ordered Radiomobil to stop the service because it was not covered by its license. The Office then started investigating whether it could issue a new license, i.e. whether Internet telephony violates STP Telecom's exclusivity or not. It later concluded that it did not violate the exclusivity – and the Office issued a general license that permitted any operator to offer public voice services, provided that were Internet-based (this general license had the form of an amended version of general license no. 22/1997, now G.P. no. 22/1999).

On May 1st, 1999, the Czech government approved a new strategic document in the area of telecommunications – the National telecommunications policy (NTP, Narodni telekomunikacni politika). This strategic document confirmed the previous decision to liberalize voice services (and thus open the whole telecommunications market) by January 1st, 2001. The NTP specifically aims at providing non-discriminatory and transparent conditions for operators on the telecommunications market, is focused for the upcoming 5 years, and wants to achieve its goals through:

• complete liberalization of the telecommunications market, taking into account that each user will be guaranteed access to basic telecommunications services (to the set of them called "universal service"),
• defining necessary regulation for the period of full liberalization, and in order to implement it to establish a National Regulatory Authority (NRA) by the transformation of the Czech Telecommunication Office and to merge at present separated price and other regulation of telecommunications into competence of a single regulatory body,
• use the principle of "Open Network Provision" for formation and support of free competition in its full extent,
• considering additional sale of state interest (administered by the National Property Fund) in telecommunications operators and carry out the sale in case that efficient regulation of the telecommunications market is established and safeguarded by NRA.

Following the approval of the NTP, and also following previous decisions and declarations (mainly the 1994 strategic decision and the signing of the WTO Agreement on telecommunications services by the Czech Republic in 1997), the necessary new Act on telecommunications was prepared and finalized (to replace the old Act from 1964 that was unusable for an open environment). Together with secondary legislation the new act creates a brand new legal framework following the EU legislation and practice in other Member States. The new Act deals with the following main issues:

• conditions for establishing and operating telecommunications equipment and telecommunications networks,
• conditions for providing telecommunications services,
• execution of state administration including regulation.

The new Telecommunications Act opens the door for further development of competition within the telecom market by setting up rules related to licensing regime, obligations of license holders - especially with regard to operators being declared as having Significant Market Power. It also sets Universal Service Obligation to guarantee the access to telecommunications services as a basic right to all citizens, and deals with open access to public telecommunications networks in order to ensure the interconnectivity of networks and the interoperability of services on reasonable terms for all interested entities on the market. Beside all these tasks the new act determines procedures for allocation of scarce resources - frequencies and numbers in order to ensure their efficient use.

The new Act on telecommunications was prepared by the Ministry of Transport and Telecommunications, passed for approval to the Cabinet and later to the Parliament. During the approval phases, some important changes were introduced - mainly the postponement of carrier selection and number portability. The first version of the new Act, prepared by the ministry, intended to open the telecommunications market fully, including carrier selection and number portability, by January 1st, 2001 (this meant an obligation for the incumbent to offer carrier selection and number portability in its networks starting by the same date). Before entering the Parliament, the proposed new Act contained a postponement of this obligation until year 2003.

The issue of carrier selection and number portability provoked much controversy and was widely debated. The Chamber of deputies of the Parliament approved a slightly modified version stating that carrier pre-selection and number portability should be available, in the networks of dominant operators of fixed voice networks, (not later than) by end of 2002, and call-by-call carrier selection by mid-2002. The Senate later shortened the time schedules by 6 month, but its decision was overvoted by the Chamber of deputies. The new Act on communications was enacted on July 1^st, 2000, as Act No. 151/2000 Coll.

1.2 Regulation and status of public utilities and public organizations regarding a potential entry in the alternative networks industry

The new Act on telecommunications (Act no. 151/2000 Coll.) defines the terms and conditions for entering the market. It states (in its paragraph 14) that a telecommunications license is needed for:

a) establishing and operating a public telecommunications network, with the exception of telecommunications networks intended solely for one-way dissemination of television or radio signals down wires,

b) providing public telephone services via a public fixed telecommunications network,

c) providing public telephone services via a public mobile telecommunications network.

The licenses are issued by the Czech Telecommunications Office, to a legal person who is registered in the Commercial Register, on the basis of a written application, provided that

a) all natural persons who are or will be the statutory body of a legal person or who are members of the statutory organ, are 21 years old or over, are capable of legal acts, are of good character, and at least one member of the statutory organ or the responsible representative of the legal person fulfils the condition of being technically qualified,

b) the applicant demonstrates financial competency in the telecommunications activities for which he needs a telecommunications license,

c) the applicant demonstrates that he has the technical, organizational and personnel prerequisites for the telecommunications activities for which he needs a telecommunications license,

d) there are available the frequencies necessary for the requested telecommunications activities, if the telecommunications license to be issued depends on the use of frequencies.

When frequencies, needed to award a license, are not sufficient for all applicants, a selection procedure (a public tender) must be applied.

The deadlines for issuing licenses are defined by the new Act as follows:

• 40 days from the delivery of the telecommunications license application including those documents which must accompany the application;
• 120 days in exceptionally complicated cases
• 240 days if a telecommunications license is to be awarded on the basis of selection proceedings

The new Act defines a "dominant operator" (a license holder with a significant share of the market) as having at least 25% of the relevant market in a geographical area in which it has the right to operate. Such an operator has certain specific duties, like:

• the Czech telecommunications Office is entitled to impose it an obligation to provide universal service via public fixed telecommunications networks
• is obliged to comply with requests of entitled providers of telecommunications services for access to the network operated by them (network access)
• is obliged to notify the Office and publish in the Telecommunications Bulletin reference offers of interconnection. The reference offers must contain the extent of interconnection, including the price, operation and technical conditions of interconnection. The Office can decide on changes to the reference offer of mutual interconnection.
• is obliged to offer call-by-call carrier selection by 30 June 2002 at the latest, and carrier preselection and number portability by end of 2002 at the latest (this applies to operators of public fixed telecommunications network with a significant market share).

Interconnection agreements between operators are basically left to mutual negotiation of both parties. Only when an agreement cannot be reached within the timeframe specified by the Act (90 days after starting the negotiations), the Office decides on the interconnection of networks or on network access. The decision of the Office replaces a contract about interconnection of networks or access to a network.

Interconnection prices are also negotiated by contract parties, provided they:

• do not discriminate any of the contract parties or other operators of interconnected public telecommunications networks
• allow verification of their method of accounting.

If the parties do not reach an agreement on the price for interconnection, they will use a method of price calculation set by the Office. The Office will set the method of price calculation for interconnection by a price decision. In stipulated cases the price of interconnection must arise from the costs of interconnection inclusive of a reasonable profit.

The new Act on telecommunications also deals with sharing capacity - it imposes the duty to share existing capacities only when it is not possible to build new capacity. Eventual disputes are decided by building regulation offices. The exact wording is:

(1) In the case where it is not possible to place another overground or underground telecommunications line or equipment for a public telecommunications network, cable duct or antenna tower in the arrangement of land communications, in the extent of an underground line or in a public area, or if it is only possible with unreasonably high costs and unreasonably temporary or permanently restricted normal use of this communication space, the operators of the existing ground or underground telecommunications lines or equipment of public telecommunications networks, owners of cable ducts or antenna towers are obliged, if it is technically possible, at the price stated by the special law, ⁸⁾ to allow, on the basis of a written agreement, use of these facilities by other operators of public telecommunications networks. By technical possibility it is understood free construction capacity, without adequate capacity for extension of the existing ground and underground ducts, or cable ducts or static load bearing antenna towers.

(2) Disputes about shared use will be decided by the appropriate building regulation office. The Office will participate in proceedings regarding shared use.

2.1 Types of companies offering networks (gas, railway, water and draining networks, waterways, motorways, electrical networks, cable...): description, choice and strategies (alliance opportunities, vertical integration,…), and customer targeting.

By the end of year 2000, there are several utility-type operators with their own infrastructure suitable for offering data services and use with IS applications.

Power distribution: Aliatel (http://www.aliatel.cz):

Aliatel was founded in May 1996 as a joint telecommunication project of Czech regional distribution power companies REAS. In April 1998, an international partner - RWE Telliance AG - joined the company and acquired 40%. The remaining 60% of shares were divided equally between 7 regional power distribution companies. By the end of year 2000, six regional companies sold their shared to the seventh (JCE, Jihoceska Energetika), with the intention to sell the combined shares to a strategic buyer. The British company Energis was considered to be a potential buyer, but to the date of writing no final decision was made.

Aliatel operates a backbone infrastructure based on optical cables, which it leases from the power distribution companies. The length of the optical cable network is currently approx. 5,500 km. The network of optical cables is using the routes and protected corridors of existing long-distance energy lines. Out of town, the optical cables are located in the grounding cables of overhead lines, while in towns, they are laid in underground power channels.

The topology of Aliatel's SDH transmission network consists of several interconnected circuits of high-capacity transmission networks, covering the whole of the Czech Republic's territory. The transmission capacity of the backbone network circuits intersecting the major cities of the country is 2.488 Gbps (STM-16). Regional networks are connected to backbone circuits and they serve major towns of the different regions (currently 37). The technology of regional circuits is SDH at a transmission capacity of 622 Mbps (STM-4) or 155 Mbps (STM-1). The access network between the customer's site and the access point of the company Aliatel is implemented mainly using wireless access links, point-to-point (up to 256 kbps) or WLL (for speeds up to 128 kbps).

Currently, Aliatel offers the following services:

• digital circuits, up to 155 Mbps, based on Frame Relay, ATM etc.
• data services, including IP connectivity services,
• Internet access services,
• global Infonet services
• voice services for closed user groups.

Aliatel was the first telecommunication operator in the Czech Republic to offer a guaranteed service quality (SLA). Immediately after the new Act on Telecommunications was enacted, Aliatel applied for a license to operate a public fixed phone network and offer voice services (and obtained such a license).

Railways: CD Telekomunikace

Ceske drahy (Czech railways) started building an X.25 network for its own internal use in 1989. Later it started using TCP/IP protocols over this network, and by 1999 the network had the following size:

On March 30^th, 1995, Ceske drahy signed an exclusive agreement with a private company named CD Telekomunikace, s.r.o. Through this agreement, it gave exclusive rights to CD Telekomunikace to lay cables along the rails of Czech railways. As it later showed, this contract was not preceded by a public tender and was not sufficiently balanced to the interests of both parties. On March 3^rd, 1999 the agreement was renegotiated to suit both sides equally.

Until the beginning of year 2000, only about 50 km of new optical cables were laid ( according to the agreement the whole network should have up to 4000 km). After unsuccessful attempts for an alliance with Mannesmann a.g., on January 22^nd, 2000, CD-Telekomunikace were sold to the Italian company Tiscaly S.p.A., owned by Renato Soru. Tiscali paid all the debts of CT Telekomunikace and speeded up the laying of optical cables. According to the newly negotiated agreement, by June 2001, some 2190 km of optical cables should be laid, and more then 4000 km by the end of 2001. Currently, public services are not offered neither by Ceske drahy, nor by CD Telekomunikace.

Power generation - CEZTel

At the end of 1999, the power-generation company CEZ had established a daughter joint-stock company CEZTel, to operate the digital communication network built during the nineties for the needs of the power engineering sector. On April 13^th, 2000, CEZ Board of Directors decided to invest assets in CEZTel and started searching for a strategic partner. In July it was announced that Vivendi was selected as the strategic partner, and CEZ wants to sell him 66 percent of CEZTel. The ministry of Industry and Trade (MPO, Ministerstvo prumyslu a obchodu) objects such a sell-out, arguing that it would diminish the value of CEZ as a whole in its future privatization. The Ministry of Transport and Communications (MDS, ministerstvo Dopravy a Spoju) is in favor of selling CEZTel separately.

CEZTel provides services mainly to its mother company CEZ, but it also leases digital lines to other companies like Aliatel and GTS. Its backbone has a length of cca 3000 km, and is composed of 2700 km of optical cables and cca 300 km of radio relay transmission circuits.

Oil pipelines - Mero

Mero a.s. owned an optical backbone laid alongside the oil pipelines it operates, mainly the Ingolstadt pipeline (to Germany) and Druzba (to Slovakia). This backbone provides connectivity from Prague to Germany and to Bratislava (in Slovakia), runs on STM-16 and provides for 2,5 Gbps.

In mid 2000, this optical backbone was sold to British-based Sloane Park Property Trust. SPPT wants to further expand the backbone, connect it with major cities in the Czech Republic and use it mainly for offering transnational data transmissions.

Gas pipelines – TransgasNet

The Czech state-owned gas utility Transgas started to build a new backbone network at the beginning of the nineties. It gradually replaces older metallic cables laid alongside its gas pipelines with optical cables. Until last year it worked mainly on building the backbone, but now it concentrates on connecting it to various localities - it wants to extend the current cca 1250 km of backbone connections to cca 2500 km and connect all regional cities and some district cities. The whole network is connected to the network of Global One.

In February 2000 Transgas formed its telecommunications venture named TransagsNet. As Transgas officials declared, they are not intending to sell TransgasNet.

Highways - EBCom

In the beginning of year 2000, the Ministry of Transport and Communications signed an agreement with the Swiss company EBCom to lay cable conducts along motor highways - apparently without a public tender. The agreement was later severely criticized and turned down by lawyers. No work was done by EBCom.

The only cable conducts already existing were laid down along the Prague/Brno highway during previous years, but are not equipped with optical cables. A public tender for filling in the cables and operating them is only being prepared.

Cable TV: UPC

Following its acquisition of three major Czech cable operators (Kabel Plus, Kabel Net and DattelKabel),UPC Czech Republic a.s., has 412000 subscribers, and 769000 households are within the reach of its networks. As the company announced, it wants to invest 2,5 to 3 billion CZK (cca 71 million ECU) into its networks and offer Internet access to 220 000 Czech households.

The aim of UPC for the near future is to become the operator of wide variety of the most modern communication services - from the cable television and telephones to high-speed data transmission and the Internet access. All these services should be transmitted via one multifunctional (multipurpose) broadband cable network.

Cable: CzechBone

CzechBone is a joint venture of leading cable TV operators that decided to build their own countrywide optical network. Such a network is currently under construction, some segments are already operational (1 Gbps to Prague, Brno, Plzen, Hodonin, Usti nad Orlici, Most). The backbone network should provide for the distribution of TV signals, multimedia programs and also facilitate the interchange of data – the company declared interest also in providing voice services to cable TV users and Internet access.

2.2 Types of operators using the networks.

Beside the utility-type operators with their own infrastructure, there are several other (non-utility) type operators also running their own infrastructure and/or using the infrastructure of other operators.

Cesky Telecom (Czech Telecom)

ČESKÝ TELECOM, a.s. (Czech Telecom, http://www.ct.cz), the incumbent, is the dominant operator of the fixed telephone services. The state owns 51,1 % of shares of the company, 27 % is owned by the TelSource consortium that consists of KPN (51 %) and Swisscom (49%). KPN owns individually further 6.5 %. Remaining 15.4 % stay in ownership of other shareholders. The Czech state declared its intention to sell its shares in Czech Telecom, but the buyer still has to be selected. The Dutch KPN at first declared interest in obtaining majority, but later (probably in relation to UMTS bids in western Europe) lost interest. The Czech government wants to sell a majority stake in Czech telecom, and currently two possible ways are considered: selling the whole 51% of shares held by the state, or selling a part of the shares held by the state together with the shares held by TelSource and KPN, so that the buyer would obtain a majority share.

Czech Telecom (Cesky Telecom) operates a large optical backbone network and a dense access network. The backbone uses SDH and runs from STM-1 (155 Mbps) to STM-16 (2,5 Gbps) and is a common transmission infrastructure for three networks:

• the voice network
• the leased lines network
• the data network

Through these three networks, Czech Telecom offers a wide spectrum of services: fixed telephony, IP and Internet services, Frame Relay service, Voice VPN, ATM, leased lines services, data and multimedia services, value added services etc. Also the customer range is very wide: from domestic clients to large corporate clients.

Ceske Radiokomunikace a.s.

Ceske Radiokomunikace (http://www.cra.cz) is the public carrier for TV and radio broadcasting. It also offers data transmission and client network services and is also a signatory to INTELSAT and EUTELSAT. It was established as a joint-stock company on January 1, 1994, and is oriented almost exclusively on corporate clients. It is 51% owned by the National Property Fund. Tele Danmark A/S has 20,8 % of shares, remaining 28.2 % are apportioned to other shareholders. České Radiokommunikace have entered the mobile telecommunications market with a 51% stake in Radiomobil. The Czech State is now considering to sell its remaining share in Ceske Radiokomunikace.

In February 2000, Ceske radiokomunikace finished implementing a new high capacity optical based DWDM (Dense Wavelength Division Multiplexing) technology in its backbone network , as the first telecommunication provider in the Czech Republic and as one of the first providers in Europe.

Ceske radiokomunikace also operate a wireless data network named RadioNet (through its daughter company Softlink). It offers ATM, Frame Relay and IP services with speeds up to 155 Mbps.

Eurotel Praha, s.r.o.

Eurotel (http://www.eurotel.cz) is 51% owned by Czech Telecom and 49% by Atlantic West B.V. (evenly shared by Verizon Comm. (NYSE:VZ) and AT& T (NYSE:T)). It started as a public data network provider, with an exclusive license to provider public data services. This exclusivity ended in 1995, when SPT Telecom (now Czech Telecom) acquired majority in Eurotel, and had to obtain a new license (which was then issued as non-exclusive). Eurotel holds a nation-wide and exclusive NMT-450 license for 20 years, issued in late 1990 (the service launched in September 1991). It is the exclusive provider of NMT (analogue mobile) services. Eurotel was also awarded one of the two GSM (digital) licenses in the 900 MHz band at the end of March 1996. By the end of year 2000 Eurotel has more than 2 million mobile subscribers and is oriented towards all users of mobile services, including corporate clients.

Radiomobil, a.s.

Radiomobil (http://www.radiomobil.cz) is 51% owned by Ceske Radiokommunikace and 49% by the CMobil B.V. (49 %).The CMobil international consortium comprises: T-Mobil - Deutsche Telekom MobilNet GmbH (84.55 %); TIM -Telecom Italia Mobile (12 %); Sporitelni kapitalova spolecnost, a.s. (1.75 %); TMP Telekomunikacni montaze Praha, a.s. (1 %); PVT, a.s. (0.7 %). In 1996 Radiomobil received the second GSM 900 MHz license (the other one was awarded to EuroTel) and started operating its mobile network named Paegas. By the end of year 2000 it has more that 1,75 million mobile subscribers.

Cesky Mobil, a.s.

Cesky Mobil (Czech mobile, http://www.ceskymobil.cz) is the third mobile operator who received a GSM 1800 MHz license in October 1999 and started offering mobile services in March 2000 under the brand name Oskar. It has two major shareholders: the Canadian company Telesystem International Wireless (TIW) and a leading Czech bank ČSOB. By the end of year 2000, the Oskar network had more than 200 000 mobile subscribers.

GTS, a.s.

GTS (http://www.gtsgroup.cz) is an alternative telecommunications operator, fully owned by Global Telesystems Inc. It operates the Ebone network that connects Prague to 28 other European cities, as a part of the GTS TEN (previously academic network). Inside the Czech Republic, GTS operates an infrastructural network named GTS CzechNet, composed of satellite, optical and microwave connections (and is also connected to the Concert network, owned by BT and MCI Worldcom). GTS also operates metropolitan networks, namely the Metronet in Prague (based on cca 200 km of optical cables laid inside metro tunnels). In June 2000 GTS announced that it intends to invest 3 billion CZK (cca 84 Million ECU) in the next three years in its infrastructure and technology in the Czech Republic.

GTS offers a wide spectrum of services, ranging from leased lines to value added service. After January 1st, 2001, it intends to offer also voice services. It already hold s a license for voice services.

GiTy, a.s.

GiTy (http://www.gity.cz) is a Czech privately-owned telecommunications company operating its own backbone network named G-NET, built on leased lines and VSAT connections. This network offers Frame Relay/IP services, VSAT, Internet and X.25 services, mainly to corporate clients.

Telenor

The Norvegian Telenor International has two daughter companies in the Czech Republic. The first of them, Telenor CR (http://www.telenor.cz) , offers data services based mainly on VSAT connection, running X.25 or IP, for mobile and stationary users. The second daughter company, Nextra (http://www.nextra.cz), is oriented towards IP and Internet services. In year 2000, Nextra bought the PVTnet network, built on ATM and Frame Relay running on leased lines.

Pragonet

The Pragonet Project (http://www.pragonet.cz) started in 1994 with the installation of backbone fiber optic cables in the metro tunnels in Prague. Subsequently, an access network was built using land-based transmission facilities. The whole transmission system is now based on ATM, SDH and PDH. backbone parts use STM16 with a ring topology.

Pragonet offers digital leased lines with speeds up to 622 Mbps, LAN interconnection through gigabit Ethernet and ATM, and Internet Access. thanks to agreements with other voice and data operators it can provide Frame Relay and X.25 connectivity also to other parts of the Czech Republic (i.e. outside of Prague).

BroadNet Czech s.r.o.,

BroadNet (http://www.broadnet.cz) a subsidiary of Brusels' based BroadNet Europe, entered the Czech telecommunications market and applied for a license in the 26 GHz band (and obtained it). The new alternative operator wants to start offering high-speed access to the Internet and multimedia services, based on the Fixed Wireless Point to Multipoint Access (FWPMA) technology. In 2001, when the voice telephony market will open, Broadnet wants to offer voice services.

Callino

Callino (http://www.callino.cz), a wholly owned subsidiary of Formus Communications, entered the market in 1999 and applied (unsuccessfully) for a license in the 26 GHz band. Callino wants to offer high speed Internet access, VPN a VOIP services, and plans to use Local Multipoint Distribution System (LMDS) technology.

2.3 Types of services offered by the operators on the networks.

Thanks to the new regulatory environment and opening of the Czech telecommunications market by January 1st, 2001, there should be no formal (legislative) constrains on offering any type of service by any operator wishing to do so – with the notable exception of services using scarce resources (mainly frequencies), where the number of operators is limited by the number of licenses issued, and with the exception of carrier selection and number portability in the networks of the dominant operator, which were postponed by two years.

Technically, the type of service offered by operators is limited only by their capabilities and their business models - and these evolve very quickly, and are expected to evolve even more quickly as a result of the opening of the whole telecommunications market by January 1^st, 2001.

The most interesting developments concerning the types of services offered by operators in the Czech Republic are:

• GPRS in mobile networks: all three mobile operators are preparing to launch GPRS services in their networks. One of them, EuroTel, already announced its tariffs and started marketing its GPRS services. The others are expected to follow shortly. This could change significantly such areas as mobile access to the Internet.
• FWA (Fixed Wireless Access): in September, the Czech Telecommunications Office issued 3 countrywide FWA licenses in the 26 GHz band, to the winners of a public tender: Broadnet Czech, GiTy/StarOne (a consortium of GiTy and the German company Star One), and Nextra. At time of writing, these companies are only starting to operate their newly built networks, but they should provide for a very flexible infrastructure that can be used for delivering a wide range of services, from voice and data services to broadband and multimedia.
• in December 2000, the Czech Telecommunications Office announced it will issue other 4 countrywide licenses in the 28 GHz band in mid 2001 (after UMTS licenses will be awarded)
• the exact way of issuing UMTS licenses is still not clear. Initially, the Ministry of Transport and Communications wanted to sell 3 licenses to the current operators. Later it showed that the licenses could be 4 instead of 3, and the Ministry of Finance asked for an auction of the licenses, in order to maximize the financial outcome. When preparing the state budget for year 2001, politicians opted for an open auction (open to anybody, with no specific rights to current mobile operators), and the Parliament decided to incorporate the outcome of 20 billion CZK (cca 571 million ECU) as an income to next years state budget. The Ministry of Transport and Communications now wants to issue the 4 licenses in a public tender.

Sources:

• company web sites
• Czech Ministry of Transport and Communications, http://www.mdcr.cz
• Czech Telecommunications Office, http://www.ctu.cz
• Act on telecommunications (Act. no. 151/200 Coll.), http://www.mdcr.cz/archiv/czechlaw1807.rtf
• State of telecommunications in the Czech Republic (document of the Czech Ministry of Transport and Communications), http://www.mdcr.cz/archiv/telecomunication141100.htm
• National Telecommunications Policy of the Czech Republic, http://www.mdcr.cz/archiv/NTPang.doc
• Supplement to the document "National Telecommunications Policy of the Czech Republic", http://www.mdcr.cz/archiv/NTPang-appendix.doc
• IT-NET magazine, March 2000, http://www.it-net.cz
• EURO magazine, No. 47, November 20th, 2000