October 1999

Czech Republic Master Report

I - General background

The Czech regulatory environment is currently in a state of transition - valid legislation originates from 1964 and was only partially amended in the recent years. A main strategic decision, concerning the liberalization of the whole sector of telecommunications and the privatization of the incumbent operator, was undertaken in 1994. This decision postponed the opening of the voice telephony market to the year 2001. A new regulatory framework for the fully liberalised telecommunications market is being worked upon but has not beenenacted yet: a National Telecommunications Policy was prepared and officially approved by the Government in April 1999 but the new Telecommunications Act that would implement the new principles and intentions is only in a state of preparation.

1. General telecom policy

Prior to the Velvet revolution in 1989, all telecommunications in the Czech Republic were state-owned, state-controlled and managed together with postal services. In 1989, the Czech Government created a state-owned monopoly supplier of postal and telecommunications services (SPT, Správa pošt a telekomunikací). On January 1, 1993, telecommunication services were separated from postal services, with the creation of an independent telecommunications company (SPT Telecom, the national operator - the incumbent - 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.

During 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 services 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 also 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).

Currently, most telecommunication services (except for fixed voice telephony) are liberalised. A full liberalization of the whole telecommunications sector, including voice telephony services, should come on January 1st, 2001.

2. Institutional structures in charges of the regulatory issues

According to Act 2/1969 Coll. (so-called Competency Act, about the establishment of ministries), in the wording of later amendments, the key role in regulating of the telecommunications sector is given to the Ministry of Transport and Communications.

2.1. Ministries in charge of the telecommunication issues

The Ministry of Transport and Communications is the authority responsible for telecommunications since November 1, 1996, when the telecommunications function was transferred from the Ministry of Economy (which was subsequently abolished). It is responsible for all aspects of telecommunications policy and regulation, except for the regulation of tariffs for inland services, which are regulated by the Ministry of Finance. The Czech Telecommunication Office (CTO, a part of the Ministry) participates in tariff negotiations but the Ministry of Finance is responsible for the final decision.

Within the Ministry of Transport and Communications, the responsibilities for telecommunications are divided between the Department of Telecommunications Policy (DTP) and the Czech telecommunications Office, which is the national regulatory authority.

As well as having responsibility for telecommunications policy, DTP exercises the shareholder rights of the National Property Fund for SPT Telecom and Ceské Radiokommunikace, including state activities relating to loans and Government guarantees.

The Ministry of Finance is responsible for approval of domestic tariffs. It is also responsible for monitoring state aid. Domestic tariffs include: monthly lump sum, tariffs for local and long-distance calls, fees for installation and transferring of telephone lines.

2.2. National regulatory authorities

The Czech Telecommunication Office (Ceský telekomunikacní úrad) was established on January 1^st, 1993 as the 6th Section of the Ministry of Economy, and retained this competence until 31st of October 1996. Since November 1st, 1996, competencies in the field of telecommunications were passed on to the Ministry of Transport and Communications.

Since January 1998 the Czech Telecommunication Office (as section No.6) has been directly under the Minister of Transport and Communications.

The mission of the Czech Telecommunication Office comprises, above all, in ensuring of the observation of the Telecommunications Act along with legal regulations issued to execute the Act and regulations related, i.e. to decide on the rights and duties of physical and legal persons within the telecommunications sector. The Czech Telecommunication Office is a constituent part of the system which regulates telecommunications in the Czech Republic.

Within the framework of the main fields of activity, the Czech Telecommunication Office is responsible, in particular, for the following tasks:

• In the field of regulation, tariffs and charges:
  • lays down fundamental conditions for the State regulatory system in telecommunications,
  • issues authorization and permits for the provision of telecommunication services,
  • prepares and negotiates proposals in the field of tariff policy for telecommunication services with regulated tariffs,
  • prepares proposals of telecommunication tariffs within the range of price regulation,
  • issues permits for establishing and operating telecommunication equipment and networks.

• In the field of international relations:
  • represents the Czech Republic in the field of telecommunication organizations,
  • negotiates international treaties,
  • coordinates foreign assistance in the field of telecommunications.

• In the field of frequency spectrum management:
  • allocates frequencies for all kinds of radio-communication services,
  • coordinates the use of frequencies and frequency bands with telecommunication administrations abroad, with other national departments (Radio-communication Coordination Committee) including notification of frequency assignments for individual radio-communication stations with the INTERNATIONAL TELECOMMUNICATION UNION (ITU),
  • ensures, within qualified jurisdiction, the cooperation with the Council of the Czech Republic for Broadcasting,
  • issues permits for establishing and operating radio stations.

• In the field of protection of the rights of users and operators of telecommunication networks and services:
  • makes, through administrative proceedings, decisions in disputes between users and operators of telecommunication networks and services,
  • safeguards the re-examination of decisions issued in the first instance of administrative proceedings.

2.3. Frequencies allocation authorities

Administration of the part of the frequency spectrum for radio and television broadcasting is within the competency of the Radio and Television Broadcasting Committee of the Czech Republic based on the "Competency" Act of the Czech National Council No. 2/1969 Coll. as amended, and on the Radio and Television Broadcasting Committee of the Czech Republic Act No. 103/1992 Coll. as amended. This part of the frequency spectrum is also used for other services, such as data services, which are not within the competencies of the CTU.

The Czech Telecommunication Authority (CTU) is specifically responsible for:

• allocation of frequencies for all kinds of radio-communication services,
• coordinating the use of frequencies and frequency bands with telecommunication administrations abroad, with other national departments (Radio-communication Co-ordination Committee) including notification of frequency assignments for individual radio-communication stations with the INTERNATIONAL TELECOMMUNICATION UNION (ITU),
• ensuring, within qualified jurisdiction, cooperation with the Council of the Czech Republic for Broadcasting,

The existing legal regulation of the frequency spectrum management is not sufficient. Based on the provisions of the valid laws, management of frequencies, as limited resources, cannot be performed really consistently (e.g. the law does not set conditions for efficient utilization of frequencies, it does not set fees for using of frequencies), and performance of legal obligations is not enforceable.

2.4. Office for the protection of economic competition

The authority responsible for competition (Office for the Protection of Economic Competition) was established in 1991, according to the Act on the Protection of Economic Competition (Act 63/1991 Coll., as amended, based on EU competition law, covering both public and private sectors) - as the Federal Office for the Protection of Economic Competition. In 1992, due to the split of the former Czechoslovakia, it was changed into the Czech Office for the Protection of Economic Competition, which was later transformed into the Ministry for the Protection of Economic Competition. On November 1st, 1996, the Ministry was transformed into the current Office for the Protection of Economic Competition.

The authority supervises that economic competition on the market is not interfered with, limited or excluded.

The support and protection of the economic competition is implemented in the areas covered by the law on the protection of economic competition, it is also focused on the banning of agreements that limit competition or which lead to the abuse of dominant and monopoly positions and also supervision of mergers of companies.

2.5. Consultative councils

Currently, there is no official consultative council or other body in the area of telecommunications.

Only unofficial bodies do exist: the Skupina 98 (Group 98), formed in 2nd December 1996.

Group 98 is a free association of businessmen in the telecommunications sector and other parties striving for the full liberalization of the telecommunications market as early as in 1998.

Alongside individuals, Group 98 associates the new telecommunications companies which have been jointly drafting and implementing projects aimed at the establishment of the essential system preconditions for an operational telecommunications market.

Their main objectives are:

• to establish a set of clear and non-discriminatory regulatory rules,
• to liberalize the licensing procedure,
• to establish an independent supervisory (regulatory) body,
• to set forth the principles of cooperation of the network partners,
• to define clearly the notion of universality,
• to liberalize the price (tariff) regulation.

The new "State Information Policy" intends to set up a consultative body named "Czech Information Forum", focused on IS issues. Preparations have started in summer 1999, and the Forum should be established by the year's end.

2.6. Public telecommunication operators

• SPT Telecom

SPT Telecom is the national public telecommunications operator. It came into existence on January 1, 1993, as a state-owned company, with the separation of telecommunication services from postal services. Since January 1st, 1994, it has operated as a joint-stock company, but in a non-liberalised environment.

SPT Telecom holds a 20-year license, dated July 1995, which grants it a monopoly over long-distance and international telephony until January 1, 2001. It is also the only company permitted to install, operate, renew and maintain telecommunications network equipment and fixed networks for services provided exclusively by SPT Telecom. The license includes universal service obligations and sets specific operational targets for line installation, pay phone installation, waiting list reduction and achievement of network performance indicators.

SPT Telecom is also the exclusive operator in 144 out of 160 local areas, covering about 93% of the population. It effectively decides which local areas shall be open to competitive telephone services (of the 16 local areas where competition in local calls is permitted).

The transformation of SPT Telecom into a joint-stock company started in 1994, when Telsource, a joint venture between Swiss PTT Telecom (now Swisscom) and PTT Netherlands (now KPN Royal Dutch Telecom), with technical support from AT&T, acquired a 27% stake in SPT Telecom for ECU 1.24 billion.

On December 31, 1998 significant shareholders in SPT Telecom were as follows:

• 51,1% - National Property Fund (plus 1 share with special rights);
• 27,0% - Telsource;
• 10,4% Chase Nominees Limited

In December 1998 KPN N.V (one of the participants in TelSource) increased its interest in SPT telecom by 6,5% and together with TelSource they now control 33,5%
(source: SPT Telecom 1998 Annual Report)

SPT Telecom participates in one main joint venture: Eurotel s.r.o. (SPT Telecom 51%, a consortium of Bell Atlantic and US West 49%);

• Ceské Radiokommunikace a.s.

Ceské Radiokomunikace is the public carrier for TV and radio broadcasting. It 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. It is 51% owned by the National Property Fund. Tele Danmark A/S has 20,8 % of shares, and The Bank of New York International Nominees has 24 %. Ceské Radiokommunikace has a 37.75% stake in the national paging operator Radiokontakt Operator and has entered the mobile telecommunications market with a 51% stake in Radiomobil.

• Eurotel Praha s.r.o. , mobile and PDN operator

Eurotel Praha is 51% owned by SPT Telecom and 49% by Atlantic West B.V. (a U.S. consortium comprised of U.S. West, now Media One International, Inc. and Bell Atlantic, Inc.) 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 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, covering 92% of the territory and 96% of the population. Eurotel was awarded one of the two GSM (digital) licenses at the end of March 1996. Since then GSM services have reached coverage of 64% of the Czech Republic and 74% of the population.

• Radiomobil, mobile operator

Radiomobil is 51% owned by Ceské Radiokommunikace and 49% by the consortium T-Mobil. This consortium consists of DeTeMobil (84,55%), STET (12%), Telekomunikacní montáže Praha (1%), PVT Praha (0,7%) and Sporitelní Kapitálová Spolecnost (1,75%). In July 1996, one year after starting its GSM service (with the trade name "Paegas") Radiomobil fulfilled the licensing conditions, covering 74% of the Czech Republic and 84% of the population.

• Radiokontakt Operator, paging operator

Radiokontakt Operator is authorized to establish and operate the national paging network and to provide related telecommunications services. Ceské Radiokommunikace has 37.75% of the shares and Télédiffusion de France 62.25%.

In July 1996 Radiokontakt Operator received a license for providing of public paging services using the Pan-European ERMES standard. The license covers Prague and the surroundings of the two towns Hradec Králové and Pardubice, to test the compatibility of this system with the Czech telecommunications environment with a view to extending the system to cover the whole of the Czech Republic.

• Local operators

The first step towards limited competition in voice telephony with SPT Telecom on the local level was the licensing in 1996 of six operators of alternative telecommunication services in 16 regions of the Czech Republic. Currently, eight operators are providing voice telephony on the local level. Although only a small proportion of the population is covered, it supports telecommunications development in local areas where the level of investment is low and SPT Telecom is not planning any improvement in the near future.

Table: the local operators

By end of 1998, only Cabel Plus, Dattel, Factcom and Telecom 21 operated their networks and offered services. Opatel returned its license in February 1998.

• Cable operators

The largest cable operator is Cable Plus, with 94% of its shares owned by Media One (previously US West International), and about 500,000 subscribers to its basic cable package.

The cable operators are represented by the Czech Association of Cable Communications and Telecommunications Network Operators, with over 20 members.

3. International relationships and agreements

The Czech Republic was founded on January 1, 1993, and signed the Europe Agreement in October 1993 (it entered into force on February 1, 1995). A previous agreement was signed for the then-Czechoslovakia, on December 16, 1991 (but due to the dissolution of the Czechoslovak Federation, it had to be re-negotiated).

The Czech Republic applied for the EU membership on January 17, 1996.

The Czech Republic has signed and ratified the WTO agreement on Basic Telecommunications to implement liberal telecommunications principles and to open all its telecommunications markets by January 1, 1998, except for the markets for voice telephony. These will be opened by January 1, 2001.

The Czech republic has signed the GATS agreement (General Agreement on Trade in Services), on March 15, 1997. Within the framework of this agreement (in sector 2 Communications) it undertook to allow foreign subjects an access to their markets with certain restrictions specified in the appendices to the fourth protocol (valid as of 1.1.1998).

4 Regulatory framework

4.1. Historical overview

The telecommunication policy of the Czech Republic in the period before November 1989 had been based on a state monopoly. From the legislative point of view, this sphere had been treated by the Telecommunication Act No. 110/1964 Coll. According to this law, the owner of telecommunication organizations, as well as the operator of telecommunication services, was exclusively the state.

The development of telecommunications in the Czech Republic in the period between 1990 and 1998 was focused particularly on speeding up telephone installations. The amendment of the Telecommunications Act No. 110/164 Coll. (law No. 150/1992 Coll.) came into force in 1992. This amendment enabled partial de-monopolization and liberalization of telecommunications, provided until then on the basis of a state monopoly, and gradual rapprochement of the telecommunication policy of the Czech Republic with the telecommunication policy of the European Union. Performing of operational activities has been consistently separated from the state administration.

The document "Hlavní zásady státní telekomunikacní politiky" (Main principles of the state telecommunications policy) (Government Decree No. 428/1994) has set as the main target, until the year 2000, doubling of the number of the main telephone stations per 100 inhabitants of the Czech Republic, as well as the way in which this goal shall be achieved (by entering a strategic partner into SPT TELECOM, a.s. company, to which exclusivity for long-distance and international telephone services has been granted until the end of 2000). The document also contained a task to grant two licenses for establishing and operating of GSM mobile telephone networks.

As a basis for the further development of the sphere of telecommunications, the Czech Government recognized in its Decree No. 324/99 the new National telecommunication policy (herein after only NTP), validity of which has been set for a medium-term period – approximately 5 years – with some tasks of a long-term nature. The newly approved NTP follows from the trends throughout the whole of Europe, concerning implementation of reforms in the sector of telecommunications, it prefers establishing a transparent regulatory framework for the sector of telecommunications, it points at the main problems of this sector, it determines the tasks and suggests their solutions also in accordance with the requirements following from the NATO membership and with the expected joining of the EU.

A new Telecommunications Act, that would provide the necessary legislative background for opening the telecommunications market to competition, and would include all legislative measures of the existing European legislative framework, is still being prepared (a draft version is available).

4.2. Present general legislation

The general legislative framework for the telecommunications policy is still based on the Czechoslovak Telecommunications Act of 1964 (Act 110/1964 Coll., from March 12, 1964). This law was based on the assumption that the whole sector should be state-owned, and controlled and operated by state-owned operators with a monopolistic position. No provisions for competition and alternative operators were made at that time.

This law (Act 110/1964) was approved as valid for the new Czech Republic at the separation of the two republics of former Czechoslovakia, in 1993. It was amended, mainly in 1992, but essentially still holds today.

The 1992 amendment (Act No. 110/1964 Coll.) adopted a policy of liberalization, and introduced the following liberalization measures:

• separating regulatory and operational functions,
• abolishing of statutory monopolies,
• permitting privatisation,
• imposing licensing conditions on the existing operators,
• separating the state administration from economic activities.

This first amendment permitted the establishment of the first administrative and regulatory body (a section of the former Federal Ministry of Communications). Later this body evolved into the Czech Telecommunication Office.

4.3 Key legislative measures

The Czech Telecommunication Office issues General Permits, for example:

• GP-07/1996 for connecting telecommunication terminal equipment to the Unified Telecommunication Network (UTN) and for establishing and operating of radio transmitting stations which are part of cordless telephone sets in the CT1 frequency band, i.e. 914 to 915 MHz and 959 to 960 MHz
• GP-22/1997 for physical and legal persons, on providing access to the Internet network services
• On August 1, 1999, a new and amended version of GP-22 came into force (as: GP-22/1999), dealing with providing Internet access and Internet telephony.
• The Czech Telecommunication Office also issues Unified Rules (UR), for example:
• UR No. 1/T/1996, which enacts the numbering plan of public telephone network
• UR No. 2/R/1997, which enacts the National Table of Frequency Allocations
• UR No. 8/T/1998, which enacts a unified numbering plan of public data networks

4.4 Issues

4.4.1. Liberalization

The opening of the Czech (or then still the Czechoslovak) telecommunication market arrived almost immediately after 1989, by opening the market with terminal telecommunication equipment, including installation and maintenance. Further liberalization steps took place after the Telecommunication Act amendment (150/1992 Coll.), from April 24, 1992, came into force.

The "Main Principles of the Telecommunications Policy" have been approved by the Czech Government in August 1994. This step represented accomplishing the process of creating the basic regulation framework for the current period. This Telecommunications Policy de-facto determined that all telecommunication services may be provided as a part of free competition. The only exceptions are the basic long-distance and international telephone services, which will be provided by SPT TELECOM, a.s. until the year 2000 on monopoly basis, and local telephone services, which can be provided in 16 defined local networks and within the framework of two pilot projects (Prague, Liberec), by companies competing with the SPT TELECOM, a.s. company.

The basic telephone service as a whole remains to be de-regulated and liberalised. The state of liberalization of the individual services is shown in the table below:

4.4.2. Licensing

Even though the currently valid Telecommunications Act does not explicitly say so, the regulation framework of the EU is currently used for the regulation of the telecommunications sector on the largest possible scale. Therefore, the respective guidelines, decrees and recommendations of the bodies of the EU are used and implemented when authorizations and other regulatory acts are issued, with an exception of the non-introduction of competition in the public telephone service and the operation of the telephone network specified for voice telephony.

The fundamental document, which the licensing policy of the Czech Republic is derived from, is the Directive 97/13/EC on the common framework for general authorizations and individual licenses in the sphere of telecommunication services. This directive concerns proceedings connected with granting of authorization and with the conditions imposed for such authorization of the provision of telecommunication services, including authorization for establishing and operating telecommunication networks, assigned the providsion of such services.

4.4.3. Universal Service

The currently valid legislature does not recognize the concept of universal service. This concept should be defined in the newly prepared Telecommunications Act.

The universal service in the Czech Republic is partially substituted for by the obligation of the SPT TELECOM, a.s., set by its authorization to provide telecommunication services to any physical or legal person who applies for them.

4.4.4. Tariff policies

The Main Principles of State Telecommunications Policy, set by the CR in 1995, call for a framework that would regulate the tariffs of phone services by a price cap method. The price caps are based on a regulatory rule according to which a basket of selected services is regulated and for which changes may be made only once a year. The Ministry of Finance determines maximum changes depending on the index of annual sliding-scale prices for industrial products, correction coefficients determined on the basis of the external environment including inflation and the index of maximum allowable price changes of three groups of services from the basket of selected services (prices for the use of telephone stations, prices of local calls and prices of long-distance calls). Within the basket the company retains the possibility of counterbalancing the tariffs of individual services according to their actual costs.

In its Price Assessment No. 4, from 21.02.1995, the Ministry of Finance issued "Information Notification of the Ministry of Finance about regulation of prices of telecommunication services applied until 1997", which sets the formulas for calculation of the maximum price increase.

Currently, the maximum prices of basic telephone services are determined by the Assessment No. 01/1999 from November 30, 1998, in which a list of goods with regulated prices has been issued and which has become effective as of January 1, 1999. It has been published in the Price Assessment of the Ministry of Finance No. 12/1998, Appendix 4.

Some other domestic telecommunication services are regulated in a less restrained way, by the so called objective price regulation. The list of services regulated in this manner is contained in Part II, Item No. 9 of the Assessment of the Ministry of Finance No. 01/1999. This less restrained form of regulation enables the operator (provider) to reflect economically reasonable costs and reasonable profit in accordance with the general principles of the objective price regulation. Such prices are set by the operator, based on his price calculations; the Ministry of Finance does not approve the prices but has the possibility of controlling them.

4.4.5. Quality of Service

Licenses, awarded by the Czech Telecommunication Office (CTÚ) to operators, contain quantity and quality parameters (indicators), and are regularly evaluated by the CTÚ.

4.4.6. Interconnection

One of the 10 Main Principles of State Telecommunications Policy, established in 1994, states that: "The determining of prices for interconnection is a matter of agreement between the operator of the basic telephone network and the other operators, for example, of the local network. In the event that both entities are not capable of coming to agreement, the pricing body (Ministry of Finance) will decide."

The Ministry of Finance is competent to determine the prices for interconnection, if the parties are not able to agree on such interconnection. The current National Telecommunication Policy presupposes that this bipolar regulation of the Czech telecommunications by the CTÚ and the Ministry of Finance will be terminated. This National Telecommunication Policy presupposes a transformation of the CTÚ into a separate national regulatory body.

The powers of the CTÚ are in the sphere of the technical aspect of interconnection. Certain conditions are imposed by the CTÚ in the telecommunication permits or authorizations. The current operators of the public telephone networks are obliged, based on their authorizations, to arrange for interconnection with other operators of public telecommunication networks, on a non-discriminatory basis, within 6 months (in case of SPT TELECOM, a.s.), within 3 months respectively (in case of other operators of public telecommunication networks), since the date, when the new operator, requesting such interconnection, presents the operator with a detailed technical and economic proposal.

The national telecommunications policy presupposes that interconnection will be governed by the provisions, contained in the new Telecommunications Act.

5 Freedom and protection

5.1. Copyright and intellectual property rights

The Czech Republic through Act No. 14/93 continued all industrial property rights granted or filed in the Czech or Slovak Republics without the need for any action by the rights holders. The Czech Republic notified the World Property Organization that it would continue to adhere to all APR treaties to which the Czech Republic and Slovak Republics had adhered.

The Czech Republic is a member of the World Intellectual Property Organization and is a party to

• the Paris Convention for the Protection of Industrial Property,
• the Bern Convention for the Protection of Literary and Artistic Works,
• the Madrid Agreement on Marks,
• the Nice Agreement,
• the Patent Cooperation Treaty (PCT),
• the Universal Copyright Convention,
• the Geneva Phonograms Convention.

The intellectual property rights regulations were drawn up after consultations with the European Patent Office and made parallel to their regulations.

Patents: Law No. 527/1990 regulates discoveries, inventions, improvement proposals and industrial designs. Inventions and dependent patents remain valid 20 for years after application. Patents must be novelties and/or inventive processes. Patent applications are examined for usefulness.

Trademarks: Trademarks and Protective Design are regulated by Act No. 174 of 1988. The first applicant is entitled to registration. A registered trademark vests exclusive rights therein to the owner and is enforceable by him against its unauthorized use by others. Trademarks are licensed for periods of 10 years from the date of application, and are renewable for like periods. Interested parties may contest a registered mark within three years of registration if they believe it did not meet registration criteria, or on grounds that they are prior users. Trademark applications are examined, but are not published for opposition.

IPR concerns were addressed by amendments to the trademark law which were adopted by the Parliament in June 1995. The amendments to trademark law brought Czech law into broad compliance with the relevant EU directives and TRIPS.

Copyrights: Following the 1995 amendment to the law on trademarks, on March 14, 1996, the Czech Parliament passed a long awaited amendment to the Copyright Law. The Czech Republic is also to join the Munich Agreement on granting European patents which commits the Czech Republic to follow the EU directives in this area.

5.2. Privacy, data protection, consumer protection

• Privacy

The 1993 Charter of Fundamental Rights and Freedoms provides for extensive privacy rights. Article 7(1) states, "Inviolability of the person and of privacy is guaranteed. It may be limited only in cases specified by the law." Article 10 states, "(1) Everybody is entitled to protection of his or her human dignity, personal integrity, good reputation, and his or her name. (2) Everybody is entitled to protection against unauthorized interference with his or her personal and family life. (3) Everybody is entitled to protection against unauthorized gathering, publication or other misuse of his or her personal data." Article 13 states, "Nobody may violate secrecy of letters and other papers and records whether privately kept or sent by post or in other manner, except in cases and in a manner specified by the law. Similar protection is extended to messages communicated by telephone, telegraph or other such facilities."

The Penal Code covers the infringement of the right to privacy in the definitions of criminal acts of infringement of the home, slander and infringement of the confidentiality of mail. There are also sectoral acts concerning statistics, medical personal data, banking law, taxation, social security and police data. Unauthorized use of personal data systems is considered a crime.

• Data Protection

The Federal Assembly of the Czech and Slovak Federative Republic passed the Act 256/1992 Coll. on Protection of Personal Data in Information Systems (the Act) April 29, 1992. The Act governs the protection of personal data, "particularly the duties connected with the protection of information during the operation of information systems dealing with personal data" and the responsibility of the file controller. Unfortunately, the Act does not specify any penalties for infringement.

Also, there is no independent oversight agency to enforce the Act. The Council of Ministers rejected a proposal by the Ministry of Economy to create an independent body in 1996, opting for a small office under the Council of Ministers. In February 1998, the European Commission set as a "medium term goal" for the Czech Republic to join the European Union the establishment of an independent body for the supervision of data protection. In July 1998, the Government proposed the creation of a new agency. The Government asked the chairman of the State Information System Office to submit principles by July 1998. The supervising body is still nonexistent.

The current regulation given by the law No. 256/1992 Coll., on protection of personal data in information systems, is inappropriate from the point of view of the requirements of the respective EU guideline (Guideline 95/46/ES of the European Parliament and Committee about protection of individuals with regard to processing of personal data, and about free movement of such data).

The Czech Republic has not signed the Convention for the Protection of Individuals with Regard to Automatic Processing of Personal Data (ETS No. 108). It has signed and ratified the European Convention for the Protection of Human Rights and Fundamental Freedoms. It has adopted the OECD Guidelines on the Protection of Privacy and Trans-border Flows of Personal Data.

• Consumer Protection

An act on Consumer protection was adopted in 1992 and amended in 1993 and 1995 (Act No. 634/1992 Coll., with amendments and modifications implemented the Act No. 217/1993 Coll., Act No. 40/1995 Coll. and Act No. 104/1995 Coll.)

There is no separate body in charge of consumer protection, and none appears to be planned. The overall responsibility for consumer affairs lies with the Ministry of Trade and Industry, although other ministries or institutions also play an important if indirect role on consumer protection issues.

5.3. Electronic protection, legal protection and security (encryption, electronic commerce)

The Import of cryptography to the Czech Republic is allowed "if it is declared by the importer not to be used for production, development, collection or use of nuclear, chemical or biological weapons."

The export is regulated according to the (pre-December 1998) Wassenaar Arrangement, implemented in the Law on the control of export and import of goods and technologies subject to international controls (Act 21/1997 Coll.) and further regulations on licensing export and import (regulations 43/1997 and 44/1997).

The official Government document State Information Policy states: "In view of the key role of encryption in creation of a trustworthy environment for economic transactions, the Government shall not initiate steps, which would lead to limitation of use of the generally accessible encryption tools and software equipment, used for their application. With regard to the international development of certification and authentication services, it is necessary to create a legislative framework for functioning of the respective certification and authentication authorities, and to initiate their establishing."

5.4. Freedom of expression and information

Freedom of expression and information is a human right and fundamental freedom, guaranteed by the Constitution of the Czech Republic. But the practical availability of information from state and local authorities was not sufficiently regulated, and the real practice was that citizens were given access to information only where there was an explicit statement (by a law, decree or another type of explicit legal statement).

In may 1999, a Law on the Right to Information passed through the Czech Parliament (and it will become effective as of January 1, 2000). It reverses the previous practice (that information is not public, unless otherwise stated ), states that all information possessed by state and local authorities is public, except where explicitly stated by other valid legislation (this applies, for example, to trade secrets, personal data etc.), and also given detailed procedural guidelines for providing such information (how to request information, deadlines, media, payments etc.).

6. Information Society Policies

6.1. Umbrella Policies

The Czech Republic has an Information Society policy document, entitled The State Information Policy (SIP, Státní infromacní politika - cesta k informacní spolecnosti). This document was elaborated by the Governmental Council for State Information Policy (Rada vlády pro státní informacní politku), established on October 19, 1998 by Governmental Decree No. 680/1999.

The State Information Policy was prepared under the supervision of this Committee, and was approved by the Government on May 31, 1999, by its Decree No. 525/1999. It contains 8 main priorities:

• Information literacy (ability to work with information),
• Informed democracy,
• Development of information systems of the public administration,
• Communication infrastructure,
• Trustworthiness and safety of information systems and protection of personal data,
• Electronic commerce
• Transparent economic environment
• Information society: stable and safe

This document is complemented by a detailed timetable stating when specific goals should be implemented. Also, a detailed Action Plan is being prepared (should be finalized by September 30, 1999).

The Governmental Council For State Information Policy (Rada vlády pro státní informacní politiku) has a permanent working group, called "Odborná pracovní skupina", to implement the decisions and evaluate and measure achieved results.

The Council also intends to form an advisory body named Czech Information Forum. It would gather up to 50 personalities representative of all relevant parts of the society (including minorities, media etc.), to provide a necessary dialogue with the public and discuss various issues related to the Information society.

6.2. IS Application Areas

6.2.1. Government (national, regional and local)

In 1996 , by Act No. 272/1996 Coll., the State Information System Office was established, originally with the goal to implement a unified Information system of all the state authorities. This goal was later changed, due to the fact that most state authorities already had an information system of their own, and starting to build one from scratch proved to be a wrong idea. The main goal of the State Information System Office was later changed to "coordinating" the interconnection of various independent information systems of the state authorities.

Today, the State Information System Office is involved in several other activities covering the area of Information Society - for example, it hosts the National Coordination Center for Y2K, acts as the Czech ISPO office, represents the Czech Republic in international activities in IS, acts as a partner for many EU activities, coordinates the development of e-commerce etc.

6.2.2. Education

The state information policy in this sphere is right to claim that the information technologies not only bring new possibilities but they also require adequate knowledge and abilities (i.e. information literacy) It therefore arrives at a conclusion that the information literacy of people will be decisive for the development and assertion of personality in the 21^st century. This, of course, brings increased requirements for the whole system of education, however, at the same time, it gives it interesting new possibilities (particularly new methods of tuition, including the so called long-distance education, etc.). The main strategic target, set in this priority field, is managing information literacy in schools, with the aim of providing the necessary literacy to the coming generation. The next aim, even though it is seen to be much less imperative, is to provide this literacy to the "older" generation – to the specialists in the first place, further, to the state administration employees, and last but not least, to the general public. It is important to use modern information technologies in education, in the whole range of its forms and possibilities. The factor, which the concept takes notice of but does not stress sufficiently (in my opinion), is the fact that the character of the process of education is changing substantially – from original process with limited time scope to a process with unlimited time scope (education becomes continuous, i.e. it becomes a lifelong process).

As far as the concrete forms of achieving the set goals are concerned, the national concept of information policy expects to connect schools of all levels and type to the internet as well as incorporating its means into the curriculum. The time schedule, which constitutes an appendix of the concept, even sets a date at which all schools should be connected to the internet: the year 2001. The internet should also be available in all libraries and all post offices as of the same date. This corresponds with but not quite explicitly, the rather distinct aim of the whole concept of supporting "collective" forms of internet access (in the form of information kiosks or computers connected to the internet in libraries, post and other offices), while the "individual" forms of access (particularly connection of households and offices) are left to the free influence of supply and demand on the liberalised telecommunications market (which, however, cannot exist in the next two years and thus, it is going to take some time before it starts to really exist).

 

II- On-going developments

Ongoing developments in the regulatory framework are mainly focused on the preparation and passing of the new Telecommunications Act. This new Act is indispensable for the final liberalization of the local telecommunications market by January 1, 2001 (when the monopoly of SPT Telecom on voice telephony ends, and competition will enter the market)

In the area of Information Society creation, according to the already valid State Information Policy, an Action Plan is being finalized, and a new advisory body (the Czech Information Forum) is being prepared.

Specific new IS laws are in the state of preparation - mainly a new law on electronic signatures, and a new law concerning the protection of personal data.

1. On-going changes in institutional structures

The new Telecommunications Act, which is currently being prepared, wants to establish a new and independent regulatory body, named "National regulatory authority" (Národní regulacní orgán v telekomunikacích, NRO).

This new body should be a state authority financed partially from the state budget, partially from licensing fees, and would probably evolve from the current Czech telecommunications Office. The competencies and duties of the new regulatory authority would include:

• implementing the National Telecommunications Policy, accepted by the Government of the Czech Republic,
• ensuring international relations on non-governmental level, connected with the NRO competencies
• granting of licenses for establishing and operating networks and for the provision of services,
• issuing and amending general permits for establishing and operating of telecommunications equipment and provision of telecommunication services,
• administration of the frequency spectrum, proposing the frequency band allocation plan (national frequency tables) and proposing the frequency utilization plan,
• allocation of frequencies to operators of radio broadcasting facilities,
• decision making concerning the basic structure of the numbering plans and their administration,
• allocation of numbers, names and addresses of networks and services to the operators,
• dealing with mutual professional disputes between operators of telecommunication networks and/or between telecommunication service providers, and of disputes concerning breach of the Telecommunications Act,
• decision making in professional disputes, concerning conditions of mutual interconnection of telecommunication networks,
• Registration of operators of telecommunication equipment and providers of telecommunication services in accordance with general permits.

The ministry of Transport and Telecommunications (MDS CR, Ministerstvo dopravy a spoju) would retain the following competencies:

• Creation of the National Telecommunications Policy and the supervision of its implementation (after approval by the Government of the Czech Republic)
• creation of legal regulations in the telecommunication sphere. Preparation, implementation and alteration of legal regulations and decrees prepared by the regulatory body,
• international relations in the field of telecommunications at Governmental level and with governmental and non-governmental organizations,
• integration into European structures,
• determining the principles and main policies of state regulation of telecommunications,
• strategy of frequency spectrum utilization,

Debate is still taking place as to who should have control over tariffs. Currently, this is divided between the Ministry of Finance (for local calls), and the Czech Telecommunication Office (international tariffs). The new Act on telecommunications will probably want to unify tariff policy and assign it to only one institution. But it is still not clear whether it will be the Ministry of Finance, or the new National Regulatory Authority.

2. On-going changes in the regulatory framework

2.1. Telecommunication liberalization and new fields of developments (wireless local loop, Internet, …)

Currently, most of the Czech telecommunications market is liberalised, with the notable exception of voice telephony. According to the ten Main Principles of State Telecommunications Policy (from 1994), SPT Telecom will hold a monopoly on voice telephony services until the end of the year 2000.

This decision was strongly criticised, and state officials on many occasions discussed the possibilities of ending this monopoly earlier - but with no definite result. The date (December 31, 2000 / January 1, 2001) will probably not change.

A new and interesting development occurred in the area of Internet telephony. In 1998, Radiomobil, one of the local mobile operators, introduced a new long-distance service based on Internet telephony (Paegas Internet Call). The Czech Telecommunications Office, following a protest from SPT Telecom (on the ground that such a service violates its exclusive rights) at first banned the service because Radiomobil did not have the necessary license. Later, the Czech Telecommunication Office issued a general permit (GP 22/1999) concerning Internet telephony. According to this GP it is possible to offer public voice services, provided that some part of the transmission system uses data networks and voice-over-data technologies.

2.2. New laws/measures under preparation

The legislative activity at present is the preparation of the new Act on Telecommunications. A first attempt to draft a new version of this Act (the currently valid one dates from 1964) started in the Czech Parliament, where the MP Mr. Anton Zima prepared the first version and submitted it in January 1998. Shortly afterwards, this first draft was withdrawn, and work started on a Government proposal (works were headed by the then-minister Mr. Petr Moos). Due to a change of Government in July 1998, this proposal did not lead to a final result. The new social-democratic Government started drafting the new Act from scratch. Currently, the new draft is passing through a Government Legislative Committee (and it still has to pass through the Parliament).

Under preparation is also a new act on the protection of personal data (that would amend the valid Act 256/1992 Coll.). This new draft was prepared by the State Information System Office, and already passed through the Government and its legislative bodies (and will now be debated in the Parliament). This new law puts personal data protection in line with the newest EU requirements, and also provides the necessary grounds for establishing a new and independent body that would oversee data protection and enforce the Act (the currently valid Act 256/1992 Coll. also calls for such a body, but needs a separate Act for its effective establishment, and this Act was never prepared and enforced).

Another law under preparation is a new act on electronic signatures. It wants to give electronic signatures the same legal statute as a handwritten signature, and enable the electronic signing of documents. The draft of this law was prepared by a professional association named SPIS (Sdruzeni pro informacni spolecnost, Association for Information Society), and should go to the Parliament in October. During the second half of September, the draft of this law was published on the Web and opened to public debate.

2.3. Allocation of resources (frequencies, numbering, access rights, licensing …)

The Czech Republic plans to grant a third mobile GSM license in the 1800 MHz area (DCS 1800). A tender for this license was opened, and the winner should be known by the end of September.

The Czech Telecommunication Office plans to award 2x 37 MHz for all mobile networks in the 1800 MHz area. The winner (holder of the third license) will receive 2x 14 MHz (70 channels).

Also, the Czech Telecommunications Office intends to issue a general permit concerning DCS 1800 equipment.