ESIS extension / Czech Republic / Regulatory Developments / Master Report

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 liberalized telecommunications market is being worked upon but was not enacted yet: a National Telecommunications Policy was prepared and officially approved by the Government in April 1999. A new telecommunications Act was prepared and is currently passing through the Parliament. This new Act opens the market for voice telephony from January 1st, 2000, but still grants some of the exclusive rights to the incumbent Czech Telecom until January 1^st, 2003 (postpones carrier preselection and number portability by 2 years).

Prior to the Velvet revolution in 1989, all telecommunications in the Czech Republic were state-owned, state-controlled and managed together with posts (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. On January 1^st, 2000, SPT telecom was renamed to Czech Telecom.

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:

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 liberalized. A full liberalization of the whole telecommunications sector, including voice telephony services, was supposed to come on on January 1st, 2001.

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.

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 Telecommunication 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 Czech 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.

The Czech Telecommunication Office (Ceský telekomunikacní úrad) has been established on January 1^st, 1993 as the 6th Section of the Ministry of Economy, and remained in its 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, of providing 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 protection of the rights of users and operators of telecommunication networks and services

Administration of the part of 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 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.

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 the 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 the 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 protection of the economic competition, and it is also focused at banning of agreements that limit the competition or which lead to abuse of dominant and monopoly position and also supervision of mergers of companies.

Currently, there is no official consultative council or other body in the area of telecommunications. Only unofficial bodies do exist.

Skupina 98 (Group 98), was formed in December 1996, and dissolved in December 1998.

Group 98 was 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 associated 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.

Skupina98 did not succeed in achieving an earlier liberalization of the telecommunications market, and ceased to exist in December 1998. Its members later formed a new body, established in May 1999: the Association of Public Telecommunications Network Operators (APVTS). Its mission is to "Support and protection of fair and opened telecommunication market in the Czech Republic".

In the area of Information Society, the "State Information Policy" planned to set up a consultative body named "Czech Information Forum", focused on IS issues. Preparations have started in summer 1999, and the Forum was established in March 2000.

Czech Telecom is the national public telecommunications operator. It came into existence (as SPT Telecom) 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 an non-liberalized environment. On January 1^st, 2000, SPT Telecom changed its corporate identity, including its logo and name - it was renamed to Czech Telecom (Cesky Telecom).

Czech 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 Czech 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.

Czech Telecom is also the exclusive operator in 144 out of 160 local areas, covering about 93% of the population.

The transformation of SPT Telecom (now Czech 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.

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

On December 13, 1999, the Czech government decided to privatize its remaining 51-percent share in Czech Telecom. This decision was based on a joint proposal of the Ministry of Finance and Ministry of Transport and Telecommunications. The privatization should take place after the new Telecommunications Act is enacted (this is expected in mid 2000),. The exact form of Czech Telecom's privatization still has to be decided, by a joint committee of the two ministries. Proposed variants include a direct sell of the remaining shares to the current strategic partner (TelSource), a public offer of the shares on domestic and foreign stock markets, and a public tender.

In March 2000, the Czech government selected the consortium of JP Morgan and Komercni banka to act as a consultant in this privatization and to work out the details. The consultant should propose the possible variants, and the government would then decide.

Privatization of the remaining 51% of shares is expected to take place by end of 2000 or beginning of 2001.

Eurotel s.r.o.: SPT Telecom 51%, Atlantic West B.V. 49% (a consortium of Bell Atlantic, Inc. and MediaOne International, Inc.);

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.

Contactel ltd. was founded in 1999 as a joint venture between Ceske Radiokomunikace a.s. (holds 50%) and TeleDanmark A/S (holds 50%). Currently, Contactel offers Internet and data services. After the opening of the Czech telecommunications market it wants to offer also public voice services.

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. RWE currently holds 40% of shares, and the remaining 60 percent are equally divided between 7 regional distribution power companies. Currently, Aliatel offers data and leased lines services and plans to offer public voice services when the Czech telecommunications market opens. Since February 2000 it offers voice services to closed groups and public Internet-based voice services.

Eurotel Praha is 51% owned by Czech 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 (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). Eurotel was awarded one of the two GSM (digital) licenses in the 900 MHZ band at the end of March 1996. In December 1999, Eurotel reached 1 million customers, and by March 2000 it has almost 1,2 million clients.

Radiomobil is 51% owned by Ceské Radiokommunikace and 49% by the consortium C-Mobil. This consortium consists of T-Mobil - Deutsche Telekom MobilNet GmbH (84,55%), TIM – Telecom Italia Mobile (12%), Telekomunikacní montáže Praha (1%), PVT Praha (0,7%) and Sporitelní Kapitálová Spolecnost (1,75%).

Radiomobil offers its mobile GSM services in the 900 MHz band, under the trade name "Paegas". In March 2000 it reached 1 million GSM users.

On October 8th, the Czech Ministry of Transport and Telecommunications issued a third GSM license to Cesky Mobil, the winner of a public tender for the third mobile license (in the GSM 1800 MHz area).

Cesky Mobil won the public tender with the promise to start offering services 3 month after obtaining its licence (i.e. on January 8th, 2000). It launched the commercial operations of its network on Wednesday, March 1, 2000, under the trade name "Oskar".

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.

The first step towards limited competition in voice telephony with SPT Telecom (Czech Telecom) on the local level was the licensing of six operators of alternative telecommunication services in 16 regions of the Czech Republic in 1996. Currently, alternative operators are providing voice telephony on the local level in eight localities.

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

The largest cable operator is Cable Plus (Kabel Plus a.s.) with 98 % of shares owned by United Pan-Europe Communications (UPC), based in Amsterodam.

and about 500,000 subscribers to its basic cable package. In January 2000, Kabel Plus was joined by Kabel Net Holding a.s., also owned by UPC. The two have formed common statutory bodies and management, but will exist as individual legal entities for certain period of time.

The cable operators are represented by the Czech Association
of Cable Communications, with 7 members.

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 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).

The Czech Republic agreed to sign the Convention for the Protection of Individuals with Regard to Automatic Processing of Personal Data (ETS No. 108) on November 29^th, 1999.

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, owner of telecommunication organizations, as well as operator of the 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 of telephone installations. The amendment of the Telecommunications Act No. 110/164 Coll. (law No. 150/1992 Coll.) has come 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 operation 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 of a strategic partner into the then-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 of 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. The NTP also confirmed the original decision (taken in 1994) to fully open the telecommunications market by the end of year 2000.

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, was prepared and submitted to public debate in June 1999. In October 1999, an amended version was submitted to the Parliament. In March 2000 this new Act successfully passed through the Chamber of Deputies of the Czech Parliament, and will be debated by the Senate.

The new Act in its latest form provoked fierce discussions in the public, because it postpones carrier selection and number portability by 2 years, therefore in fact prohibiting real competition (see section II.2.1.). This is felt to be in contradiction with the goal of fully opening the telecommunications market.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 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:

This first amendment permitted establishing 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.

Key measures	Objective	Date
Act No. 110/1964 Coll. on Telecommunications	valid Telecommunications Act	July 1, 1964
Act No. 150/1992 Coll.	amendment of Telecommunications Act, the first step to liberalization	April 24, 1992
Act. No. 253/1994 Coll.	amendment of the Telecommunications Act, concerns mainly TV and radio broadcasting	April 1, 1994
Governmental decree No. 486/94	ten Main Principles of the State Telecommunications Policy	August 10, 1994
Ministry of Economy's Decree No. 26/1996 Coll.	decree on the conditions and procedures concerning the verification and approval of telecommunication terminal equipment	January 23, 1996
Ministry of Transport and Communications Decree No. 130/1997 Coll.,	on telecommunications networks terminal points	1997
Governmental decree No. 324/99,	"National telecommunications Policy" (declaration of the main objectives, goals etc. in the field of telecommunications )	April 14, 1999

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.

Opening of the Czech (or then still the Czechoslovak) telecommunication market arrived almost immediately after 1989, by opening of 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 of the process of creation of the basic regulation framework for the current period. This Telecommunications Policy de-facto determined that all telecommunication services may be provided as a as a part of free competition. The only exceptions are the basic long-distance and international telephone service, which will be provided by CZECH TELECOM, a.s. until the year 2000 on monopoly basis, and local telephone service, which can be provided in 16 defined local networks and within the framework of two pilot projects (Prague, Liberec), by companies competing with the CZECH TELECOM, a.s. company.

The basic telephone service as a whole remains to be de-regulated and liberalized. The National telecommunications Policy (NTP), approved by the government in 1999, confirmed the intent to fully liberalize the whole telecommunications sector, including voice services, by the end of year 2000 (as decided in 1994 by the "Main Principles of Telecommunications Policy"). The new Act on telecommunications, currently passing through the Parliament, wants to open the market for new entrants by January 1^st, 2001, but postpones carrier selection and number portability until 2003. See section II.2.1.

The state of liberalization of the individual services is shown in the table below:

	Liberalization status (see examples below)	Comments (number of operators and licenses, name of major operators, types of licenses, etc.)
Infrastructures
Public telecommunication network	Fully liberalized	for data and non-public telephony (not for public voice telephony)
Local networks for voice telephony	Partially liberalized	based on license to offer local voice telephony
Leased lines	Fully liberalized
Alternative infrastructure (Highway, railways, electricity utilities …)	Partially liberalized	can be built on private premises only
Broadcasting and cable TV	Partially liberalized	Terrestrial broadcasting: specific license needed, SAT and Cable TV: only registration needed
Voice telephony
Local communication	Partially liberalized	16+2 licenses granted to local operators in restricted areas, country-wide license held by Czech Telecom
Domestic Long-distance	Monopoly	exclusive rights held by Czech Telecom
International communication	Monopoly	exclusive rights held by Czech Telecom
Provision of voice services to closed user groups	Fully liberalized market
Mobile communication
Analog	Monopoly	exclusive license held by EuroTel s.r.o,
GSM digital (900 MHz)	Duopoly	2 licenses, held by Eurotel and Radiomobil
DCS 1800 digital	On-going liberalization	1 license issued to Cesky Mobil in October 1999
Paging (RDS)	Monopoly	1 license issued
Paging (ERMES)	Duopoly	2 licenses issued (Radiokontakt Operator, Multitone)
Satellite communications	Open	but no connection with public phone network
Data transmissions	Fully liberalized market
Value Added Services	Fully liberalized market
Internet services provision	Fully liberalized market	no license needed, covered by general permit GP 22/1999
Equipment provision	Fully liberalized market	equipment must be approved (Ministry of Economy's Decree No. 26/1996 Coll.)

Even though the currently valid Telecommunications Act does not explicitly state so, the regulation framework of the EU is currently used for regulation of the sector of telecommunications 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 non-introduction of competition in the public telephone service and operation of the telephone network specified for voice telephony.

The fundamental document, which the licensing policy of the Czech Republic follows 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 authorizations and with the conditions imposed for such authorizations for providing of telecommunication services, including authorizations for establishing and operating of telecommunication networks, assigned for providing of such services.

The currently valid legislature does not recognize the concept of universal service. This concept is defined only in the new Telecommunications Act.

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

The Main Principles of State Telecommunications Policy, set by the CR in 1995, call for a framework that would regulate 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 a 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 service, 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.

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

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 non-discriminatory basis, within 6 months (in case of Czech Telecom), 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 economical proposal.

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

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 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.

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.

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 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 agreed to sign the Convention for the Protection of Individuals with Regard to Automatic Processing of Personal Data (ETS No. 108) on November 29^th, 1999. 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.

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."

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.).

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:

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 end of March 2000).

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 formed an advisory body named Czech Information Forum. It gathers 61 representatives of all relevant parts of the society (including minorities, media etc.), with the aim to provide necessary dialogue with the public and discuss various issues related to the Information society. The Forum was established in March 2000 and only starts its work.

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 still 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.

The state information policy in this sphere is very 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 of the information literacy in schools, with the aim of providing the necessary literacy to the coming generation. The next aim, even though formulated in a much less imperative way, 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. The important mean, which the conception appropriately emphasizes, is using of modern information technologies for education, in the whole range of its forms and possibilities. The factor, which the concept takes notice of but does not stress it 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 lifetime process).

As far as the concrete forms of achieving of the set goals are concerned, the national concept of information policy expects connecting of schools of all levels and type to the internet as well as incorporating of its means into the curriculum. The time schedule, which constitutes an appendix of the concept, even sets a date until 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 not quite explicit, but still rather distinct aim of the whole concept to support the "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 liberalized 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).

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 Czech Telecom on voice telephony ends, and competition should 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) was established and started working.

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.

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 Telecommunication Office. The competencies and duties of the new regulatory authority would include:

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

Debate is still taking place as to who should have the competencies over tariffs. Currently, these are 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.

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

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

This decision was strongly criticized, and state officials on many occasions discussed the possibilities of ending this monopoly earlier - but with no definite result. . When the new Act on Telecommunications was debated in Parliament, it showed up that its latest version intended to postpone number portability and carrier selection in the network of the incumbent Czech Telecom by two years, until the end of 2002. This provoked intensive discussions in the public and was criticized as postponing the whole liberalization by 2 years.

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 Telecommunication Office, following a protest from then-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. Several operators already started to offer Internet-based voice services: the two mobile operators (Eurotel and Radiomobil], alternative operators (Aliatel), and recently also the incumbent Czech Telecom.

The main undergoing legislative activity 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 led to a final result. The new social-democratic Government started drafting the new Act from scratch.

The first version of this new Act was published on the Internet and opened for public debate in June 1999. In its paragraph 78 it provided an obligation for dominant operators to offer carrier selection a number portability (with no specific date, and therefore from the date of enactment of the new law). In October 1999, an amended version of the new Act on telecommunications was submitted to the Parliament for approval. This new version contained a modified version of par. 78: it stated that the dominant operator is obliged to offer carrier selection and number portability in its networks not later than by the end of year 2002 (and with the possibility for the regulatory authority to prolong this deadline for technical reasons).

This provoked intensive discussions: opponents feel that such a postponement effectively closes the market to real competition by 2 years, contrary to previous government decisions and announcements. Proponents argued with EU Directive 98/61/EC and the possibility of postponement it gives under certain conditions to number portability and carrier pre-selection (and not to a call-by-call carrier selection).

The discussions and the reaction of the public forced the Chamber of deputies of the Parliament to distinguish between preselection and call-by-call selection. The Chamber then introduced a minor change in the postponement: the dominant operator would be obliged to offer carrier pre-selection and number portability not later than by the end of year 2000, and call-by-call carrier selection not later then by mid-2002. This minor change is still not compatible with EU Directive 98/61/EC (that does not permit any postponement of call-by-call carrier selection).

With this minor change, the Chamber of Deputies approved the new Act (in March 2000) and passed it for approval to the Senate.

Under approval 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 oversight 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). The new act successfully passed through the Chamber of Deputies of the Czech Parliament, but was turned down by the Senate (on February 25^th), and returned to the Chamber of Deputies.

Another law under preparation is a new act on electronic signatures. It wants to give electronic signatures the same legal statute as 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 was submitted to the Chamber of Deputies of the Parliament. It passed successfully its first reading (on January 26^th, 2000), but then had to be substantially updated to comply with the new EU directive 1999/93/EC on electronic signatures of December 13^th, 1999}.

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

The Czech Telecommunication Office plans to award 2x 37 MHz for all mobile networks in the 1800 MHz area. Cesky Mobil, the holder of the third license, received received 2x 14 MHz (70 channels). Some of the remaning channels in the 1800 MHz band will be allocated to the two other mobile operators (Eurotel and Radiomobil), six month after the third operator obtains its channels.

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

In November 1999, the Czech Telecommunication Office issued Unified Rule no. 10/R/1999 concerning the allocation of frequencies in the 26 GHz band for FWA (Fixed Wireless Access, point-to-point and point-to-multipoint). The CTU intended to allocate frequencies to individual applicants according to their requests. But the demand fairly exceeded expectations and the available frequency range, so in March 2000 the CTU decided to open a public tender and issue countrywide licenses to only 3 FWA providers.

Company	Local Area
DATTEL, a.s.	Limited area in Prague
FACTCOM, a.s.	Ceska Lipa, Frydlant v Cechach, Novy Bor
FPD Telecom, a.s.	Benesov, Bilovec, Uhlirske Janovice, Valasské Klobouky
Cabel Plus, a.s	Limited area in Liberec
Cabel Plus Tel, a.s.	Litomerice, Lovosice
Cabel TC Jesenik, spol. s.r.o.	Jesenik, Zabreh
Opatel, a.s.	Opava
Telecom 21, spol. s.r.o	Horosovsky Tyn, Moravské Budejovice, Sedlcany, Votice