July 2000

Czech Republic Update Memo

The following report outlines new developments in the past three months and the state of on-going developments.

1. Introduction and Summary

The most important IS events of the second quarter of year 2000 were the approval of the long awaited Action plan for implementing the State Information Policy, and the instalment of Mr. Karel Brezina as the new minister responsible for IS. The new Telecommunications Act was approved by the Parliament, but was criticised for prolonging exclusivity for the incumbent, instead of promoting competition.

2. Information Society Policy

2.1. Historical overview and general legislation

General legislation concerning IS Policy did not change significantly during the 2nd quarter of year 2000 (2Q2000). New laws were enacted (by June 1st): Personal Data Protection Act (Act 101/2000 Coll.), Public Tenders Act (Act 28/2000 Coll.), Auctions Act (Act 26/2000 Coll.) and Consumer Protection Act (Act 64/2000 Coll.). Other relevant laws were approved by the Parliament during 2Q2000 (new Telecommunications Act, Electronic Signature Act), but were not enacted yet.

2.2. Umbrella Policies and national IS strategy

On May 31st, 2000, the Czech Government approved the Action Plan for the implementation of the State Information Policy (SIP). The SIP itself, approved exactly a year ago (May 31st, 1999), requested the existence of such an Action Plan and its enactment by September 1999. But the preparations were postponed and the first version of the Action plan was presented to the Government only in February 2000 - but it was not approved then and returned to be updated in accordance with the eEurope project and IT developments in EU.

The new version, approved on May 31st, is more detailed and more specific in its content, and enlarged to cover also intelligent transport systems and healthcare.

2.3. IS Application Areas

The final version of the Action Plan is project-oriented. It contains 33 projects by 24 subjects (mainly ministries and state authorities) from 3 main areas:

• information literacy
• electronic commerce
• electronic public authorities.

Previously, the Action plan was intended to be "static", giving precise deadlines and allocating necessary resources. Now it is only a list of priorities and mechanisms that can flexibly react to changing developments in the area of financing. http://www.vlada.cz/1250/vrk/rady/sip/dokumenty/akcni_plan.pdf

2.4. Government and administration (national, regional, local)

Two new laws, on public tenders (Act 28/2000 Coll.), and on auctions (Act 26/2000 Coll.), enacted on June 1st, 2000, require the authors of important documents (for example: public tenders, auctions etc.) to publish them also on-line, on a "central address" (technically a single and a priori known location on the Internet). On May 31st, the Czech government decided to appoint the Czech Post (Ceska posta) to be the keeper of the "central address" (http://www.centralni-adresa.cz).

2.5. Telecommunications and Internet

During 2Q2000, the Czech Parliament debated the new Telecommunications Act. The biggest issue was the date when carrier selection and number portability have to be offered (by the incumbent, Cesky Telecom, in its networks). Contrary to previous drafts of the Act, the version produced by the Government and sent to the Parliament, postponed the obligation for the incumbent to offer carrier selection and number portability by two years (until the end of 2002). The House of Representatives of the Parliament approved a slightly modified version stating that the carrier pre-selection and number portability should be available (not later than) by the end of 2002, and call-by-call carrier selection by the mid-2002. The Senate later shortened the time schedules by 6 month, but its decision was outvoted by the House of Representatives.

The new Act ends the current monopoly of the incumbent on public (fixed) telephony, because other subjects can obtain a licence and offer voice services from January 1st, 2001 (other services are already liberalised). But the incumbent will be obliged to offer call-by-call carrier selection only by the mid-2002 (and pre-selection and number portability by the end of 2002). Critics argue that such a postponement in fact closes the telecommunications market, because new entrants will not be able to offer their services to current customers of the incumbent, and will first have to build a new (and redundant) infrastructure, mainly new local loops. Another argument is that EU directives provide for a possible 2-year postponement of carrier pre-selection and number portability, but not in the case of call-by-call carrier selection (because no real competition is possible without even such selection).

The incumbent argues that it needs such postponements because it is not prepared to provide carrier selection and number portability earlier.

The new Telecommunications Act should be enacted on July 1st, 2000.

2.6. Electronic Commerce

In January 2000, the Czech Government assigned the area of electronic commerce to the competencies the Governmental Committee for State Information Policy, and ordered it to produce a plan of activities aimed at developing e-commerce in the Czech Republic (Navrh reseni zakladnich opatreni na podporu rozvoje elektronickeho obchodu CR) by the end of March 2000. On February 28th, 2000, the Government decided to incorporate this plan into the Action Plan for the implementation of the State Information Policy (and this Action Plan was approved on May 31st, 2000).

Currently, according to public statements by the new minister Karel Brezina (in charge of IS), an analysis of the whole legislative system of the Czech Republic is taking place, aimed at harmonising it with the requirements of e-commerce. Two possible outcomes of this analysis are expected: either a new law on electronic commerce would be prepared, amending all relevant acts, or these relevant acts will be amended individually, without a specific law on e-commerce.

On May 24th the House of Representatives of the Parliament approved (in its third reading) the proposed Electronic Signatures Act. The content of this proposed Act changed significantly between the first and second reading, to reflect the philosophy and requirements of the EU directive on electronic signatures, and is now compliant with it. The Act still has to pass through the Senate.

2.7. Education and research

On May 10th, 2000, the Czech Government approved a strategy document for implementing the State Information Policy in the area of education (Koncepce SIP ve vzdelavani). This strategy was prepared by the Ministry of Education as a separate document, but is closely related to the above mentioned Action Plan for the Implementation of the State Information Policy.

The education strategy document sets the following goals:

• start connecting schools to the Internet in 2001. During the same year, every school should be connected - at least it should be equipped with one connected computer.
• by the end of 2003, every school should be connected to the Internet with a fixed connection at least 64 kbps. Also, every secondary school and every major elementary school should be equipped with at least 8 multimedia-enabled computers connected into a local area network.
• by end of 2004, ICT should be integrated into the education process and multimedia technologies should be used widely in teaching. Also, all students leaving school should be fully IT-literate.
• by the end of 2005 all citizens should be IT-literate.

2.8. Privacy, data protection, consumer protection

In June 2000, the Office for the Protection of Personal Data was established by a governmental decree (no. 642/2000), starting with 18 employees. The existence of this institution is required by the newly enacted Personal Data Protection Act (Act 101/2000 Coll.).

3. Institutions and organisations in charge of IS regulation

3.1. Ministries

The Czech Republic has no ministry specifically dedicated to IS. The body in charge of IS is the Governmental Council for State Information Policy (Rada vlady pro Statni informacni politiku). Previously, this council was headed by the vice-minister for economy and minister of finance Mr. Pavel Mertlik. On March 24th, 2000, Mr. Karel Brezina was nominated the new minister "sans portfei" and charged (among other duties) with the area of IS. Specifically, Mr. Brezina was charged with:

• chairing the Governmental Council for State Information Policy (instead of Mr. Mertlík)
• politically supervising the Office for the State Information System.

On March 22nd, 2000, the Governmental Council for State Information Policy significantly increased it competencies in the area of IT procurement - according to governmental decree No. 292 it now oversees (together with the ministry of finance) the IT procurements of all state authorities.

3.2. National regulatory authorities

In April, the Czech Telecommunications Office issued a proposed (draft) Unified Rule concerning the renumbering of the public phone network. The new and radically different numbering plan will cover the fixed and mobile networks, and should come into effect by July 1st, 2000.

In late 1999, the Ministry of Transport and Telecommunications (through its Czech Telecommunications Office) published a consultative document on issuing future UMTS licences, and expected feedback from the public. After evaluating responses, the ministry proposed (in June 2000) to the government to issue three licences to the three current (GSM) mobile operator, for a fixed price settled by the government (covering administrative costs plus a surcharge set by the government).

3.3. Consultative councils

In the 2Q2000, the Czech Forum for Information Society (an advisory body to the Governmental Committee for State Information Policy) started working. It formed six task forces:

• Informative and computing skills in 21st Century
• Electronic business
• The 21st century re-built of the enterprises and companies
• The healthcare in the Information Society
• The State as a citizen’s servant
• Harmonious development of Information Society

but specific outputs are not yet available. http://www.info-forum.cz/

3.4. Organisations in charge of the promotion of the IS

The organisation in charge of promoting the IS is the Office for the State Information System, politically supervised by minister Karel Brezina (since end of March, 2000). On May 31st, 2000, a new chairman of the Office was elected by the government (Mr. Alexander Kratochvil).

4. International relationships and agreements

On May 31st, 2000, the Czech Government agreed to sign and ratify the Agreement on protection of persons with respect to automated processing of personal data (No. 108).

5. Market: Privatisation, foreign investment, mergers, acquisitions, call for tenders,…

The Czech government decided to privatise its remaining (majority) stake in the national telco (Cesky Telecom). In March 2000, a privatisation consultant was selected (J.P. Morgan and Komercni banka) to recommend the best variants. Two main possibilities are considered: selling the 51 percent of shares (currently owned by the state) as a whole, or selling a smaller number of shares (about 17 percent) to KPN Telecom to reach majority. KPN already expressed its willingness to invest further into the Czech Telecom - but as to the date of writing, no specific variant was selected.

Foreign investment in the area of IT is continuing and its volume is increasing. Mainly Internet-related start-ups are entered by strategic investors or venture capital (precise figures about investments are usually not given). Also telecommunication companies are receiving investments, probably in relation to the expected opening of the telecommunications services market (by January 1st, 2000, with the notable exception of carrier selection and number portability).

On June 26, the Czech Telecommunications Office opened a public tender for 3 countrywide licences in the 26 GHz band for FWA (Fixed Wireless Access), point-to-multipoint.