ESIS extension / Czech Republic / Regulatory Developments / Update Memo 6

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

The most significant events of the third quarter of year 2000 were the enactment or approval of new laws (on telecommunications, on personal data protection, on electronic signatures and on IS of public authorities). Also, a new state authority was established - the Office for Personal Data Protection, with significant competencies in the area of electronic signatures.

During the third quarter of year 2000, the following new laws were approved by the Parliament or enacted:

A new Act on information systems of public authorities was finally approved by the Parliament (on September 14th), after long debate and a refusal by the Senate.

During the third quarter of 2000, a significant change in the national IS strategy occurred. Previously, the whole area of information society and its implementation was considered to be only a matter of state authorities and no involvement of the public sector was expected - there was no formal provision for joining the forces of the private and state sector. At the end of August, the newly appointed "IT minister" (Mr. Karel Brezina, minister "sans portefei" charged with IT and IS) issued a proposal named PPP (Public-Private Partnership). In it, he asks the private sector to join forces with the state and help speed up the implementation of the State information policy.

By the end of September, Mr. Brezina should produce a report on the possibilities of public-private partnership (a more detailed study of what and how could be done), and present it to the government.

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). The reason is that two new laws (on public tenders, Act 28/2000 Coll., and on auctions, Act 26/2000 Coll., both 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 July 31st, the Central address went into operation, but only according to the requirements of Act

no. 28/2000 (it only publishes information on tenders issued by public authorities). Functionality required by Act no. 26/2000 Coll. (publishing of auctions) should be operable by September 30th.

The newly approved Act on information systems of public authorities (approved by the Parliament on September 14th) finally departs from the previous plan to build from scratch a new and homogeneous information system of public authorities, and instead asks for the building of a "unified referential interface" that would cover the individual and already existing information systems of public authorities and provide for unified access and data exchange between the individual parts. It also introduces certification of information systems of public authorities.

The new law is also aimed at simplifying the communication between citizens and public authorities, including the state.

The new Act on telecommunications (Act no. 151/2000), enacted on July 1st, 2000, opens the possibility for new operators to offer voice services (from January 1st, 2001). Immediately after the enactment of the new law, several alternative operators applied by the Czech Telecommunications Office for such a license (Aliatel, Contactel, GTS a Kabel Plus and Kabel Net).

A public tender for 3 countrywide licenses for Fixed Wireless Access (FWA) Networks was opened in July, as a "beauty contest". The licenses will be issued to the winners for a fixed price of CZK 150 million (approx. 4,3 million ECU). Current fixed and mobile operators were excluded from the tender by its terms (due to the regulator's intention to bring in new entrants). 13 bids were submitted by August 15^th, and of these one was rejected (the offer of Czech Telecom, on the grounds that current operators are excluded). On September 8^th, the Czech Telecommunications Office announced three winners: Broadnet Czech, GiTy/Star One and Nextra Wireless. Czech Telecom, who's bid was rejected, filed a complaint to the Constitutional court, stating that his exclusion was discriminatory.

Licenses for UMTS (3rd Generation Mobile Networks) should have been sold to the 3 existing mobile operators, according to a previous suggestion of the Ministry of transport and education. But following the preparations of the new state budget for year 2001, the ministry of finance asked for selling the licenses in auctions, to raise more money. The government asked the ministry of transport to prepare a study of the possibilities and possible outcomes, and present it to the government by end of September. Meanwhile, the Ministry of Transport announced that by January 1s, 2002, frequencies for 4 licenses will be available, and therefore 4 licenses can be issued. A technical problem arose with performing an auction of licenses: the newly enacted law on telecommunication (no. 151/2000 Coll.) asks for public tenders and has no provisions for auction. As a remedy, selling the frequencies (as a national resource) in auction and then issuing the necessary licenses in a public tender (according to the Act on telecommunications), open only to successful auctioneers.

In the area of electronic commerce, no decisive developments occurred. According to Mr. Brezina's public presentations (the minister charged with IT a IS), a study of current legislation is underway, aimed at mapping what has to be done in the legislative area to promote e-commerce. The study should also decide whether the necessary changes in legislation should be accomplished through one single new law (a specific law on e-commerce), or through specific amendments to individual existing laws.

Funds for IT investments in education (providing computers and Internet access to schools, according to plans set up by the State Information Policy in Education) were a hot topic during the preparations of the new state budget. No definitive results were reached.

In July, a group of Deputies proposed an amendment to the income tax law, aimed at helping people buying computers for their own personal use. The amendment, if approved, would enable private persons to deduct the cost of such a computer (max. 35 000 CZK, cca 1000 ECU) from their taxes during a period of 3 years. The government already discussed this proposal, but did not give a specific verdict of acceptance or rejection. The government expressed a general consent with the intention to promote computers for personal use through income tax deduction, but it returned the proposal with comments about formal issues that have to be clarified before the proposal can be debated (the issues were mostly technical, concerning the legislative definition of a computer).

At the end of June, the government proposed an amendment do the currently valid VAT legislation. According to this amendment, all software would be subject to 22% VAT taxation, instead of the current 5% taxation. Very negative reaction in the public occurred, arguing that such a dramatic change would increase software piracy, copyright infringements etc., and jeopardize all activities aimed at fighting against it that already started producing tangible results.

The new Act on protection of personal data (No. 101/2000 Coll. ), enacted on June 1^st, 2000, calls for the establishment of an independent Office for Personal Data Protection (OPDP), as an independent authority charged with supervising the processing of personal data and the maintenance of the register of personal data processing.

The Czech government decided about the establishment of the Office in its decree no. 642/00 on June 21^st, 2000. The Office started working on July 1^st, 2000.

Subjects gathering personal data, which are not required to perform such activity by law, must apply to the Office for the registration of permitted processing. This will begin on December 1, 2000 and everyone who began to process personal data before this date is required to meet the notification requirement by May 31, 2001. Permission for new personal data processing must be obtained before it is initiated. The Office will issue registration forms, which will be available starting in October at designated locations and on the Internet.

The Office has a president elected by the Senate, and seven inspectors. On August 29, 2000 Dr. Karel Neuwirt was appointed to the post of President of the Office for Personal Data Protection by the President of the Czech Republic, Vaclav Havel, effective from September 1, 2000. Also, four of the seven inspectors were elected.

The Act on electronic signatures (No. 227/2000) gives the Office for Personal Data Protection relevant competencies also in the area of electronic signatures.

2.17. Freedom of expression and information as far as the distribution via electronic networks is concerned

During the third quarter of 2000, a new state authority was established - the Office for Personal Data Protection (see section 2.15.)

According to the new Act on telecommunications (Act no. 151/2000) , the Czech Telecommunications Office transforms itself into an independent regulatory body. Previously it was a part of the Ministry of transport and telecommunications. Now, its president is appointed by the government.

On July 4th, the government appointed Mr. David Stadnik as the president of the new independent Office (Mr. Stadnik was also the previous head of the Office).

In relation to the newly approved Act on Information Systems of Public Authorities), the current Office of the State information System (USIS, Urad pro Statni Informacni System) should be renamed to "Office for Public Information Systems" (UVIS, Urad pro Verejne Informacni Systemy). But because renaming is not possible for formal reasons, the Office will be dissolved and a new Office will be established.

On September 8th, 2000, the Czech Republic signed the Convention for the protection of individuals with regard to automatic processing of personal data (convention no. 108)

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

In December 1999, the Czech government decided to privatize its majority in the incumbent Czech Telecom (amounting to 51 percent of its shares, still held by the state through the National Property Fund). Only in May 2000 the main shareholder of the current strategic partner of Czech Telecom, KPN, expressed its intention to participate in this privatization. But on August 30^th, probably due to the result of the German UMTS tender, KPN announced that it is no more interested in investing into Czech Telecom and obtaining a majority in the incumbent.

Please note that this report has been prepared under the sole responsibility of the ESIS II contractors.
It does not necessarily reflect the views of the Commission, nor does the Commission accept responsibility for the accuracy or completeness of information contained herein.
The ESIS Team of contractors welcomes any additional information or corrections.