The Czech telecommunications market
in the first half of 2012
The telecommunications market in the Czech Republic witnessed a slight decline in the first six months of 2012; the gradual recovery of the market demand, continuous competitive pressures and regulatory impact were the key reasons.
The mobile market was dominated by new and innovative services – mainly data, abut also voice.
For the overview of the key new services and products of Telefónica CR, please refer to Section 3.2.2.
Effective from 28 May 2012, MobilKom, a.s. introduced ‘Calling for One Crown’, a tariff which, for CZK 200 per month, gave customers calls for CZK 1 to the U:fon network, to other fixed and mobile networks, 100 minutes of calls to all networks in the Czech Republic and to selected international fixed line numbers.
UPC Česká republika, a.s. (UPC) ran promotions for all internet access services from the beginning of the year until the end of April 2012. The 10 Mbit/s service sold for CZK 299 for the first 12 months, instead of the listed price of CZK 494 per month. The 25 Mbit/s service could be subscribed for CZK 399 per month for the first 12 months, instead of the regular price of CZK 599 per month. The 50 and 100 Mbit/s services were offered by UPC at a 50% discount for the first 4 months of usage.
T-Mobile Czech Republic a.s. (T-Mobile) began to market a new edition of prepaid cards Twist Přátelé Extra. A regular monthly top-up of at least CZK 300 gave the customer calls to all numbers for CZK 3.50 per minute and SMS for CZK 1.50.
Vodafone Czech Republic a.s. (Vodafone) overhauled its data tariff proposition. Its mobile data tariffs charged on a per-day basis increased the daily data limit from 5 MB per day to 25 MB per day; the price went up from CZK 17 to CZK 25 per day. The Connection tariffs were expanded with Weekly Connection for CZK 49 per week and FUP 60 MB per week. The monthly Internet in Mobile tariffs welcomed a new Mobile Connection Super for CZK 249 per month with FUP 300 MB per month.
As part of the so-called ‘Eurotariff’ regulated by the European Union executive authority, customers were charged CZK 8.60 for a minute of an outgoing call (CZK 10.30 previously), CZK 2.38 for an incoming call, CZK 2.68 per SMS and CZK 20.84 per 1 MB of data, charged at the rate of 1kB.
T-Mobile started offering Travel&Surf, a new roaming mobile internet tariff; the service could be activated on a daily, weekly or a monthly basis.
Vodafone communicated its new ‘roaming per day’ proposition, which could be subscribed by customers of Vodafone’s Tailor-made tariffs. The roaming offer allowed customers to use free units from their national tariffs in 41 countries of Europe.
Regulation
Several changes occurred in the first half of 2012 in the regulatory environment which governs the field of electronic communications in the Czech Republic. The most material changes included the following:
- changes in the legislation;
- changes in the areas of markets analysis and product regulation;
- changes in the Universal Service provision and in the government’s policy and support of broadband internet access.
The following are the most significant changes in the area of legislation governing electronic communications:
- Promulgation of the Act No. 341/2011 Coll. on General Inspection of Security Forces, and on the amendment to related acts,
- Promulgation of the Act No. 19/2012 Coll., amending the Act No. 216/1994 Coll., on arbitration and enforcement of the arbitration award, as amended, and other related laws, including the Act No. 127/2005 Coll., on electronic communications, and on the amendment to some related acts (Electronic Communications Act), as amended,
- Completion of the implementation of the revised regulatory framework for electronic communications networks in the Czech law:
- Directive 2009/136/EC of the European Parliament and of the Council amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services; Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws;
- Directive 2009/140/EC of the European Parliament and of the Council amending Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services Directive 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and Directive 2002/20/EC on the authorisation of electronic communications networks and services;
- Regulation (EC) No 1211/2009 of the European Parliament and of the Council establishing the Body of European Regulators for Electronic Communications (BEREC) and the Office, through the Act No. 468/2011 Coll., amending the Act No. 127/2005 Coll., on electronic communications, and on the amendment to some related acts (Electronic Communications Act), as amended, and some other laws, which came into effect on 1 January 2012.
Telefónica CR was involved in the preparation of the above legislation by providing consultation either directly or on the platform of industry associations of telecommunications operators or through its parent company Telefónica.
Relevant markets analysis and product regulation
Telefónica CR continued to meet its duties with which it was tasked based on the relevant markets analysis undertaken by the Czech Telecommunication Office (CTO) in previous periods.
On commission from the CTO, Ernst & Young, s.r.o., continued the development of the LRIC methodology, including a model for call termination in public fixed networks. The outputs of this model are expected to be used by the CTO to set the maximum call termination rates in fixed public networks in 2013 and beyond.
The LRIC methodology for call termination in public mobile networks was drawn up for the CTO by PricewaterhouseCoopers Česká republika, s.r.o., and the result of the cost price calculation of mobile termination rates based on the new model will apply most likely from 2013.
The CTO continued the third round of the third round of analysis of the relevant market no. 5 – wholesale broadband access in electronic communications networks. The draft paper was notified to the European Commission, which chose to exercise its veto and commenced the so-called second phase of the relevant market analysis; the publication date for the final version of the analysis has thus been postponed. Telefónica CR expects that the analysis will be published in the form of a general measure by the end of the year.
In the middle of 2012, the CTO also commenced the analysis of the relevant market no. 2 – call origination in the public telephone network provided at a fixed location, market no. 4 – wholesale (physical) network infrastructure access (including shared or fully unbundled access) at a fixed location, and market no. 8 – access and call origination in public mobile telephone networks.
Regulation of international roaming
A new regulatory framework for international roaming services, which defines the regulated services and the related prices for the period until 2022, was approved by the European Parliament and the Council of Ministers in the second quarter of 2012. In line with the roaming regulation, regulated prices of international roaming voice and SMS services were cut further with effect from 1 July 2012, and the scope of the regulation was expanded to include also mobile data roaming services.
With effect from 1 July 2012, the retail price for incoming calls went down to EUR 0.08 per minute; the price of an outgoing call was cut to EUR 0.29 per minute. The price of an outgoing SMS went down to 0.09, and the new maximum price of EUR 0.70 per 1MB of data now applies. The prices in Czech crowns were adjusted using the applicable exchange rate conversion.
Imposition of duties related to the provision of the Universal Service
Telefónica CR provided the following services during the first half of 2012 as part of meeting its duties imposed by the CTO in relation to the Universal Service provision:
- the public payphone service;
- access to the public telephone service, of the same quality as for other end users, for people with disabilities, namely by means of special terminal equipment;
- special price plans for persons with disabilities, which are different from the regular price plans provided under the standard commercial terms and conditions.
As to the service under (a), a CTO decision tasked Telefónica CR with the duty to operate the service in municipalities with 4,999 or more residents until the end of 2013; and in municipalities with a population under 1,999, until the end of 2014.
As to the service under (b), the CTO passed a decision which obliges Telefónica CR to provide the service as part of the Universal Service for a period of three years commencing from 15 July 2012.
Compensation for Universal Service provision
Telefónica CR is presently working to prepare its claim for compensation for the loss incurred as a result of Universal Service provision (including the loss incurred as a result of offering special price plans for people with disabilities) in 2011.
State policy and support in the area of broadband internet
In March 2012, the CTO released working draft terms of reference for the tender for 800 MHz, 1800 MHz and 2.6 GHz frequencies for public consultation. Using the aforementioned frequencies to develop mobile broadband internet access represents one of the tools to meet the objectives set out in the State Policy in the Area of Electronic Communications – Digital Czech Republic. Telefónica CR submitted its comments to the CTO. After the CTO processes all the comments, it invited tender in July 2012. On 12 July 2012, the CTO published on its electronic bulletin board and in the Telecommunications Journal the details of a tender for the use of radio frequencies for the operation of a public communication network in the 800 MHz, 1800 MHz and 2600 MHz bands.
Structural funding from the EU continued to support various projects in the area of ICT development in public institutions. The support went in the direction of mainly regional networks connecting public institutions, as well as the private sector.
In April the European Commission invited comments on the EU Initiative to Reduce the Cost of Rolling Out High Speed Communication Infrastructure in Europe, and, in July 2012, on the Community Guidelines for the application of State aid rules in relation to rapid deployment of broadband networks.
The Government of the Czech Republic started the process of programming the EU Structural Funds for the period 2014–2020. With regard to the overall objectives of the EU, as expressed in the policy paper Digital Agenda for Europe 2020, we can expect that support will focus also on the field of ICT.
The Company is constantly monitoring options offered to customers by structural funds, and modifies its products and services so that they are eligible for subsidies. A special attention was paid to Call 8 under the Integrated Operational Programme for the development of eGovernment services in the regions. Telefónica CR successfully participated in tenders for projects co-funded from the Structural Funds.