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Czech Republic: Public Protests Telephone Monopoly's Proposed Rate Hikes

Prague, 19 November 1998 (RFE/RL) -- Large numbers of Czechs yesterday protested plans by the telephone monopoly, SPT Telecom, to increase by over 60 percent the rate it charges per minute for some telephone and data connections. The hike is due to take effect January 1.

Over 100,000 people signed a protest petition on the Internet, and declared they would boycott the Internet all day Wednesday. Nearly 1,000 Czech Internet servers joined the boycott.

Some 2,000 protesters demonstrated in blowing snow near Telecom headquarters in Prague last night, a similar number protested in Brno and an estimated 1,500 turned out against Telecom in Zlin.

The Prague organizers constructed a giant yellow spider they dubbed "Monopolak". Protesters attached strings to the spider forming a huge web as they marched to Telecom headquarters where they handed over the spider and the petition to Telecom representatives.

Demonstrators in Brno waved banners in the spirit of the Velvet Revolution nine years ago. One read "Stop Telecommunism". Another read: "With Telecom forever and ever, but not an impulse longer" -- a turn on the old slogan, "with the Soviet Union forever and ever but not a day longer".

The protest against the planned price increase for Telecom services was launched two weeks ago by writer Ondrej Neff, publisher of the Internet daily Neviditelny pes (Invisible Dog), and two other professional Internet users (the operator of the most widely used Czech Internet search service Seznam, Ivo Lukacovic, and MobilServer's Patrick Zandl).

Neff, writing in Neviditelny pes today says that unless the right tariff level is found, access to the Internet will be out of reach of schools, local and regional governments and small and medium-sized enterprises. In that case he says, the Internet for Czechs "will remain petrified until a fundamental change in attitude occurs."

Telecom recently announced it intends to increase the impulse rate while also reducing the period of an impulse from three minutes to two minutes during peak hours. In combination, it works out to an increase of more than 62 percent per minute.

Telecom says charges for domestic long distance calls are to be reduced by 40 percent and international calls by 25 percent. But in a country where only two percent of employees earn more than the equivalent of $1,000 a month and the vast majority earn only one third of that, the proposed increase in local rates could be a hardship for many. As 70 percent of Czech phone calls last no more than two minutes, customers hardest hit will be private users of the Internet in the Czech Republic, who are estimated currently to be paying on average between $60 and $100 a month in phone bills. The Czech Republic currently has some 80,000 Internet users.

The conservative speaker of the lower house of parliament, Vaclav Klaus, sides with Telecom and criticizes the protesters for "failing to accept the market". Speaking on Czech TV, Klaus said "attempts to reduce telephone rates are nonsense". In his words, "the market sets prices -- so this (protest) is an apparent attempt to get us back into the Communist system.

The protesters counter that a monopoly does not constitute a market.

Protest organizer Neff says the protesters' further steps depend on Telecom. On a visit to parliament yesterday, he told lawmakers that telephones and the Internet are two different things requiring completely different conditions. He said Telecom should offer broader service to its customers so that, in his words, "a grandmother who phones her grandson once a week should pay a lower monthly fee and more for a single call, while business people should be offered the exact opposite".

Deputy Prime Minister for coordinating economic policy, Pavel Mertlik, supported yesterday's boycott. Mertlik has been calling for an earlier than planned end to Telecom's monopoly -- by the end (Begin optional cut.)

But the cabinet yesterday confirmed the state's intention to privatize its share in SPT Telecom by the end of 2001. Prime Minister Milos Zeman told reporters the cabinet did not decide whether to sell off all of the government's 51 percent share in Telecom or whether the government would give preference to the existing minority shareholders.

Finance Minister Ivo Svoboda, who approved the rate hikes without informing the cabinet, says the contract signed four years ago with TelSource, a consortium of three foreign companies, is "bad". He says TelSource though owning just 27 percent of Telecom's shares has 60 percent of the seats in Telecom's executive bodies.

That could change at an extraordinary meeting of shareholders next month. Minister for Transportation and Communications, Antonin Peltram, wants a review made of SPT Telecom's contract with Telsource, noting the government lacks adequate control over Telecom's policy and tariffs.

The protests and publicity have forced Telecom to respond.

Telecom vice president Milan Cupa, who was spat on in yesterday's demonstration in Prague, announced in an interview in today's Pravo that the telecommunications monopoly intends to offer two solutions in talks tomorrow with Neff and "other representatives of the Internet public". These include a special dialing code for Internet users that would offer either a reduced tariff or longer intervals between impulses. The alternative, he says, would be for Telecom to offer free access to the Internet through a so-called green line (what in the U.S. are known as 800 numbers). The internet servers rather than the customer would pay Telecom the fees. Cupa suggests either variant could be implemented by the end of the year, enabling Telecom to go ahead with plans to raise its rates.