IT subsidy dismissed as "band-aid"

TWO months before early elections, the Slovak government plans to take its first steps towards increasing the number of broadband Internet users in the country by introducing a subsidy programme for young people.

TWO months before early elections, the Slovak government plans to take its first steps towards increasing the number of broadband Internet users in the country by introducing a subsidy programme for young people.

Under the plan, the state will pay Sk6,016 (€160) to people between 15 and 25 years of age for a two-year broadband Internet connection. In each of the country's eight regions, 5,000 people can receive the state contribution through their Inters by the end of the year, for a total of 40,000 subsidies.

The grant scheme is part of the cabinet's programme to increase the "informatization" of Slovak society, a term which means the use of information technologies to transform economic and social relations.

The subsidies are also part of Minerva, the government's overall plan for turning Slovakia into a knowledge-based economy. By developing information techno-logies, long slow to penetrate the Slovak market, the cabinet hopes to put Slovakia on a par with Europe in terms of education and economic development.

"We want to increase the number of Internet users," said Finance Minister Ivan Mikloš, who has the cabinet role of promoting a knowledge-based economy. "Instead of using tax rebates, we settled on direct support."

The Ministry of Transport, Post and Telecommunications, which will be providing the subsidy, said it wants as many Internet providers as possible to join the project so it will cover all of the country's regions. The required connection speed is 512/128KB per second, and the allowed price of the connections ranges from Sk260 (€6.8) to Sk734 (€19) a month.

Internet providers have generally welcomed the pilot project, but some have argued it should have come earlier, and ought to have targeted different groups. Others have said that the state support criteria discriminate between providers.

"We hope the project will increase the penetration of broadband Internet and IT literacy among young people. Even though the conditions for the project are complicated, our firm will certainly join in," said Petra Vagaská, a spokeswoman for Internet provider Slovanet.

On the other hand, the Orange Slovensko mobile operator is excluded from the programme as it does not meet the price and speed criteria.

According to Milan Hric, spokesman of the country's other mobile provider, T-Mobile, support for increasing Internet use in Slovakia should focus on young people. He said his company had prepared several special programmes for students, and that "we also hope that the cabinet will systematically enlarge the segments [of the population] it supports."

Some analysts have praised the general idea of supporting Internet use, but have asked why the state targeted the young, who will naturally gain exposure to it, rather than older citizens, who tend to need an incentive to use the Internet. The motivation for launching the project now has also been ascribed to the coming elections rather than to a systematic plan to build Internet use.

Indeed, for analyst Tomáš Bella, the cabinet plan merely highlights how little the government has done so far to systematically disseminate the use of information technologies.

"The current cabinet has done practically nothing in terms of the informatization of society," Bella said. "Of all the dozens of concrete steps they planned to carry out in their programme documents, they ended up approving one that is not even listed."

The European Union continues to criticize Slovakia for lagging behind its neighbours in the use of information technologies.

The country has one of the most expensive Internet connections and the fewest users among the 25 member nations of the European Union. Slovakia was also one of the last to begin offering broadband Internet or ADSL connections within Central and Eastern Europe.

The cabinet has verbally recognized the need to invest in information technologies for several years. In January 2004 it approved a document called Strategy for the Informatization of Society, which outlined how Slovakia might gradually catch up with developed European countries in building an information society.

"The most tangible result of the adoption of the strategy was the establishment of the office of a government appointee for the informatization of society," Bella said. "However, from the viewpoint of the average citizen, there has been virtually no improvement. As far as concrete tasks go, the cabinet had fulfilled less than one third of what it promised as of the beginning of 2005."

The government informatization appointee, Miroslav Kukučka, said at the outset of 2005 that Slovakia had not yet started to informatize its society. He praised the approval of the strategy, but criticized the absence of legislation and of concrete powers for his office, as well as what he termed the waste of money.

Experts say the government did not fulfil its first and most important task: to put its own services online under its "e-government" strategy. While some cabinet ministries introduced computer-based services to reduce bureaucracy, these steps were not interlinked.

"Having interesting content could be an important factor in raising interest in the Internet," said Orange spokesman Peter Tóth. "This is currently lacking, mainly in the state administration, such as the possibility to perform various tasks in electronic form from the comfort of one's home without having to visit state offices."

Analysts agree that the informatization of Slovakia is a task best performed by the education system. The government has prepared several projects targeting schools, such as Computers for Schools and Infovek.

IT providers and analysts blame the industry's tardy development on dominant provider Slovak Telecom's abuse of its market position, and the inability of Slovak state regulators to enforce their verdicts against ST and introduce true market liberalization.

"The telecom market above all lacks effective regulation," said Vagaská from Slovanet. She explained that prices for regular Internet and broadband connections could be lower if ST did not require that customers pay telephone flat rates for DSL (digital subscriber line) services.

DSL technology transmits data over phone lines without interfering with voice services.

"If the state regulated the market effectively, no subsidies would be needed for Internet prices. With healthy competition prices would drop to such a level that broadband Internet would be accessible to larger groups of citizens," Vagaská said.

"The state grant for young people is a small band-aid on a large wound," said Bella. "The problem is that the wound is still bleeding."

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