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ST's OnLine Start cut down by ministry

In a definative finale to a two-and-a-half month long debate over Slovak Telecom's cut-rate Internet access service, the Slovak Telecom Ministry demaded that the state-run telephone company discontinue its fledgling OnLine Start service by April 20.
Ministry officials cited possible security concerns and monopoly abuse allegations as the reason for the shut-down. ST representatives, meanwhile, complained that the government had succumbed to unjustified pressure from the the Association of Private Internet Providers (API), a newly-formed Slovak group.
Launched on February 1, OnLine Start was an Internet service provided by telecom monopoly Slovenské Telekomunikácie (ST) which allowed subscribers to log onto the Internet under one universal password for only the advertised cost of a local telephone connection.


ST Product and Services Manager Pavol Bojňanský is "not happy" about the Telecom Ministry's decision to stop ST's controversial internet service.
photo: Chris Togneri

In a definative finale to a two-and-a-half month long debate over Slovak Telecom's cut-rate Internet access service, the Slovak Telecom Ministry demaded that the state-run telephone company discontinue its fledgling OnLine Start service by April 20.

Ministry officials cited possible security concerns and monopoly abuse allegations as the reason for the shut-down. ST representatives, meanwhile, complained that the government had succumbed to unjustified pressure from the the Association of Private Internet Providers (API), a newly-formed Slovak group.

Launched on February 1, OnLine Start was an Internet service provided by telecom monopoly Slovenské Telekomunikácie (ST) which allowed subscribers to log onto the Internet under one universal password for only the advertised cost of a local telephone connection.

The API was founded on February 25 in protest, with its members lambasting "security flaws" of the system's universal password, "unfair pricing" and "misleading advertising", all of which amounted to ST's "clear abuse of their monopoly status."

Under mounting pressure to resolve the situation, the Ministry sided with the API and told ST on April 12 that the service had to be discontinued, effective April 20.

"The [Telecom] Ministry decided to stop OnLine Start," said Stanislav Vanek, director of the Ministry's regulatory department. "First, there were security concerns resulting from the danger of [the universal password's] confidentiality. But, there was also a conflict in the creation of fair competition. ST offered a service that is not possible for other private providers to offer."

Boris Kostík, an analyst for the Bratislava Brokerage house Slávia Capital, explained that the service had mixed the two areas of fixed line communication, in which ST enjoys its monopoly, and Internet provision, in which ST does not hold a monopoly. According to the API, this constituted a monopoly abuse because private Internet providers are forced to offer customers fixed lines through ST.

For the API, the decision was a triumph. "We are satisfied with the decision," said Stanislav Stowasser, director of Internet services firm Global Network Services and API member. "We believe that the Ministry has chosen the correct approach for addressing the problem. They accepted that it was unfair and dangerous."

But ST representatives denied the accusations, saying that the cancellation was simply the result of the Telecom ministry succumbing to the API's pressure.

"Of course, we are not very happy with the decision," said ST's project and services manager Pavol Bojňanský. "We think that there was no reason to stop [OnLine Start], but the Ministry felt the pressure."

"The service had no security flaws that were proved," he added. "We discussed the problem with EuroCert [an expert group on computer network safety], and they said that it [the universal password] may cause problems but that even systems without a universal password could cause problems. The real reason was the pressure. We received a letter from the ministry which cited the campaign against us."

Kostík agreed with ST's Bojňanský, saying, "if it hadn't been for the pressure of the API, OnLine Start would have continued." As for why the ministry gave into the pressure, he added that it could have been the Ministry's desire to avoid bad press in light of ST's impending privatisation.

ST was left feeling that it had been betrayed by the Telecom Ministry, Bojňanský said. The closure, he added, also resulted in a barrage of "angry letters and e-mail complaints from OnLine Start subscribers" who said they had enjoyed the service and were upset by its sudden closure.

"The Ministry gave us permission to start the service in the first place," Bojňanský complained. "If there were problems, they had to have known about them. We only did what they told us to do."

Hoping to avoid any future problems concerning Internet services, Vanek said that the Ministry would make some changes by "the second half of 1999," thus assuring a level field of competition. While he would not go into specifics, Vanek said that Internet providers would be offered rates less expensive than fixed telephone lines, emphasising that all providers, ST and API members alike, would be able to take advantage of the rates.

Such statements have been met with a warm reception by the API, who said that they now trust the Ministry to act in the best interest of private Internet providers and customers.

"The API believes in the Ministry now," Stowasser said. "We believe that they will continue to check the market and hold ST [from future abuses of their monopoly]. They will support lower prices and create uniform conditions which will support the development of the Internet in Slovakia."

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