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New Internet programs promise few changes, say experts

NEW INTERNET services offered by the domestic monopoly telecom operator, Slovak Telecom (ST), are not likely to boost Slovakia's lagging Internet development, despite ST's claims, experts say.
ST, which has often been blamed for slowing down the country's Internet penetration, introduced two new Internet packages October 1. In a series of PR articles published in the Slovak print media in early October, ST said that the new programmes would enable its customers to "pay much less for connection to the Internet".
When they were first announced at the end of September, the new packages were heralded as a major step forward. However, once the details were revealed, experts said that the programmes will make very little difference to how much most users will pay for Internet access.

NEW INTERNET services offered by the domestic monopoly telecom operator, Slovak Telecom (ST), are not likely to boost Slovakia's lagging Internet development, despite ST's claims, experts say.

ST, which has often been blamed for slowing down the country's Internet penetration, introduced two new Internet packages October 1. In a series of PR articles published in the Slovak print media in early October, ST said that the new programmes would enable its customers to "pay much less for connection to the Internet".

When they were first announced at the end of September, the new packages were heralded as a major step forward. However, once the details were revealed, experts said that the programmes will make very little difference to how much most users will pay for Internet access.

"These programs introduce cosmetic changes only. They don't solve the problems [associated with Internet access in Slovakia]. They are a marketing tool, rather than a real contribution [to IT development]," said Marián Ďurkovič, deputy chairman of Slovak Association of Internet Providers.

The first package, Internet Intensiv, costs Sk122 [$3] for five hours' access to the Internet per month, with discounted rates for further time used, provided customers connect only during off-peak hours.

The second package, Internet Efektiv, costs twice as much as Internet Intensiv and offers similar services but to business customers, who can connect to the Internet whenever they want. Both packages require the subscriber to buy certain telephone services from ST in addition to the Internet programmes.

Industry associations have repeatedly voiced their unhappiness about the prohibitive prices for Internet connection in Slovakia. Until ST's monopoly on telecom services is officially dismantled in January 2003, the country's Internet service providers have little leeway in how they price their products.

In a June report focused on the IT sectors of candidate countries, the EU stated that in terms of Internet penetration and prices, Slovakia ranks nearly bottom among the group of 13 central and eastern European states waiting for Union membership.

Comparing the number of households connected to the Internet, Slovakia ranks 12th, ahead of only Latvia, said the report. Similarly, Slovakia has the second-most expensive Internet connection of all EU candidate countries, calculated with respect to purchasing power parity.

"An hour of Internet connection during peak time is higher than the average hourly wage in Slovakia. As for off-peak usage, the prices grew by 66 per cent in the 13 months before August 2002," said Peter Polakovič, head of the civic society Internet For Everyone, which has criticised ST's new Internet packages as ineffectual.

"At first glance, it looked like ST was trying to address the huge criticism it has received for its excessively high Internet access prices. But these packages do not solve anything. They are only about business," said Polakovič.

"The majority of Slovak Internet users would like to be able to browse the Internet [for a significant amount of time]. ST does not allow for that intensity of use. People want unlimited access and an affordable connection to the Internet, as is offered in other countries, where connecting to the Internet is a natural thing and not a luxury," said Polakovič.

Polakovič also added that the new packages are not suitable for customers whose Internet use is mainly limited to sending and receiving electronic mail. Other industry insiders agreed.

"If you look at how these packages are designed, the rates are almost double what they were before, unless you stay online for a certain length of time. The price falls only after 10 minutes. If you do the maths, only those connections to the Internet that last more than half an hour are cheaper than before," Ďurkovič said.

"These packages do not address the needs of the ordinary user. Unless you are an Internet fanatic who spends hours on the Internet, you're not saving any money," added Ďurkovič.

In explaining the slow adoption of the Internet in Slovakia, experts point to the high price of computers, higher value added tax ahead of EU entry and ST's pricing structure as the most significant reasons.

"The level of penetration is directly linked to the price of Internet connection. Fixed-line connection is very expensive, both for smaller companies and the ordinary user," said Jiřina Perényiová, executive director of the Slovak Association of Telecom Operators.

Ďurkovič agreed: "[The main reasons for the high prices] are the price policy of ST on the one hand, and the reluctance of the state to regulate the monopoly operator on the other."

"Any monopoly should be regulated, so that it is prevented from doing whatever it wants on the market. The state took a hands-off approach towards ST, and prices increased by more than 60 per cent in two years. That will not contribute to the development [of this sector]," he added.

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