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HIGH PRICES, LACK OF INFRASTRUCTURE STILL OBSTACLES TO INTERNET GROWTH IN SLOVAKIA

Bratislava tests broadband

COMPETING broadband Internet services have begun test operations in Bratislava, but legal questions, technical hurdles, and high prices for Internet access continue to hold penetration in Slovakia well below EU levels, as well as those in other accession states.
In the first three months of 2003, dominant fixed-line operator Slovak Telecom (ST) and the country's largest cable-television provider UPC began testing broadband Internet services in limited areas, with an eye on expanding later this year.
After months of delays and quarrels with Internet service providers (ISPs) and market regulators, ST launched a test of asymmetric digital subscriber line (ADSL) service in late January, with plans to begin commercial operation by summer.

COMPETING broadband Internet services have begun test operations in Bratislava, but legal questions, technical hurdles, and high prices for Internet access continue to hold penetration in Slovakia well below EU levels, as well as those in other accession states.

In the first three months of 2003, dominant fixed-line operator Slovak Telecom (ST) and the country's largest cable-television provider UPC began testing broadband Internet services in limited areas, with an eye on expanding later this year.

After months of delays and quarrels with Internet service providers (ISPs) and market regulators, ST launched a test of asymmetric digital subscriber line (ADSL) service in late January, with plans to begin commercial operation by summer.

"If you want to have better connections to the Internet, help us, everyone, reach success with ADSL," said ST vice-president Mark von Lillienskiold on the launch of trial service in Bratislava.

ADSL technology works over standard copper phone lines, allowing download speeds of 84 kbits to eight Mbits per second, and uploads of 128 kbits to 512 kbits per second. Existing high-speed ISDN service delivers a maximum data transfer speed of 128 kbits per second and analogue telephone modems top out at 56.6 kbits per second.

Competing ISPs, however, did not greet the tests warmly, saying that ST was not giving them fair conditions to provide their services through ST's fixed-line network. In a filing with the country's Antimonopoly Office (PMÚ) in late January, one ISP complained providers would be unable to offer service without leasing equipment from ST.

The PMÚ blocked ST's last attempt at ADSL service in June 2002, after the Association of ISPs (API) charged ST was cross-subsidising the service to unfairly price out competition.

ST's plan to expand ADSL services, however, has already won the backing of the Slovak IT Association (ITAS) and several ISPs. Nonetheless, ADSL already faces competition in the broadband market from Slovakia's cable networks.

The largest cable network operator in the country, UPC Slovakia, on April 1 introduced test broadband access through its television cables in parts of Bratislava. Company officials say broadband will be available throughout its cable network in the Slovak capital by the end of 2004 and in other population centres by 2005.

UPC's Dutch parent, United Pan-Europe Communications, already has 700,000 households in eight European countries using its broadband service, which offers data-transfer capabilities comparable to ADSL.

Nonetheless, there are also hurdles for cable operators wanting to offer the service. According to the market-regulating Telecoms Office (TÚ), current cable licenses only cover one-way broadcasts; for two-way data transmission, cable providers need additional licenses from the TÚ.

"The general permit that at the moment allows for the expansion of their services refers only to networks designed for single-direction radio and television signals," said TÚ spokesperson Roman Vavro.

UPC already has a license to provide Internet service in the Bratislava area, but company officials say additional licensing is not necessary and amounts to discrimination against cable providers.

"We are confident that cable operators have the right, as do other ISPs, to offer [broadband] service on the basis of registration," said UPC spokesperson Stanislav Šaling.

While competing systems may be good news for the Bratislava area, the cost for broadband service is likely to remain out of reach for most Slovak consumers for some time.

Neither ST nor UPC has yet announced commercial rates for broadband services, but rates for the aborted ADSL launch last summer started at Sk1,000 (24 euro) per month, while broadband access through television cables in neighbouring Poland and Hungary costs users around Sk1,600 (40 euro) per month.

Few Slovaks regularly pay more than Sk500 (12 euro) for their monthly phone bills, and Internet penetration in the country has remained low, critics say, because of already-high Internet prices.

According to EU estimates from 2002, less than 10 per cent of Slovak households had Internet access last year, compared to 21 per cent in the Czech Republic and 43 per cent in the EU.

Costs for home Internet connection in Slovakia currently consist of monthly fees to ISPs, usually between Sk80 and Sk500 (2 and 12 euro) depending on the service and provider, as well as per-minute costs for telephone time of Sk0.4 for non-peak hours and Sk0.8 for peak time.

"We did a comparison of prices for operators and our prices came out very competitive," said ST's von Lillienskiold, brushing off complaints that costs have hampered growth in the number of Slovaks online.

The civic group Internet for Everyone (IPV), however, argues that Internet costs are still too high, and that ST's current Internet packages only benefit heavy Internet users.

"In our opinion, [ST's Internet plans] are worth it only for a small group of Internet fanatics," said IPV head Peter Polakovič, adding that access prices would have to come down before many Slovak households would be wired.

"We have warned that for the target group of households, in the short term, there is no advantageous Internet package," said Polakovič.

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