What to expect from the Amendment to the Act on Electronic Communications?

In a second voting the Chamber of Deputies approved the Amendment to the Act No. 127/2005 Coll., on Electronic Communications which aims to bring Czech law in line with European directives. The Chamber of Deputies initially approved the bill at the end of September of last year, however on 26 October the Senate referred it back to the Chamber of Deputies for further amendments. In December it was approved by the Chamber of Deputies and signed by the President. The changes open the door to new business opportunities and offer increased consumer protection.

New business opportunities

In the future, the Czech Telecommunications Office (ČTÚ) will grant authorisations for the use of radio frequencies. The amendment will provide for an auction sale of frequencies that have become available after the transfer to digital broadcasting. The radio frequencies will be granted to successful bidders for a maximum of five years. The ČTÚ will require operators to guarantee a minimum quality of service. The conditions of participation in an auction cannot prevent other big operators entering the Czech market and can thus have a substantial impact on the competitive environment in the local telecommunications sector. The consumer will particularly benefit from this change.

Furthermore, the amendment provides for important safety measures for entities participating in the auction – the ČTÚ will be obliged, prior to announcing a tender, to discuss any conditions of participation, criteria for the evaluation of applications and conditions of the tender with the involved entities. This regulation ensures that important aspects of the tender will be subject to public supervision, which should be a guarantee of a transparent and due tender.

Amendment protects consumer...

Currently, the prices for mobile communication are very high in comparison to the rest of Europe. Recent research by the Parliamentary subcommittee on Electronic Communication and ICT revealed that mobile phone rates in the Czech Republic are over 50% more expensive than those in the United Kingdom. According to the lawmakers and experts, the amendment should bring along a future reduction of prices for mobile phone calls and internet by up to 50%.

The amendment should, among others, improve the position of customers by making contracts for electronic communications services more transparent. For example, providers of connections will be obliged to contractually guarantee a minimal offered and minimal guaranteed quality of service provided to the customer. Practically, this will mean that the operator will, for example, have to make the customer aware of the fact that the quality of the service provided might temporarily deteriorate due to any technical failures or restrictions. The contract will also have to contain arrangements on compensation for damage and reimbursement of money. Such arrangements will be applied in cases of a failure to comply with the quality of service as stipulated in the contract or in case of any disruptions in providing the service or connection.

In addition, the law protects the consumer by imposing a duty upon entrepreneurs to inform the customer of any changes to the contract at least one month prior to the effective date of such change. The customer must be informed of such a change at the operator’s expense and in a manner allowing remote access. In some cases, the law gives the customer the option to terminate the contract without any penalties as at the effective date of the change, provided that the customer does not accept the new conditions.

In the event that the operator and the customer enter into a contract for a definite period of time, this period may not exceed 24 months if it is the first conclusion of a contract for the provision of the respective service. At the same time however, the operator must allow the customer to enter into a contract for a period of one year at the most. If, however, the customer explicitly requires so, the contract with the operator may be entered into for a longer period according to the parties’ needs.

Any contractual arrangement containing such conditions and procedures regarding the termination of the contract which would discourage the customer from changing the provider of electronic communications services, are invalid by the operation of law.

The ČTÚ will be authorised to impose sanctions on operators in case of any potential violation of the consumer protection rules. For example, a sanction may be imposed upon a company having a significant force in the relevant market for charging inappropriately high prices.