Telecom increases prices, people unsubscribe lines

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The dominant Czech telecommunications operator, Czech Telecom, has announced an increase in prices as of February. Although the overall price hike is somewhat around 3.7 percent, it includes a 70 percent increase of the monthly subscription fee for the standard service whereas long-distance and mainly international calls are cheaper. In reaction to the news, hundreds of people throughout the country reportedly lined up in front of Telecom's customer service centres to cancel their fixed line telephones. Although the general manager of Czech Telecom, Premysl Klima, did confirm that hundreds of people were cancelling their fixed lines every day, the company's spokesman Vladan Crha said many more people were changing the tariff rather than unsubscribing: The change in the tariff policy comes as a little surprise to experts who have long predicted that Telecom will secure a certain revenue from higher monthly subscription fee and narrow the room for competitors before the market is fully liberalised at the end of this year. A high fixed fee paid to the dominant operator will effectively prevent clients from using the services of alternative operators on a call-by-call basis despite competitive prices. Analyst Ondrej Datka from the Patria Finance investment bank believes Telecom is likely to increase its revenues even though many clients may eventually opt out. Another important aspect is the fast developing mobile phone market. The Czech Republic currently has a 70 percent mobile penetration, one of the highest in Europe. This, according to Mr. Datka, will play an important role in people's decision: Despite the competition from mobile phones and the coming liberalisation of the market, Telecom firmly believes that clients will not cancel their lines an masse: