Internet and e-commerce industry in Czech Republic

One of the most stable and prosperous of the post-Communist states today is the Czech Republic. Since 1999 the country has been a member of NATO and since 2004 it has been a European Union participant. The Czech Republic is a country with a developed, high-income economy with a GDP per capita of 80% of the EU average. Substantial income The Czech economy gets from tourism. And we are to consider now what broadband and e-commerce infrastructure in the country looks like.

According to Economist Intelligence Unit the Czech Republic ranks 3rd in the European Union for growth of broadband sector and Internet related technologies in terms of the GDP. Internet in the Czech Republic became commercially available at the beginning of 2003 by then-monopoly operator Ceský Telecom trough ADSL service. The company offered internet service with basic speeds from 192/64 kbit/s to 1024/256 kbit/s. At the very beginning ADSL didn’t succeed a lot due to overpriced plans: about €350 per month for 1024/256 kbit. Later, at the beginning of 2004, local loop unbundling began, and alternative operators started to support ADSL (and also SDSL). That, in compliance with later privatization of Cesky Telecom, impacted prices to move down. July 2006, Cesky Telecom was renamed to Telefonica O2 Czech Republic. ADSL2+ has started to be offered in many variants, both with data limit and without with speeds up to 10 Mbit/s since January 2006. Currently, the typical ADSL connection in Czech Republic is available at 2048/256 kbit/s, and from year 2008 it’s also accessible at 8192/512 kbit/s, with data limits of several GB. Speeds, data limits, Fair User Policy and overbooking depend on a certain ISP.

Cable internet is gaining more and more popularity with its higher download speeds from 2 Mbit/s up to 30 Mbit/s. The largest ISP, UPC, delivers its service in Prague, Brno and Ostrava.

Internet in the country is developing rapidly, thus 399.1% usage growth for the period of 2000-2008 is evidenced. If in 2000 the volume of Internet users in the Czech Republic made up less than 10% with the total of 1,000,000 users, by 2008 the figures surged significantly reaching 50% of the population with 5,100,000 people connected to the web. 

Thus, the Czech Republic has the most Wi-Fi subscribers in the European Union, with 350,000 in 2007, and by the beginning of 2008, there was over 800 mostly local wireless ISPs (WISPs). That happened as ADSL service appeared to be very expensive for the average employee at the beginning, that led in 2003 to the appearance of an enormous number of WISPs (based on 802.11 Wi-Fi technology) offering reasonable priced monthly-plans. The most popular of them are: CZFree.Net, Neutral czFree eXchange, including variety of local members such as Czela.net, ?elákovice, PilsFree.net, etc., Svobodna Praha, Gavanet, AirDump.Net, NobodyNet, PVFree.Net. 

As for the mobile Internet, it’s also very popular, with the variety of planes based on GPRS, EDGE, UMTS or CDMA2000, provided by all three mobile phone operators, T-Mobile, Vodafone, Telefonica O2, and U:fon. The average cost for an unlimited mobile internet plan ranges around 25 euro/month. Various traffic shaping (monthly data limits after which the speed dramatically decreases) are used under common name "Fair Use Policy".

The places people connected Internet from are usually their homes, work places, education places and some public Internet accessible places. Thus, in the Czech Republic home access is leading with 31% of users, while connection at work makes up around 20%. And educational and public places connections show 8.6% and 3.5% as of 2006, Internet Intelligence Unit reports. 

Many Czech ISPs are offering free Internet access. Thus, key companies supplying free Internet connection within the countries Internet access market include Telefonica O2 CR, GTS Novera, UPC, and Nextra. 

As for the goals Czechs use the web, mainly people apply to the Internet in order to send emails, that is over 37%, while in 32% of the cases users are looking for information about goods and services and 19% are reading online newspapers or magazines. 9% Czechs use Internet for telephoning or videoconferencing, 12.5% - are playing or downloading games and music, 6.5% - are listening to the web radio or watching web TV. And around 10% of the total Internet users in the Czech Republic connect the Web for e-commerce, and e-banking particularly. 

So, let’s turn to the e-commerce sector in the Czech Republic. Online commerce development in the country appeared to be much slower than in most of the countries of Western Europe. However, Czechs are well-educated and computer competent. But there are a lot of obstacles and difficulties in the Internet connection, such as high cost of access, low personal-computer penetration and the slow growth of the financial applications needed to manage e-commerce, mainly those that are related to credit cards and more-sophisticated banking services.

The main items purchased via the Internet in the Czech Republic are audio recordings, books, software and electronics. The largest e-commerce web site in the country appeared to become Internet Mall. The other important merchants, like Electroworld and Datart, that are both providers of electronics and home-appliance, have also turned to the e-commerce. i-legalne.cz is also one of the most successful providers delivering copyrighted music legally for a fee. 

In early 2000 US Corporation GE Capital Leasing became the first leasing company in the Czech Republic to launch its service over the Internet. The company reported that currently 90% of the car sellers it deals with use the web for their transactions, and some Individuals also may use this service to arrange car financing.

As for the electronic banking service, all the major banks in the Czech Republic provide with e-banking. Thus, the first and largest exclusively online bank is eBanka (formerly Expandia). In the year 2004 the bank, launched in 1998, started offering online services in a move to support small and medium-sized businesses, by opening several branches to help bring in customers afraid of dealing with a bank strictly via the Internet, and, additionally, to make it easy for its core retail clientele. Direct banking, including online and mobile-phone services, has become extremely popular among the customers of traditional banks, and also amid corporate clients.

Thus, being one of the European leaders, the Czech Republic doesn’t slow down its development and improvement in ICT and e-commerce sphere. A lot of new ISP’s are appearing, offering the newest and advanced services, at the same time variety of e-commerce businesses are appearing, while number of large and popular businesses are successfully turning to the Web.