NKÚ: Czech call and mobile data prices among the highest in Europe

A 2020 auction of radio frequencies did not result in increased competition or lower prices.

Expats.cz Staff

Written by Expats.cz Staff Published on 12.12.2022 14:00:00 (updated on 12.12.2022) Reading time: 3 minutes

The prices of calls and mobile data in Czechia remain among the highest in Europe, and an auction of radio frequencies did not help the situation, the Supreme Audit Office (NKÚ) announced in a press release.

The NKÚ report focused on how the Czech Telecommunications Office (ČTÚ) handled state finances and property between 2018 and 2022.

The inspectors pointed out that the auction of radio frequencies organized by the ČTÚ in 2020 did not meet expectations. The auction was supposed to lead to a reduction in the price of mobile data and to an increase in competition on the market. The prices of calls and mobile data in the Czech Republic were also among the highest in Europe in 2021, and the three existing large operators – Vodafone, O2 Czech Republic, and T-Mobile – divided the frequencies without significant competition.

“As a result, the income from the auction in the amount of CZK 5.6 billion was significantly lower than the ČTÚ had planned. They wanted to get CZK 7 billion from the auction for the state budget,” the NKÚ stated.

The high prices of calls and mobile data are confirmed by a study prepared for the European Commission, as well as an international comparison prepared by the NKÚ based on data from the ČTÚ. The comparison shows, for example, that while in Poland, Germany, and Austria the price of a package containing 100 calls (188 minutes) and 2 GB of data was on average CZK 338, the same package cost customers in the Czech Republic CZK 1,151. The price was higher only in Hungary and by just CZK 17.

Postal prices on the rise despite falling demand

The NKÚ also found that the costs of providing basic postal services doubled between 2013 and 2020, although their volume has halved. While the volume of services decreased from 477.6 million to 247.4 million pieces, the total cost of their provision climbed from CZK 948 million to CZK 1.87 billion.

In 2013, the average unit cost was CZK 2 for the service provided, in 2020 it had already risen to CZK 7.40. At the same time, due to the development of data boxes, a further reduction in the volume of provided basic services can be expected in the coming years. The state will increasingly communicate with citizens electronically, and will therefore use basic postal services to a lesser extent.

ČTÚ, as the administrative and regulatory authority in the field of postal services, compensates the Czech Post from the state budget for part of the net costs for providing basic postal services, up to a legal limit. For 2018–2020, ČTÚ paid CZK 4.5 billion to the Czech Post Office, which is 61 percent of the total CZK 7.4 billion of net costs incurred. A total of 59 percent of these costs are expenses for the operation of the post office.

The number of post offices is conditioned by legislative requirements, including availability, density of coverage, and distance to the next post office. On the basis of the criteria set in this way, in 2015 the ČTÚ calculated that the minimum number of post offices should be 2,100.

However, the government set the minimum number of post offices at 3,200 in its decree, which corresponded to the number of Czech Post offices at the time (3,217). The NKÚ said a change in government regulation could bring cost savings for the provision and provision of basic postal services.

Unauthorized split of a contract

According to the NKÚ, the ČTÚ violated budgetary discipline by making an unauthorized division of a public contract and awarding separate parts directly to specific suppliers. This way, the NKÚ avoided having to offer a public contract, even though the subject of performance of three of these contracts was demonstrably one functional unit. The contracts involved the development of an analysis of the wholesale market of access to mobile services.

"The ČTÚ proceeded in violation of the Public Procurement Act. The suppliers cooperated with each other and delivered the same or similar or related outputs," said the NKÚ.

Would you like us to write about your business? Find out more