30-11-2000

New central bank governor appointed

Definitely the biggest news of the week was the appointment of a new governor of the Czech National Bank. President Vaclav Havel ended weeks of speculation after selecting the current vice-governor, Zdenek Tuma. Mr. Tuma succeeds Josef Tosovsky, who resigned at the beginning of November after 11 years in office.

Several leading politicians immediately protested against the president's choice. While some of them said they were worried about economic growth in the country--Mr. Tuma enjoys the reputation of an anti-inflation hawk--others claim that the new governor wouldn't be independent. Well, earlier this week I spoke to economic analyst Petr Zahradnik from Conseq Finance, and I began by asking him whether the politicians' fears were justified:

Battle for liberal telecommunications market continues

Czech alternative telecommunication operators have been protesting against the conditions for interconnection of networks announced by the monopoly Czech Telecom. The so-called Reference Interconnection Offer governs the conditions for the interconnection of the public telecommunication networks of Czech Telecom and competing operators, which will be allowed to enter the market as of January 1st. The newcomers are complaining about the prices for interconnection, which are higher than the end-user prices of calls within Telecom's network. That means that the other operators will be unable to offer competitive prices. In comparison with average tariffs in the European Union, Telecom's price offer is 5-9 times higher.

I asked the spokesman for the monopoly operator, Vladan Crha, what method Czech Telecom used to determine the criticised interconnection prices:

Despite the optimism on the part of the dominant operator, the competitors are rather sceptical and have appealed to the Czech Telecommunications Office to supervise the method of setting the interconnection prices. One of them, Aliatel, has lodged a complaint with the Czech Anti-monopoly Authority, claiming that Czech Telecom has misused its monopoly position to eliminate competition.

And as observers say it is no surprise that Telecom is fighting hard to strengthen its position, especially amidst growing public discontent over ever rising tariffs.

30-11-2000