The prices for calls and mobile data in the Czech Republic are one of the highest in Europe. Frequency auctions did not lead to a reduction of the prices.
Press release on audit No 22/03 – 12 December 2022
The SAO focused on how the Czech Telecommunication Office (CTO) handled state funds and property between the years 2018 and 2022. Although the audit did not identify weaknesses in terms of effectiveness and cost-effectiveness in selected financial management areas, the auditors pointed out that the radio frequency spectrum auction organised by the CTO in 2020 did not meet expectations. It was expected, inter alia, that the auction would reduce the price of mobile data and increase competition on the market. The prices of calls and mobile data in the Czech Republic continued to be among the highest in Europe in 2021, with the three existing large mobile operators sharing frequencies without significant competition. As a result, the auction revenue of CZK 5.6 billion was significantly lower than planned by the CTO. The CTO wanted to raise CZK 7 billion from the auction for the state budget. Furthermore, the SAO found that the cost of providing basic postal services had doubled between 2013 and 2020, even though their volume had halved. According to the auditors, the CTO committed a breach of budgetary discipline amounting to CZK 4.7 million by unduly dividing a public contract into legal and consultancy services and awarding parts of it directly to specific suppliers.
The high prices of calls and mobile data are confirmed by a study prepared for the European Commission, as well as by an international comparison carried out by the SAO on the basis of CTO’s data. The comparison shows, for example, that while in Poland, Germany and Austria the price of a bundle of 100 calls (188 minutes) and 2 GB of data cost on average CZK 338*, customers in the Czech Republic paid for the same bundle CZK 1,151. A higher price for the bundle (by CZK 17) was in Hungary.
The CTO, as the administrative and regulatory authority in the field of postal services, compensates from the state budget to the Czech Post part of the net costs of providing so-called basic postal services up to the legal limit. For the years 2018–2020, the CTO paid CZK 4.5 billion to the Czech Post which represents 61% of the total of CZK 7.4 billion of net costs incurred during that period. In total, 59% of these costs are made up of expenses for the operation of post offices. The number of post offices is subject to legislative requirements for, inter alia, availability, coverage density and distance to the next post office. On the basis of the criteria thus established, the CTO calculated in 2015 that the minimum number of post offices should be 2,100. However, by means of a decree, the government fixed the minimum number of post offices to 3,200, which corresponded to the number of Czech Post establishments at the time (3,217). Amending the Government Regulation could result in saving costs for the provision of basic postal services.
The auditors also found that the cost of providing basic postal services had doubled between 2013 and 2020, even though their volume had halved. While the volume of services fell from 447.6 million to 247,4 million units, the total cost of providing the services increased from CZK 948 million to CZK 1.87 billion. In 2013, the average unit cost was two Czech crowns per service provided, rising to CZK 7.40 in 2020. Given the development of data mailboxes, a further reduction in the amount of basic services provided can be expected in the coming years. The state will increasingly communicate with citizens electronically and will therefore not use basic postal services to such an extent.
As regards the unduly division of the public contract, the auditors found that the CTO concluded contracts within 19 days for the development of an analysis of the wholesale mobile access market with five suppliers directly, i.e. without a tender, even though the subject matter of the performance of three of these contracts was demonstrably a single functional whole. The CTO thus acted in breach of the Public Procurement Act. The suppliers cooperated with each other and delivered the same or similar and/or related outputs.
Price levels of mobile data and calls in the EU in 2021
* Average mobile operator bundle prices in selected countries in 2021 (CZK per Purchasing Power Parity/month)
Communication Department
Supreme Audit Office