The war over free Internet in Prague, which has raged for the past year, is set to be resolved in Brussels in the coming weeks, following an appeal last spring by local telecommunications providers. The project could provide more than a million people with free Internet access.

Internet users can now access free Wi-Fi connections in parts of Prague 5, 8 and 13. The city had hoped to cover each district by July 2006.

But telecommunications providers, which rely on Internet services as a significant source of revenue, viewed the plan as a threat that would deprive them of thousands of current customers and more than a million potential customers.

"There is no reason that the city should sponsor free Internet in the areas that are fully covered by commercial providers," said Svatoslav Novák, chairman of the Association of the Providers of Public Telecommunication Networks, an umbrella organization for major telecommunications companies. "On the other hand, we don't mind if the government finances the coverage of areas that have not been covered by commercial networks."

In order to block the plan, local telecommunications companies, alongside cable network providers, filed complaints to the Anti-Monopoly Office (ÚOHS) and the EC.

In August, the ÚOHS ruled that the project did not violate fair market conditions, but it also issued a recommendation to the Regional Development Ministry to stop subsidizing free Internet in Prague with European Union funds.

Meanwhile, the EC is set to address the issue later this month. Should Brussels consider the project to constitute illegal government support, it will force the city to drop the plans.

Awaiting financing

The EC ruling is crucial for further development of free Internet.

In late 2005, City Hall asked the Information Technology Ministry for 100 million Kč ($4.5 million) to finance two-thirds of the project designed to establish a free 64 kilobytes-per-second (kb/sec) connection in Prague. The rest would come from City Hall and municipal districts.

However, the IT Ministry decided early this year not to subsidize the project.

The city then applied for money from EU Structural Funds, and it secured 37.3 million Kč for the 89 million Kč project last May.

"That was the biggest EU subsidy we could get," said Ivan Seyček, head of the City Hall's IT department.

But the ÚOHS's appeal to the Regional Development Ministry, which is responsible for allocating money from EU funds, dealt a major blow to the project.

"We need to wait and see what the EC's decision will be," Seyček admitted.

Delayed development

Right now, the best coverage is in Prague 5, which began developing hotspots in March 2005. The wireless signal there covers about 90 percent of the district and serves more than 10,000 people, said Jaroslav Neubauer, spokesman for Prague 5 Town Hall.

Prague 8 and Prague 13 also began testing Wi-Fi networks in late September.

Other districts, however, have been reluctant to subsidize the development of wireless coverage because of concerns about the pending EC decision.

"We originally planned to launch free Internet service last July, but because of legal turmoil we had to postpone it," said Jan Šlajs, spokesman for Prague 1 Town Hall. "We're now waiting to see how the legal disputes will be resolved, and then we'll decide what to do."

Prague 13 spokesman Samuel Truschka said that his district received an inquiry from the EC about how the town hall would run its Wi-Fi network.

Truschka insists that the district's relatively slow 64 kb/sec free connection poses no threat to commercial telecommunications providers, which offer connections on average of nearly 512 kb/sec.

In order to avoid the EC's negative statement, City Hall announced that free Internet could be provided only for accessing government and other public-service sites, while viewing regular commercial sites would incur fees.

"My goal is to simplify and improve public administration and make it possible for citizens to process administrative tasks through the Internet," Prague Mayor Pavel Bém said.

Should the EC rule against the project, Prague 5 officials said they would consider charging fees for accessing the Internet through the district's hotspots. The district could also sell the Wi-Fi network to another operator or find sponsors, said Martin Stránský, Prague 5 deputy mayor.