Skype plans to launch a Czech version of its voice-over-Internet protocol (VoIP) services via the country's second-largest Web portal, Centrum.cz.

The move caps a flurry of major Web businesses launching in the Czech Republic. Within the past two months, search engine Google launched its Czech site, PayPal allowed local users to receive money on their Web accounts, and communications provider ICQ launched on Czech Web portal Atlas.cz.

"We do plan a cooperation with Skype," Centrum.cz spokesman Miroslav Čepický confirmed to The Prague Post Oct. 18. He said, however, that the exact details of the cooperation could only be released later this month.

Skype is a fast-growing Internet communications site that allows unlimited free voice and video communication among Skype users. The program is already available in 27 languages and is used in nearly every country around the world. The company generates revenue through its premium offerings: calls to land lines and mobile phones, voicemail, call forwarding and personalized ring tones and avatars.

Adding a Czech version to its language portfolio is expected to further increase the number of users.

"Although Skype has been available to the Czechs for a while, the introduction of the Czech version should attract even more people," Čepický said. "The Internet is still a new thing to many people here, and so every simplification of its use, such as translating applications into Czech, can make it more user-friendly, and can lead to faster penetration of the Internet to local households."

That logic has held true in at least one recent example. In late September, Atlas.cz announced a steep increase in the number of ICQ users after the Czech version was launched.

The success of Skype will depend on how many people get an Internet connection and sign up for a Skype account, said Wood & Company's analyst Tibor Bokor.

"The most attractive feature of Skype is free calling over the Internet, which is attractive not just for international callers, but also for domestic callers," Bokor said.

The arrival of new major players is expected to toughen competition on the Czech Internet market and also bring about more diversification of services by the major domestic Web portals.

With Google now on the scene, only the market-leading Seznam.cz — which still has about 2 million visitors every day — will be able to survive as a search engine, said Pavel Doležal, director of Internet advertising agency Ataxo. Other Czech portals, including Centrum.cz and Atlas.cz, will be forced to provide additional services.

Centrum.cz's Čepický agreed that the current development of the market prompted the company to alter its development strategy.

"We want to target younger people, and we want to offer them attractive new services," Čepický said. "Internet telephony is just one of them."

Internet calls on the rise

Skype is not filling a void in the market.

The popularity of communications over the Internet is growing quickly in this country, and VoIP services to land lines and mobile phones have been available for some time. VoIP forces dominant land-line operators to embrace the new technology or lose out to it.

Český Telecom announced in the spring that it would enter the field of VoIP for households in the second half of this year.

Also, cable television provider Karneval launched VoIP services in February, prior to its merger with UPC. Alternative operator Volný also added VoIP technology last summer.

Also this past summer, multinational telecommunications operator TeliaSonera International Carrier entered the Czech market with a strategy to focus on developing VoIP services.

The expansion of VoIP providers in this country is expected to significantly boost the number of VoIP users. To date, about 100,000 people in this country make regular calls via the Internet.

Attractive market

For major players such as Skype, Google and ICQ, the Czech market has finally become attractive thanks to the fast penetration of the Internet and the sizeable growth potential.

A 2005 European Union survey marked the country as one of the fastest growing in terms of the number of broadband connections. By September, more than 1 million fast-Internet users were registered, an increase of more than 300,000 users since the beginning of the year.

"People are getting richer, and this creates good grounds for further Internet penetration," Čepický said. "As a result, major Internet companies have begun fighting for their spot on the market."

A study conducted by Factum Invenio in August clearly confirmed that there was further room for Internet expansion. While 80 percent of people aged 15–29 regularly use the Internet, more than two-thirds have no Internet access at home, and most do not own a computer.

Another study by NetMonitor showed that the number of visitors to Czech Web portals is still increasing. The number of visitors to Czech sites rose almost 5 percent month on month to 4.6 million in August.

The increasing visitor makes the Czech market a good place for placing advertisements, said Ataxo's Doležal. The Czech Internet advertising market was worth more than 1 billion Kč ($44 million), and will further grow this year, especially thanks to the arrival of Google.