March 14 2001 Decree Regulates Conditions of Use of Frequency Band Dentons | Tech, Data, Telecoms & Media - Hungary Tech, Data, Telecoms & Media Background The Decree The Auction On February 26 2001 Ministerial Decree 5/2001 (2.6 MeHVM) was passed, with effect from February 14 2001. The decree regulates the conditions for use of the 3.5 gigahertz (GHz) frequency band. Background Over the past few years the Communications Authority, the central governmental agency that is responsible for the management of frequencies in Hungary, has experienced heavy market demand for utilization of the 3.5 GHz band for various communications services. However, as the existing regulations failed to provide for the basic conditions under which the 3.5 GHz band could be used, the Communications Authority was not successful in opening it to the public. The conditions of use with respect to this frequency have now been defined by a ministerial decree. With the opening of the 3.5 GHz frequency band, existing service providers will be able to expand the range of their services to include, among other, fixed wireless services, and new operators will be able to enter into the Hungarian telecommunications market. The Decree The decree regulates the use of frequencies in the 3410-3494 megahertz (MHz) and 3510-3594 MHz range. In accordance with the decree, the status of the 3.5 GHz band has been changed in the National Frequency Allocation Table (as defined by Government Decree 221/1999 (12. 29) to reflect that it is now free for designation for the purposes of public telecommunications services. The band consists of five duplex blocks, each 14 MHz wide. The blocks are separated by four separator blocks, each 3.5 MHz wide. Frequencies within the 3.5 GHz band will be designated by means of the auctioning of such duplex blocks. The right to use the designated frequency block will be granted to the winner of the auction for a period of 15 years. The right to use the frequency may not be transferred by the holder to any third party. Any one operator is entitled to obtain only one block of the band. (These principles are in line with Government Decree 8/1997 (3.14), as amended, regarding the licensing of certain telecommunications services.) The separator blocks may be used by the holders of the two neighbouring duplex blocks, in order to handle interference between such neighbouring blocks. The holders of these neighbouring blocks are obliged to enter into an agreement regarding the use of the separator block. The decree defines the exact border of each duplex block and separator block, and sets forth certain technical criteria relating to the radio receivers operating in the 3.5 GHz band. The Auction An auction for the 3.5 GHz band would be the first auction of a frequency band in Hungary. The framework of the auctioning procedure with respect to frequencies, including the 3.5 GHz band, is set forth in the licensing decree of 1997, as amended in 2000. Although the basic principles of the auction procedure were not affected by the 2000 amendment, certain prohibitions relating to the cross-ownership of applicants were introduced and the requirements relating to the content of the auction announcement were expanded. Applicants participating in an auction are required to hold a 'conceptual service licence', which is a preliminary service licence that entitles the service provider to provide a specific service upon designation of the required frequency to it. Applicants are not allowed to participate concurrently in any one auction if (i) one applicant has a 'significant interest' in the other applicant, or (ii) a third party has 'significant interest' in both applicants. Under the decree, an interest shall be deemed to be 'significant' if, directly or indirectly, through ownership interest, voting rights, representation in the management or by contractual arrangement, an entity holds a 25% interest in another entity.In accordance with the licensing decree, the auction for the 3.5 GHz band will be conducted by the relevant office of the Communications Authority. Once an application for such frequency has been filed, the auctioning authority must make a public announcement of the auction within 30 days of the date of the application. The public announcement must include the following information: the place and date of auction; the participation fee; the minimum price and the terms of payment of the final price; and the terms and conditions of participation in the auction. The auction may not be closed so long as new bids are presented. The final price must be paid by the winner within 45 days of announcement of the results of the auction. As yet there is no precedent relating to the auctioning of frequency bands in Hungary. For further information on this topic please contact István Réczicza or Balázs Fazekas at Réczicza Law Firm White & Case LLP by telephone (+ 36 1 488 5200) or by fax (+ 36 1 488 5299) or by e-mail ([email protected] or [email protected]).The materials contained on this web site are for general information purposes only and are subject to the disclaimer.