Communications Conciliation Board Decision
Status of the Disputes
A new Communications Act (40/2001) came into force on December 23 2001. Its practical implementation has been effected by several supplementary decrees, including Decree 30/2001 of the Prime Minister's Office (12.18), which concerns the sharing of internet access revenues. The uncertainties of the new regime have caused disputes between telephone and internet service providers.
Under the Communications Act, telephone service providers (defined as those in possession of a telephone network capable of providing dial-up access to internet services) and internet service providers (ISPs - entities which provide internet access and related data transmission services) must enter into network access agreements to facilitate the widespread availability of internet services. The decree requires that such network access agreements comply with its provisions, including a stipulation that a certain percentage of the fees for internet access through the telephone network be transferred to the ISPs under these agreements.
Matáv, the former state monopoly telephone service provider, sent a draft offer to the ISPs regarding the terms and conditions of network access. The ISPs strenuously objected to the proposed terms and conditions, and in particular to a condition that required the ISPs themselves to collect the percentage of internet access fees allocated to them by the decree. Matáv then announced that it would terminate the availability of the '+51' internet dial-up number if the ISPs failed to sign the proposal within a short timeframe.
The ISPs argued that they could not accept an agreement under which they were to collect the fees charged for internet access services made available through telephone networks. They reasoned that because their billing and collection systems are not designed for this task, the proposed structure would result in a significant increase in costs and would thus jeopardize the viability of the internet access industry. Moreover, the ISPs argued that receipt of their share of the internet access revenues should not be subject to the conclusion of a network access agreement.
When Matáv rejected their arguments, the ISPs urged the Communications Conciliation Board - established by the Communications Act to act as a forum for settling disputes between market players on certain issues, including the provision of network access - to investigate the issue. Interdotnet and GTS-DataNet, two ISPs, brought their dispute with Matáv before the board.
Communications Conciliation Board Decision
On March 7 2002 the Communications Conciliation Board published its principal decision on how internet access fees should be shared between the telephone service providers and the ISPs. The key aspects of its decision are as follows:
- The telephone service provider may not refuse to conclude a network access agreement with the ISPs;
- The telephone service provider must make the +51 number available for internet access;
- The telephone service provider may not unilaterally force ISPs to invoice and collect its share of the fee for the internet access service provided through the telephone network. Unless the parties agree otherwise, the fees for such services must be collected by the telephone service provider; and
- The telephone service provider must transfer a portion of the invoiced internet access fee to the ISPs, as specified in the decree.
The board noted that this decision has no direct effect on existing affairs, but rather serves as guidance to be applied in the case of similar disputes between telephone service providers and ISPs.
On June 5 2002 the Communications Conciliation Board, applying the above principles, issued a final decision in the disputes between Matáv on the one hand and Interdotnet and GTS-DataNet on the other, coming down in favour of the ISPs. The board ruled that Interdotnet and GTS-DataNet are entitled to their share of the internet access revenues from January 1 2002, irrespective of the conclusion of a network access agreement. Similar decisions are expected in pending disputes between local former monopoly telephone providers and ISPs. Although Matáv has stated that it will observe the Communications Conciliation Board's final decision, it is likely that it will take the issue to court.
For further information on this topic please contact Attila Csikai 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 email ([email protected] or [email protected]).