Recent and Future Changes
Current Regulatory Framework
Mobile Communications

Recent and Future Changes

Hungarian telecommunications regulations have recently been brought into line with EU law. For example, the import and distribution of telecommunications devices bearing 'CE' (ie, European Union) marking were fully liberalized last year. Internet voice services may now also be provided by companies other than MATÁV (the national telephone company), formerly the sole telecommunications service provider in Hungary.

However, further harmonization is still required in certain fields. To this end the government drafted a new telecommunications act at the end of 1999. The draft is under review and the new act is expected to be passed later in 2000. It will introduce a liberalized telecommunications market that is fully compliant with the relevant EU directives and other requirements. Accordingly, MATÁV will no longer monopolize the provision of domestic long-distance voice telephone services and transmission of international calls.

Current Regulatory Framework

The Hungarian telecommunications market is currently regulated by a telecommunications act that was adopted in 1992. As the telecommunications market is regulated, many telecommunications services may only be provided by entities in possession of an appropriate concession or licence.

Certain telecommunications activities in Hungary are subject to concession. These activities include the following:

  • public (fixed-line) telephone services;

  • public mobile cellular telephone services;

  • nationwide public paging services;

  • nationwide and regional distribution and broadcast of public service radio and television programmes, with the exception of specialized programmes.

These activities may only be performed by concession companies established for the purpose of providing the service on the basis of a concession contract with the Ministry of Transport, Communications and Water Management. The most relevant telecommunications companies operating under concession are MATÁV, the local telephone operators (which currently possess monopolies in the regions in which they operate) and four public mobile communications operators.

With the exception of telecommunications services subject to concession, anyone can provide public telecommunications services on the basis of an official service licence, which is issued by the Communications Authority of Hungary. Such services include:

  • leased line services;

  • data transmission services; and

  • cable television services.

  • Provision of non-public services (ie, provided to a closed group of users) need only be reported by the service provider to the Communications Authority.

    Mobile Communications

    Until the end of 1999 three operators were competing on the Hungarian cellular mobile communications market. These were Westel 450 in the NMTi 450 analogue band, and Westel 900 and Pannon GSM in the Global Service for Mobile Communications (GSM) 900 digital band. In 1998 the government decided to allow a new operator to enter the market in order to increase competition and consumer satisfaction.

    Following an open tender issued by the Hungarian government, Vodafone was awarded the new concession. It entered into a concession contract with the Ministry of Transport, Communication and Water Management on October 8 1999 for the provision of GSM900/1800 public mobile communications services. Vodafone started commercial operation in December 1999.

    Vodafone has indicated that it expects to acquire a significant market share rapidly in the Hungarian mobile telecommunications market. Its goal is a 10% market share by the end of 2000, rising to 30% by 2003.

    The ministry also awarded a concession for the provision of GSM1800 public mobile telecommunications services to the incumbent GSM900 operators. Each of the three digital cellular operators will have an equal bandwidth of frequencies (ie, 8 megahertz (MHz) bandwidth in the GSM900 band and 15 MHz bandwidth in the GSM1800 band) until the end of 2003.

    In addition to the equal bandwidth of granted frequencies, a number of conditions have been attached to the new concessions in order to ensurethat new market entrants are treated fairly. The incumbent GSM900 operators have agreed to give Vodafone the right to roam their networks until 2004. The new concessions of the incumbent GSM operators permit them to use GSM1800 frequencies only one year after Vodafone has actually started roaming in their networks.

    The terms upon which the mobile communications operators operate are expected to be substantially affected by the provisions of the new telecommunications act.

    For further information on this topic please contact István Réczicza or Balázs Fazekas at R├ęczicza 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]).
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