New Licensing Regime
Universal Communications Services
Market Position
Communications Authority

A new Communications Act is being drafted by the relevant legislative bodies in Hungary. It is not clear when the new act will enter into force. The act, in accordance with the relevant EU directives, laws and regulations, is intended to liberalize the communications market in Hungary. It will therefore introduce new concepts, institutions and provisions into Hungarian communications legislation. This update is based on the latest draft of the act, dated May 17 2000. The final text of the act may differ from the current draft.

The act is drafted as a so-called 'unified act', which, contrary to existing legislation, will regulate telecommunications services, frequency management and postal services under one single act. However, the government will need to pass several decrees to implement the act.

New Licensing Regime

Any person that meets the requirements defined in the act will be allowed to enter the communications market. Communications services may be provided upon notice to the Communications Authority, or, in certain cases, upon receipt of an individual licence issued by the authority. An individual licence will be required for the provision of the following services:

  • local, national and international (voice) telephony services;

  • mobile radio-communications services;

  • national and regional broadcasting, and dissemination of radio and television programmes; and

  • universal postal services.

These services are currently provided on the basis of a concession (ie, by concession companies on the basis of concession contracts entered into between those companies and the government). In order to ensure a smooth transition from the concession regime to the licensing regime, existing concession companies will be issued an individual licence under the same terms and conditions as defined in their concession contracts, with the exception to provisions relating to exclusivity.

Universal Communications Services

The act will introduce the concept of universal communications services in Hungary. Universal communications services will initially be provided by telephone service providers currently operating under concession in a given territory. The act also provides an option for service providers that meet certain criteria to apply for the provision of universal services. The minister responsible for communication is required to select the universal service providers and to enter into an agreement with them regarding the terms and conditions, including territory and financing, of the relevant services, in accordance with the relevant laws.

If a service provider is required to provide universal service it must:

  • provide access to the service for all customers under the same conditions, regardless of their location;

  • operate one public telephone per 1,000 inhabitants and one public telephone accessible by disabled persons per 2,500 inhabitants;

  • provide information and directory services; and

  • provide free emergency calls.

Although customer tariffs are normally determined by the service providers without any statutory limitations, universal services may be accessed by customers for a pre-determined price set out in the laws.

The communications service providers will be obliged to pay 1% of their net revenues (excluding interconnection costs) into a universal services fund (which will be a separate chapter in the central budget). The fund may be used exclusively for the purpose of promoting universal services. A universal service provider may apply for compensation of reasonable costs that are incurred in the course of providing the universal services. The basis for the calculation of these costs will be the service provider's net operating costs. A service provider with a market share that exceeds 50% on the basis of net revenues may not apply for compensation from the universal service fund.

Market Position

The new act contains new regulations relating to market players with significant market position. Under the act, a market player is be deemed to have significant market position if it meets any of the following conditions:

  • It has at least a 25% market share in a given territory;

  • There are no substitutable services available under similar conditions;

  • Its revenues are significantly higher than the market average; or

  • It has control over the buildings and equipment through which customers are accessed.

A market player with significant market position must enter into interconnection agreements with other communications service providers if their requests for interconnection are reasonable. A player with a significant market position may not discriminate between other providers (including its affiliates) as regards the terms under which it will permit them to interconnect.

Interconnection fees applied by significant market players must be approved by the Communications Authority. The interconnection fees are subject to certain requirements set forth in the act:

  • They must be determined according to clear criteria;

  • They must be determined on a cost basis;

  • The costs on which they are based must be clearly indicated in the service provider's books; and

  • The service provider may not discriminate among the parties interconnecting with it.

The Communications Authority is entitled to supervise the interconnection fees applied by the communications service providers and may require a service provider to apply a different fee in compliance with the act.

Communications Authority

The Communications Authority, the body in charge of supervision and control of the telecommunications sector in Hungary, is expected to be slightly reformed in order to be able to fulfill its new duties under the act. Like the existing situation, the Communications Authority will be a central government authority under the supervision of the government, with regional branches, and it will be independent from the market players. The Communications Authority will perform certain official, professional and coordinating duties, set out in the act and other laws.


The importation and distribution of communications, radio and postal equipment will be liberalized under the new act, as long as this equipment fulfils safety and electromagnetic compatibility requirements. In the case of certain classes of equipment, the equipment must meet further requirements, including the following:

  • be compatible with other network components;

  • be suitable for use in the public network;

  • protect personal data; and

  • be suitable for use by disabled persons.

A declaration of conformity of the manufacturer, importer or distributor of the equipment, or an eligibility examination must prove that the equipment meets all these requirements.

For more 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.