RESTRICTED
WORLD TRADE S/NGBT/W/3/Add.18/Rev.2
18December 1995
ORGANIZATION(95-4139)
Original: English Negotiating Group onBasic Telecommunications
COMMUNICATION FROM HUNGARY
Response toQuestionnaire onBasic Telecommunications
Revision
TheattachedcommunicationiscirculatedattherequestofHungarytoMembersoftheNegotiating
Group onBasic Telecommunications. Itreplaces document S/NGBT/W/3/Add.18/Rev.1
_______________S/NGBT/W/3/Add.18/Rev.2
Page2
PartI
Definition andMarket Structure
Definitions
1. What areconsidered tobebasic telecommunications under yourregulatory regime? Howare
they defined? How does your regulatory regime defined thatwhich isnotconsidered basic
telecommunications?
TheHungarian regulation doesnotdefine thebasic telecommunication. Theconcept ofbasic
telecommunications services isusedinstead. Theconcept isdefined incaseofpublic networks thata
basic telecommunications service isrespected assuchifitsusage isensured forthesubscriber bythe
subscriber 'scontract without anyadditional agreement.
Iftheuseofaservice isconditioned byfiling anadditional claim and/or byobligation of
additional fee,thatservice cannot beconsidered basic service, butitfallsintooneofthecategories
ofthe"liberalized services".
TheTelecommunications ActNo.:LXXII. of1992 isstrongly service-oriented andthusthat
partoftheGATS 'sdefinition which takesthetransport network forthepartofbasictelecommunications
doesnotcoincide withtheHungarian terminology. However, forthepurpose ofthisquestionnaire,
theconcession bound services areconsidered tobebasic services. Ofcourse, thetransport network
candeliver basic services aswellasother services.
There arenomonopolies intheHungarian telecommunications, butthesubsectors providing
services onthebasis ofstateconcessions areexclusive bydefinition. These aretheconcession bound
services, which arethestate'sresponsibilities toprovide:
- public telephone
- mobile radiotelephone
- nation widepaging system
- nation wideandregional distribution andbroadcasting ofpublic
service radio andtelevision programs
Withtheexception oftheconcession services defined above, other telecommunication services
areliberalized, inparticular national public switched datatransmission services, maybeperformed by
anyperson subject totheservice license requirements setforthintheAnnex oftheTelecommunication
Actasfollows:
Definitions related tothetelecommunications services
Telecommunications
Aprocess whereby signals, signs, texts, pictures, voice ormessages ofother nature generated
inanyconceivable andmeaningful formcanbetransmitted, either viacable orbyelectrical oroptical
means, orbyradio orother electromagnetic system orthrough acombination thereof, tooneormore
user.S/NGBT/W/3/Add.18/Rev.2
Page3
Telecommunications Services
Abusinessactivitywherethesupplierperformstelecommunicationsandrelatedsecondaryservices
forthird parties against thepayment ofafeeormakes hisnetwork available forthispurpose either
inthepublic sector (bound toconcession) orinthecompetitive sector
Public Telephone Services
Aservice provided bythesupplier forthetransmission ofvocal messages through PTNagainst
thepayment ofafee.PTSmayinclude international, domestic andlocaltelephone services.
(a) International telephone services aretelecommunication services bound toconcession
where thesupplier provides connection tointernational service access points.
(b) Domestic telephone services aretelecommunications services bound toconcession where
thesupplierprovidesconnectionthroughorwiththebackbonenetworkunderagreements
made withusers.
(c) Local telephone services aretelecommunications services bound toconcession where
thesupplier executes subscriber agreements withusers inlocal networks orprimary
areas. Theconcession companies authorized toperform LTS shall alsoexecute
agreements fortheuseoftheservices.
Public Mobile Radio Telephone Services
Direct realtime transmission ofelectromagnetic signals through public switched radio
telecommunications network tousers freely moving inanextensive space, against thepayment ofa
fee.Signals canbetransmitted between mobile terminals connected tothenetwork and/or between mobile
terminals andusers ofpublic telephone services.
Public Telecommunications Services
Publicservicesprovidedbytelecommunicationsorganisationsthroughthepublictelephonenetwork
where thestate, assuming responsibility fortheavailability ofsuchservices toallusers, defines the
special relevant liabilities andrights ofthetelecommunications organisations.
Telegraph Services
Aservice where theprovider receives thenextofthemessage fromtheclient, either through
thetelecommunications network orbymeans ofapostal service operator, transmits itover the
telecommunications network, thendelivers itbyoperator, transmits itoverthetelecommunications
network, thendelivers itby:
(a) apostal service provider (oranyother entrepreneur);
(b) telephone;
(c) telex;
(d) telefax;
(e) anyother way.S/NGBT/W/3/Add.18/Rev.2
Page4
Program Distribution
Transmission ofsignals provided byprogram suppliers totheradio andtelevision broadcasting
station andother program transmission networks.
Broadcasting andProgram Transmission
Onewaywireless telecommunication process totransmit sound, picture orother programs to
users withcompatible receiving sets.Thenumber ofusers isvirtually unlimited.
National Broadcasting andProgram Transmission
Aprogram service covering arange including notlessthan50percentofthepopulation.
Regional Broadcasting andProgram Transmission
Abroadcasting orprogram transmission service where therange ofreceiving ordistribution
covers theadministrative areasoftwoormorelocalgovernments ofvillages, citiesormunicipal districts,
whether adjacent orgeographically separate.
Telecommunications Service Providers
Entities, organisations without anentity andprivate entrepreneurs, orconcession companies
incaseofpublic telecommunications services bound toconcessions, thatprovide telecommunications
services tothethirdparties (supplies, users orsubscribers).
Leased LineServices
Telecommunications services where thesections ofcircuits interconnecting points ofaccess
toservices aremade available byaservice provider (operator) fortheperformance oftelecommunications
activities inreturn forthepayment ofafee.
Definitions related totelecommunications networks
Telecommunications Network
Asettelecommunications equipment interconnected byrealorvirtual links whereby signals,
written texts, pictures, sound orother messages canbetransmitted overoneormore routes between
specific services access points. Interconnection means connection established between compatible
telecommunications network. Connection means connection ofequipment tothetelecommunications
network forthepurpose oftelecommunications services.
Public Telephone Network
Asystem ofservices access points, transmission paths andswitching equipment interconnecting
theabove elements which enable anyperson whomaywishtoutilise itunder equal terms andconditions
theterminal equipment connected toaservice access point fortheexchange ofinformation withthe
userofanother terminal equipment connected toanother service access point.S/NGBT/W/3/Add.18/Rev.2
Page5
Telecommunications Backbone Network
Abasic partofthetelecommunications network thatiscapable ofthetransmission ofanykind
ofthetelecommunications signals. Theservices ofthisnetwork arenotprovided directly forsubscribers
toitensures access, atadefined signal transmission rate,trough nodes, fornetworks thatprovide
subscribers services under contracts. Thebackbone network extends uptoservice access points atthe
exchanges ofprimary areas asdefined inthemaster technical plans.
Leased Lines
Setofsections ofcircuits interconnecting points ofaccess tointernational anddomestic services
(telecommunications equipment). Leased linesinclude transmission routes, interface access points for
thepurpose oftestsonlyandareusedtoestablish connection without signal routing.
Dedicated (Special Purpose Networks)
Telecommunications networks separated physically, functionally orinterms ofapplication from
othertelecommunications networks implemented andoperated byspecially license exclusive usergroups
usedforinternal telecommunications traffic ofmembers.
Local Telephone Company
Business organisation formed bynatural persons andentities including thecompetent local
government interested intheuseoflocalpublic telephone services fortheimplementation (construction
anddevelopment) ofpublic telecom networks capable ofsuchservices.
Primary Area
Asegment ofthepublic telephone network where thebackbone network isnotrequired for
performing theservices under subscriber agreement ofestablishing connection between anytwoservices
access points.
2. Does yourregulatory regime distinguish between networks (facilities) andservices indefining
basic telecommunications? Ifso,howisthisdistinction made?
Theregulation distinguishes between thepublic telecommunications network andthepublic
telecommunications services (concession bound services) inthedefinition oftelecommunications service
categories andnospecial distinction ismade between basic andvalue added service .
3. Arethereanynetworks orservices which would beconsidered tobebasic telecommunications
within thescope oftheGATS definition which would notbesoconsidered byyournational definition?
Ifso,whatarethey?
Seereply toquestion 1.
Market structure
4. Listanybasic telecommunications sub-sectors orcategories which arereserved tosupply by
monopoly orexclusive supplier(s).
According totheTelecommunication Acttheconcession bound services reserved services
canbeclassifiedasreservedservices.Otherservicesareliberalized.TheGovernmentDecreeonlicensingS/NGBT/W/3/Add.18/Rev.2
Page6
5. Does yourregime designate oneoralimited number ofmonopoly/exclusive suppliers tosupply
anybasic telecommunications nationally, onageographical basis, orforparticular market segments?
Howisit(orthey)constituted (e.g.government ministry oragency, wholly government-owned corporate
entity, company partly owned bythegovernment, privately owned)?
Theconcessions canbeobtained bytheCompetition Actof1991andtherulesofcompetition
areregulated bytheDecree oftheMinister No.:25/1993 (IX.9.) .Intheregional (localnetworks)
theownership structure ofconcession companies arethecompetence oftheMinister. Thecompanies
remaininginlongtermstateownership,e.g.thoseentitledtotheNationalConcessionCo.,areexceptions.
(ActLIIof1992, andtheGovernment Decree No.:126/1992 (VIII. 28.)).Forownership limitations
seereply onanswer 6.
6. Isforeign equity participation orownership ofmonopoly orexclusive suppliers permitted?
Ifso,whatisthemaximum percentage share allowed andwhatisthecurrent levelofidentifiable foreign
participation?
Yes.TheGovernment granted bothforthesuccessor company oftheformer monopolist supplier
(MAT ÁVCo.,nowNational Concession Co..) and18other newservice providers areauthorized for
providinglocal(socalledprimarydistrict)servicesbyconcession.OnlytheNationalConcessionCompany
isauthorised fornational andinternational longdistance service. Theconcession expires in25years
(beginning in1993), andforthefirsteight years aterritorial exclusivity isguaranteed bythestate.
Thebiggest company, National Concession Co.hasabout 33%offoreign share (30.1 percentofthe
shares obtained byaconsortium consisting ofDeutsche Telecom andAmeritech International and2.9per
centoftheshares belongs toIFCandEBRD), theremaining majority oftheshares arestillheldby
theState. Themaximum foreign participation allowed inbytheHungarian regulation is25percent
+1vote.
Inthelocalloops, theconcession holders 'share isbetween 49and75%. Themaximum foreign
participation allowed bytheConcession Actis75%. National Concession Company (NCC) became
concession holders in36of54primary districts while other companies havewonintheremaining 18
districts.
7. Ifyourregime isgenerally characterised asnotpermitting competition, please indicate:
(a) ifcertain activities orcategories ofwhatcould beconsidered basic telecommunications areto
reserved tothemonopoly, e.g.facsimile, telex, datatransmission, mobile, satellite services;
Thecompetition isnotallowed inconcession bound services.
Inthefieldofvoice telephony till2002 forinternational andlongdistance services andfor
localservices 2003.
Inthefieldofmobile telephony three licences (twoGSM andoneNMT 450)andforpaging
twolicences were issued asfollows:
In1991, MATAV andUSWest established ajointventure (Westel) fora450MHz mobile
cellular communications system. Thesystem achieved fullnational coverage in1993. In1993, the
Ministry issued twoconcessions fortheestablishment of900MHz digital, GSM systems.
Theconcession contract called forstart-up byApril 1,1994, withcoverage forBudapest. In
thesecond phase themajor highways must becovered. Total coverage must beachieved bytheend
of1995. TheGSM system willallow future roaming intoother European countries where GSM isused.S/NGBT/W/3/Add.18/Rev.2
Page7
Demand hasexploded forthenewmobile cellular service. Inmost cases, mobile phones are
being usedasasubstitute forland-line communications. During thethree years ofoperation, Westel
450,forexample, hasnearly achieved fullcapacity (56,000 subscribers). Recently, thereareabout 86,000
mobile subscribers.
Acompany called Operator Hungaria provide paging services inHungary. Operator Hungaria
Kftis51percentowned byAntenna Hungaria and49percentbyTDF(France Telecom subsidiary).
Operator Hungaria provides paging service ononeoftheFMbroadcasting channels withnation-wide
coverage.
InFebruary 1994, theMinistry issued atender fortwoconcessions fortheinstallation and
operation ofnational paging services equivalent totheERMES (European Radio Message System).
Thetwoconcessions wereawarded to:"Magyar Paging", aconsortium comprising Gerard ACSales
andLeasing CO(USA) andMicros stemTelecom (Hungary); "EasyCall Hungaria", aconsortium of
Matrix Telecommunications Ltd.(Australia) andTelecom Finland.
Thefacsimile, telex, datatransmission andsatellite services areliberalized.
(b) arethereareanyother means through which foreign suppliers ofbasic telecommunications are
ormay participate inthesupply ofbasic telecommunications, e.g. sub-contract or
build-operate-transfer arrangements withthemonopoly suppliers.
TheNational Concession Co.andservice providers inthelocal areanetwork canconclude
subcontract withforeign suppliers. Only exception wasconcerned thesystem selection tender related
todigitalswitcheswhichwasissued1990.TheErikssonAXEandSiemensAWSDswitcheswereselected.
From 1996 onthebasis oftheLawonPublic Procurement (1995), theNational Concession Co.and
theLTOs havetheirownchoice.
8. Please listandbriefly describe anyintergovernmental agreements, bilateral orotherwise, that
yourgovernment hasentered intorelating tothesupply ofbasic telecommunications networks and
services.
- ITUInternational Telecommunications Union;
- Constitution andConvention (Geneva, 1992);
- ITUInternational Radiocommunications Regulations;
- IUInternational Telecommunications Regulations
(Ratification isexpected in1996).
Hungary isaParty ofEUTELSAT, Intelsat andINTERSPUTNIK. Thesignatory office isthe
HUNSATssociationwhichisaconsortiumofMATÁVCo.andAntennaHungariaRadiocommunications
Co.S/NGBT/W/3/Add.18/Rev.2
Page8
PartII
Competition
(i) Overview
(ii) Modes ofsupply
(iii) Market access
(iv) National treatment
(v) Licensing
A. Sub-sectors
(a) Public Switched Telephone Service (Concession Bound Service)
(i) Overview: seeanswers inPartI.
(ii) Modes ofsupply: Inthefieldofvoice telephony outofthecountry, there areserviced
realised viatheinternational network:
(a) provision ofservice from oneMember 'sterritory toanother Member 's(call
toaforeign subscriber);
(b) provision ofservice onaMember 'sterritory fortheuserofanother Member
(transport ofthecallfrom abroad)
(d) Provision ofservice onaMember 'sterritory foracitizen ofanother Member
(TeleCard service).
Theinternational callsarecarried outviatheinternational circuits.
Thesatellite services suchasVSAT isliberalized.
Liberalized service concerning theinternational service isthe"Hungary Direct" service enabling
callsmade from abroad toaccount ofthe(Hungarian citizen) caller. Another introduced form isthe
TeleCard service offering thepossibility ofinternational callsmade byforeign citizens inHungary to
theirbankaccount.
Therefile andhotlineservice isnotallowed.
(iii) Market access: Thisservice should onlybeprovided byaconcession holder. For
liberalized services nobarrier oftrade.
(iv) National treatment: Thesame restrictions arevalidfortheareaoftelecommunications
asthose forevery foreign investment inHungary.
(v) Licensing: Type orindividual approval ofimplemented technical devices ismandatory
onthebasis ofobligatory Hungarian standards including domesticated standards of
theEuropean Telecommunications Standardisation Institute (ETSI). Newtrackprojects
should havenetwork licence too,andatlast,theswitching andtransmission equipment
should getapermission forimplementation. TheHungarian LawonStandardisation
giveaframework totheEuropean Standard Setting procedure.S/NGBT/W/3/Add.18/Rev.2
Page9
Theservice provider should keeptheprescribed quality levelwhich ischecked bythe
Communications Authority (CA) periodically. Incaseofdeterioration ofservice the
Ministry orders atariffreduction; inajustified case,canevenwithdraw theconcession.
Thelegal harmonizaion theHungarian licensing regime isdone trough European
Telecommunications Office (ETO) asHungary signed theinstrument onso-called
one-stop-shopping licensing procedure.
Liberalized services
(b) Public packet switched dataservice
(i) Overview: Themarket ofthesubsector isliberalized. Recently there isonenational
network, partly stateowned.
(ii) Modes ofsupply: Inaddition tothenational supplier, several private networks are
connected tointernational service provider 'snetwork (e.g.Internet).
(iii) Market access: National treatment exists.
(v) Licensing:Inrespectofequipmentandnetwork,seesubsection(a)(v).Theestablishment
ofHungarian Name Registration Office isinprogress. Starting ofitsactivity isexpected
atthebeginning of1995.
(c) Public circuit switched dataservice
(i) Overview: Themarket isliberalizd.
(ii) Modes ofsupply: Forthetimebeing, only onenational supplier, theNCC exists.
(iii)-(v) Seesection (b).
(d) Telex service
(i) Overview: Themarket isliberalized, butactually thereisonlyonenational public telex
network, owned bytheNCC.
(ii)-(v) Seesection (b).
(e) Telegraph service
Seesection (b).Therelated postal service istheonlyservice provider forthetimebeing.
(f) Facsimile service
Themarket isliberalized. Seesection (d).
(O) Others
National andregional distribution andbroadcasting ofpublic radio andTVprogramsS/NGBT/W/3/Add.18/Rev.2
Page10
(i) Overview: TheGovernment hasnotgranted concessions fornational distribution
broadcasting ofpublic radio andTVprograms astheMedia Acthasnotpassed the
Legislation.
Thecable TVmarket isliberalized. InBudapest awireless distribution network called
"AM-Micro" isoperated. Foreign payTV(movie channel) ispresent ontheHungarian
market.
(ii) Modes ofsupply: Thenation-wide radioandTVprograms aredistributed bytheAntenna
Hungaria Radiocommunications Co.
(iii) Market access: Theaccess tothemarket isbarred untilthepassing theMedia Act.
(iv) National treatment: Foreign equity participation isexpected.
B. Categories
Local/long-distance/international
1. How arelocalanddomestic longdistance distinguished ordefined?
Thetelephone connection islocalifithasbeenestablished within onelocality or-incaseof
several localities within thefeeding areaofalocalexchange. Theconnection islongdistance/national,
ifitcrosses theborders oflocalarea, butdoesnotcross theborder ofthecountry.
2. Arethere anyregulatory orother distinctions between domestic (local andlongdistance) and
internationalnetworksandservicesandbetweenthesuppliersofbasictelecommunicationsinthesemarket
segments? Ifso,whatarethey?
Theregulation makes adistinction between domestic long-distance andinternational services
asfollows:
(a) onlytheNational Concession Company isauthorized forproviding international and
long-distance services till2002.
(b) localtelephone companies areauthorised forproviding service onlyintheprimary areas
till2003.
Theregulation restricts thenumber ofservice providers foreightyears ontheconcession bound
service:
- international andlong-distance service, onlytheNational Concession Co.;
- fortelephony, foreachprimary district -one;
- forGSM radiotelephony, two,andanalogue radiotelephony onenation-wide licence;
- forERMES paging network, two,andforanalogue paging onenation-wide licence.
Incaseofdatatransmission, program distribution, intheirwireless network, thefrequency
management imposes restrictions; forthelack offreefrequency bands.S/NGBT/W/3/Add.18/Rev.2
Page11
Wire-based
(i) Overview: The answer actually coincides with that given forlocal/long
distance/international withtheaddition thattheHungarian regulation usestheexpression
"track projected" rather than"wired", because thenational backbone network contains
microwave linksaswellasandoptical fibres oneswhich generally fallintothesame
category asthewired tracks. Their leasing byother service providers isregulated in
respect offeesofusage. Otherwise thefrequency restrictions should beconsidered for
thewireless tracks. Ofprivate networks, theTelecommunications Acthighlights the
corporate ones, theowners ofwhich areauthorised toleaseoutcircuits orpartsofthe
network.
(ii) Modes ofsupply: Seetheanswers given insection A.Forinterconnection ofnetworks
ofdifferent suppliers, prescriptions oftheFundamental Technical Plans should be
considered.
(iii) Market access; When building track-project connections, ifitisbeing builtnotbythe
National Concessionaire Company, anditcrosses theborder ofthelocalnetwork, the
investor should enter anetwork contract withtheNational Concession Co.which
stipulates thetraffic-dependent feesandtheresponsibilities. Theterminal points ofthe
track should belocated inaccordance withtheFundamental Technical Plans.
(iv) National treatment: Restrictions related toforeign investors areenforced through the
concession contracts. These arevalid, however, onlyfortheservices andarenotvalid
forinvestments ormaintenance.
(v) Licensing: Seetheanswer tosection A.
Radio based services
(i) Overview:Itwouldbeappropriatetoseparatethewirelessnetworkprovidingautonomous
services from thewireless parts ofthetrack-projected networks.
Public cellular radiotelephone, national paging, wireless dataVSAT, trenched wireless,
despatched networks. Their regulation hasafrequency management character while
thefirsttworequire concession.
(ii) Modes ofsupply: Wireless tracks, local loopextends andlineconcentrators. Their
regulation hasafrequency management character while requiring anetwork licence.
(iii)-(iv) Seeattheservices.
(v) Licensing: Besides afrequency permission, atypeapproval orindividual approval of
theequipment isnecessary.
Public Mobile Radiotelephone Service (concession service)
(i) Overview: TheGovernment granted twoGSM service providers andoneNMT-450
service provider concession whoarecompeting witheachother. Allcompanies have
foreign share near49percent.S/NGBT/W/3/Add.18/Rev.2
Page12
(ii) Modes ofsupply: ThetwoGSM service providers using thepan-European GSM
standards. OneNMT-450 service provider ensures theinternational access onlythrough
thenational transit network. Thenetwork agreement between MATAV andtheGSM
companies contains apositive discrimination exists till1997 inprice ofleased lines
between MATAV andthemobile companies forhelping theirmarket access InHungary
(theEUONP leased lineDirective isvalid except theabove alteration).
Public paging service (concession service)
(i) Overview: TheGovernment granted twosupplier companies concession which arein
competition. Theregulation requires aHungarian State ownership of25percent+
1vote.
(ii) Modes ofsupply: Theconcession holders should usethepan-European ERMES paging
system.
(ii) Modes ofsupply iscarried outviatheinternational circuits. Thecase(c)takes place
withVSAT service which isliberalized. Mode (d)iscurrent aswell;oneofitsrealisation
isthe"Hungary Direct" service enabling callsmade from abroad toaccount ofthe
(Hungarian citizen) caller. Another introduced form istheTeleCard service offering
thepossibility ofinternational callsmade byforeign citizens inHungary totheirbank
account.
(iii) Market access: Theabove services should onlybeprovided byaconcession holder.
(iv) National treatment: Thesame restrictions arevalidfortheareaoftelecommunications
asthose forevery foreign investment inHungary.
(v) Licensing: Seeanswers inpartA.
Resale basis
3. Doyourregulations permit international resale ofprivate leased circuit capacity ifconnected
tothepublic network. Ifso,atoneend?atbothends? Under whatconditions? Isresale ofswitched
voice capacity permitted?
International resale ofleased lineisallowed onlytoNCC (MATAV) till2002.
Theresale ofprivate leased linesbelongs totheliberalized services. Thecorporate networks
arecharacterised bythepossibility tolease apartorthewhole forpublic service.
4. Isresale ofprivate leased circuit excess capacity permitted? Ifso,under whatconditions? May
basic telecommunications beresold tomake them available tothird parties? Forwhich basic
telecommunications isthispermitted?
Iftheprivate network isinterconnected tothepublic network, theresale ofpublic network access
isallowed forathird party onlyinspecial case. Thisisthesocalled PABX service which maybe
provided onlyonprivate localnetworks, i.e.onPABX networks which doesnotcross theborder of
thegiven public localnetwork.S/NGBT/W/3/Add.18/Rev.2
Page13
Forthetimebeing, theconcession oftheNCC ensures exclusivity inrelation ofthenational
andinternational transit connections. Thus, theMinistry grants nolicence forsuchactivity offurther
companies, except forcorporate networks ofsome nation-wide companies which mytransport traffic
inbetween theirownsphere ofinterest andbetween theirownstations without restriction. However,
theyarenotallowed topasstransit callsoriginated andterminated inthepublic network.
(iii) Market access: Themarket isliberalized inrespect ofthePABX service.
(v) Licensing:ThePABXserviceproviderisobligedtouseanequipmentwithtypeapproval.
Itsnetwork should comply withtherequirements oftheFundamental Technical Plans.
Facilities-based
5. Maybasictelecommunications suppliers (foreign anddomestic) construct andoperate theirown
networks orinvest inconsortia toconstruct andoperate suchfacilities? Ifnot,whatorganisations are
permitted toconstruct andoperate basic telecommunications network infrastructures?
Yes.Theregulation isreferred firstly totheservice providers andtherequirements oflicensing
areenforced tothenetwork investors oroperators through theservice suppliers. Itislefttothebasic
telecommunications service providers whether theyinvest themselves ortheyleasetheequipment from
another investor company, theyoperate oritisoutsourced. Theservice provider alone isresponsible
forthequality ofservice.
Public/non-public supply
6. Does yourregime make distinctions between suppliers ofpublic switched andnon-public basic
telecommunications? Ifso,how?
Yes.Thenon-public service providers areenforced tocomply withtherequirements ofthe
Fundamental Technical Plans tosuchanextent astheirusers canbeinterconnected withthepublic
network. Themarket ofthenon-public telecommunications isfullyliberalized andthequality levelof
thenetworks isformed bythemarket. Theservice quality checked bytheCommunications Authority.
Itdoesnotcomprise thenon-public networks andthestatecommitments stipulated intheconcession
agreements donotcover these networks.
7. What basic telecommunications doyourregulations require, explicitly orineffect, tobemade
available tothepublic generally?
Thepublic access ismandatory forallsubsectors enlisted intheChapter A.
8. What basictelecommunications doyourregulations permit tobesupplied onanon-public basis
(i.e., notrequired tobemade available tothepublic generally)?
Suchnetworks areasprivate local, corporate andspecial ones(e.g.datatransmission forbanks,
some wireless services suchasdispatcher, trunked, PABX networks etc.).
9. What obligations orresponsibilities areincurred bystatus asapublic basictelecommunications
supplier andunder whatconditions? E.g., What kinds of"common carrier"-like obligations areimposed
(e.g.withregard toUniversal service), andonwhom?
Thegeneral obligations andresponsibilities fortelecommunications operators areasfollows:S/NGBT/W/3/Add.18/Rev.2
Page14
- tocomply withtheFundamental Technical Plans. These are:
Structure Plan
Numbering Plan
Routing Plan
Transmission Plan
Signalling Plan
Synchronisation Plan
Interconnection Plan
Dependability andReliability Plan
Service Plan
Service andNetwork Security Plan
Wireless Radiation Plan
- Compliance withtariff decrees andtariff caps
- Compliance withdecrees ofbuilding andservice licensing
- Approval ofTrade Regulation ofthecompany
- Compliance withobligations forquality control anddatadelivery
- Inthecaseofaconcessionaire, fulfilling theprovisional anddevelopment obligations
stipulated inthecontract.
Fortheconcession services theconcession 'sholders should meet therequirements ofthe
concession contract. Only notification isrequired. Thedecree concerning theliberalized services is
underpreparation.TheinterconnectioncontractsamongtheNCCandLTOsandNCCandGSMoperators
should bebased onthese requirements. Thenetwork agreements aremonitored bytheAuthority.
10. What, ifany, restrictions arethere onorganising andoffering aprivate network bya
telecommunications supplier?
Restrictions onprivate networks:
- frequency usage onawireless network;
- compliance withsome technical requirements when connecting tothepublic network;
- routing restrictions withrespect totheinterworking withthepublic network.
11. Istheoperation ofpublic pay-phones reserved tomonopoly orexclusive suppliers?
Theoperation ofpublic payphones arereserved totheconcession holders.
PartIII
Regulatory issues
Relationship between regulatory andoperational functions
1. Doanybasic telecommunications suppliers become involved, directly orindirectly, inmaking
regulatory policy? enforcement ofregulations? informulating standards orenforcing standards?
No.According tothepractice, thelawmaking institution (theMinistry) sends thedrafts of
lawsandthestandards under preparation totheconcession service providers forthepurpose ofexpressing
theiropinion.TheHungarianTelecommunicationsReconciliationForumcouldexpressitsviewoncoming
regulatory issues (Laws andDecrees)S/NGBT/W/3/Add.18/Rev.2
Page15
2. Isyourregulatory authority (orauthorities) alsoresponsible forformulating standards? for
enforcing standards?
Inthefieldofstandardisation National Standardisation Institute isthecompetent agency. Prior
decisionNationalStandardisationInstituteshouldconsultwiththeMinisteronthebasisoftheauthorization
ontheLawonSetting Standards.
3. Howmany levels ofgovernment (e.g., national, regional, state, local) haveresponsibility for
regulation affecting basictelecommunications? Please identify anddescribe relevant levels ofgovernment
authority. Arethere anyprocedures enabling suppliers toresolve questions ordisputes theymayhave
ortoappeal adecision withtheregulatory body concerned? Ifso,please describe.
OnlygovernmentlevelregulationexistsaccordingtotheTelecommunicationsAct.Theregulatory
body istheMinistry. Theservice provider should keeptheprescribed quality levelwhich ischecked
bytheGeneral Inspectorate ofCommunications periodically. Incaseofdeterioration ofservice the
Ministry orders atariff reduction. Inajustified case, theconcession canbeevenwithdrawn
Thedecision oftheregulatory bodycanbechallenged oncourt. Disputes afterareconciliation
bytheregulatory body canbesettled byArbitration.
Frequency allotment orassignment
4. What aretheprocedures, requirements andcriteria applied fortheallotment orassignment of
radio frequencies?
Frequency allocation istherightofCommunications Inspectorate, asastatebudget institute
operating under thesupervision ofMinistry ofTransport Communications andWater Management
(Government Decree No.142/1993 (X.13)). Frequency Management isregulated bytheFrequency
Management ActNo.LXII. of1993. Thebasis offrequency allocation isadraft ofthe"National
Allocation Table ofFrequency Bands "(NATF)" which hasbeen prepared and,atthetimeofthe
introduction, theregulation oftheprocedures willalsobedone. TheNATF alsomeets therequirements
ofrelevant EUDirectives.
5. Doforeign telecommunications suppliers receive national treatment under theseprocedures and
criteria?
Theregulations offrequency assignment mean anational treatment forallservice providers.
Numbering andidentification codes
6. What aretheprocedures, requirements, andcriteria usedtoassign numbering andidentification
codes?
Numbering structure andnumber allocation applied inpublic telephone network (PSTN) and
theselection procedures areregulated bytheDecree oftheMinister No:24/1993 (IX.9).
7. Doforeign telecommunications suppliers receive national treatment under theseprocedures and
criteria?
Therulesofnumbering according totheprevious reply, mean national treatment forallservice
providers.S/NGBT/W/3/Add.18/Rev.2
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8. What types ofmandatory standards areinplace?
International standards (ISO, CEN, CENELEC), European Telecommunications Standardisation
Institute (ETSI), andinternational recommendations (ITU-T andITU-R) areused. TheLawonSetting
Standards isforce (1995).
9. When astandard isunder review oranewstandard isbeing developed byyourstandards
authority, isthereanopportunity forpublic review andcomment priortoitsadoption? Mayforeigners
participate inthisprocess? Maytheprivate sector participate inthedevelopment ofstandards? Ifso,
how?
Atemporary regulation isapplied tonational standardisation (Government Decree No.42/1994.
(III.25) which brings regulations ofthisareacloser totheEuropean standardisation andaccrediting
system. Inpractice division oflabour isambiguous among General Inspectorate ofCommunications,
Hungarian Standardisation Institute andthevoluntary andaccredited organisations.
10. What equipment issubject totypeapproval? Isself-certification allowed? Hasyourgovernment
concluded mutual recognition agreements fortelecommunications equipment certification? Arethey
required forforeign produced equipment?
Allequipment connected tothepublic telecommunications network issubject toofficial licence.
Thebasic principle is"noharm tothenetwork".
11. How istheability toattach terminal equipment tothenetwork regulated? What restrictions,
arethere onterminal equipment thatmaybeattached tothenetwork?
TheCPEmarket isliberalized.
12. Maybasictelecommunicationssuppliersconnectedtothepublicnetworkusetheirownswitches?
Determination ofswitches applicable inpublic telephone networks (selection ofsystem) was
aGovernment decision: onlyEriksson (AXE) andSiemens (EWSD) switches canbebuiltinthenetwork.
From 1996, alltelecommunications companies canbuytheirownswitches nothebasistheEUconform
public procurement law.
13. Does thegovernment require network-based suppliers topermit theattachment of
customer-supplied terminal equipment?
Notrelevant.
Interconnection
14. Ingeneral, howisinterconnection regulated inyourregime? What aretheregulations applied?
Theinterconnection isregulated byaGovernment Decree No:154/1993.
15. Doyourregulations require network-based suppliers toprovide interconnection forother basic
telecommunications network orservices suppliers? Ifso,please describe?
No.Discrimination isprohibited inthesense thatallthesubscriber terminal equipment is
compulsory toconnect tothenetwork thathasofficial licence.S/NGBT/W/3/Add.18/Rev.2
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16. Isinterconnection between leased circuits andpublic datanetworks permitted?
Co-operationandinterconnectionofnetworksare,undertheauthorisationofTelecommunications
Act,regulated bytheGovernment order No.158/1993 (XI.11). Thetechnological, economic andtraffic
conditions ofnetwork co-operation aretobeagreed upon inthenetwork agreement. Theagreement
istobepresented totheCommunications Authority.
17. What aretherulesandregulations regarding thepricing ofinterconnection? Areinterconnection
charges setinrelation toanyprinciples (e.g., cost-oriented)? Isthere arequirement tosubmit
interconnection charges toaregulatory body forapproval? Arethese changes inthepublic domain?
Arethesame interconnection charges applied toallsuppliers requesting interconnection orarethey
negotiated onacase-by-case basis? What requirements orobligations existtopublish, make publicly
available, ortosupply details ofinterconnection agreements toregulatory authorities?
Theservice provider isobliged incaseitisgiven acontract offer inaccordance withthe
prescribed conditions.
Incaseofpublictelephoneservicesandmobiletelephoneservicesalsotheinterconnectioncharges
fallunder official priceregulation (30/1993 (XI.23)) Ministry ofTransport, Communications andWater
Management order) and(13/1994.II.17) Ministry ofTransport, Communications andWater Management
order). These orders define acharge maximum for1994, afterthisthechange ofcharge maximum is
connected totheproducers 'price index (price cap-regulation). Theinterconnection charge includes
onetimeconnection price, monthly price andthecharge forthecallforwarding.
Competitive safeguards
18. What kinds ofsafeguards doesyourregime haveagainst anti-competitive practices ofmonopolies
ordominant suppliers insituations where theymaycompete withother firms tosupply certain basic
telecommunications inthedomestic market? intheinternational market?
Neither competition normerging ofcompanies isregulated specially intelecommunications
sector. TheCompetition Actof1990, asgeneral regulation, istobeapplied forthisareaaswell. The
competition Actprohibits unfair competition, competition restricting agreements andabusing power
ofeconomic advantage. Thisareaisregulated alsobythelawforprohibition ofunfair market behaviour
(ActLXXXVII of1990) andtheActforsettling theprices (ActLXXXVII of1990).
Incaseofmerging ofcompanies theOffice ofEconomic Competition hassupervisory function
forthepurpose ofprotection ofmarket participants.
Leased linescanbeconnected tothepublic network ononeendbutthisisnotqualified as
interconnection.
19. Doyourregulations distinguish between dominant andnon-dominant suppliers? Ifso,whatare
thedetails andhoware"dominant" and"non-dominant" defined? Arethere anysafeguards concerning
suppliers whohavemonopoly ordominant control ofaccess tocertain market ornetwork segments?
Nosuchdefinition isexists.
20. Isthereanindustry-wideantitrustpolicyand/oranytelecommunications-specificantitrustpolicy?
What aretherules andregulations regarding mergers andacquisitions?S/NGBT/W/3/Add.18/Rev.2
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Nospecific safeguards exist butthegovernment decision (selection ofsystem) onthe
manufacturers oftheexchanges tobeapplied inpublic telephone network might beconsidered as
restriction ofcompetition till2002 forinternational anddomestic longdistance callsandtill2003 for
localcalls.
21. Arethere anysafeguards concerning basic telecommunication suppliers alsoengaged inthe
manufacturing oftelecommunications equipment? Ifso,please describe thecontent andworking ofthese
safeguards.
Seeanswer onquestion 21.
Pricing-related measures
22. What istheroleofthegovernment oranyrelated agency withregard toestablishing prices
(e.g., tariffs, access charges, accounting rates) orpricing policy? E.g., doesthegovernment setprices
oraccounting rates, directly orindirectly (e.g. price capsorrateofreturn controls), ordobasic
telecommunications suppliers determine these themselves? What requirements orobligations doesthe
government setregarding prices charged bymonopoly/dominant suppliers? Orother suppliers?
Thecharges ofconcession bound services aredetermined intheDecrees oftheMinister
No.30/1993 (XI.23.) andNo.:13/1994. (III.17).
Forpublic switched network services Hungary employs thepricecapformula. TheGovernment
would liketoensure through thetariffpolicy anequilibrium between thelevelofdemand andthefinancial
capabilities ofconcession service providers. There arethreemajor tariffcategories inthefieldofvoice
telephony:
(1) Subscription fees;
(2) Local calls;
(3) Long distance andinternational calls;
(4) Entrance fee.AGovernmental Decree onprotection ofcustomer interest inunder
preparation.
Categories 2and3aredivided intotariff zones. Future changes intariffs aretobelinked to
changes intheProducer Price Index (PPI), which islower than theconsumer price index (CPI).
23. Does thegovernment require tariffapproval ornotification and,ifso,whataretheprocedures?
What requirements regarding cost-accounting areputinplace toensure transparency?
Theprices ofconcession bound telecommunications services aredetermined for1994 under
theauthorisation ofTelecommunications Actandtheprice maximum (price cap)regulation isalso
determined. Thetariff plans prepared yearly bytheservice providers areaccepted andpublished by
theGovernment.
Theofficial prices havebeendetermined withtheconsideration ofnational costs-, price-, and
income levels annually
24. Towhatextent istheprinciple ofnon-discrimination applied inpricing policy? E.g., isatariff
package suchasavolume discount targeted foraspecific group allowed and,ifso,whataretheterms
andconditions applied? Areaccounting ratesapplied onanon-discriminatory basisbetween countries?
Ifaccounting ratesapplied indifferent agreements arcnotthesame, whatarcthecriteria usedtoarrive
atdifferent accounting rates? Aresome ofthese criteria required ordefined bythegovernment?S/NGBT/W/3/Add.18/Rev.2
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Traffic-dependent feesandtheirdistribution among service providers aredefined byMinisterial
Decree. Thefeesofinternational callsarestipulated ininternational agreements. Nosuchdetailed
regulation isthere forother subsectors oftelecommunications.
25. Doanybasic telecommunications suppliers getinvolved insetting industry-wide tariffs?
No.Theplayers could propose thepricesetting andtheMinister ofTransport, Communication
andWater Management hasajointdecision withtheMinister ofFinance.
26.Onwhatbasisareprices (e.g.tariffs, access charges, accounting rates) determined? What concepts
areapplied regarding costs? Isthere ageneral principle applied regarding allocation ofcosts? Is
cost-oriented pricing ofbasic telecommunications usedorrequired bythegovernment? Ifnot,dobasic
telecommunications suppliers usecost-oriented pricing?
Thegeneral priceregulation isapplied tothenonconcession bound telecommunications services.
ItisaGovernment policy toformulate ageneral principle regarding allocation ofcostsandcost-oriented
pricing.
27. Arethere anyrules specific tothepricing ofanewservice?
No.
Rights ofwayfortheconstruction ofinfrastructure
28. Arebasictelecommunications services suppliers arcpermitted tobuild theirowninfrastructure
orfacilities? Ifso,what aretheprocedures andcriteria forauthorisation tobuild infrastructure or
facilities? What aretheprocedures, criteria, limitations orqualifications applied withrespect tothe
granting ofortheavailability ofrights ofwayfortheconstruction ofinfrastructure orfacilities?
Construction oftheownnetwork forthepurpose ofprovision ofconcession telecommunications
services isdetermined bythegovernment intheconcession contract. Establishment oftrack oriented
telecommunications canbedonebyapproval oftheCommunications Authority afterthebasictechnical
planisreviewed.
Thelocalnetworks plans should authorized bylocalgovernments.
29. Isnationaltreatmentextendedtoforeignbasictelecommunicationssuppliersundertheseprocedures
andcriteria?
Yes.
Newtelecommunications services
30. Please describe anygeneral regulatory processes orprocedures thatapply todealing withthe
introduction of"new" telecommunications services. Prior toanyrelevant regulatory procedure having
beencompleted, isitpossible forsuchnewservices tobesupplied?
Theregulatory body (theMinistry) decides oncase-by-case whether anewservice isbelong
toaconcession service ortheliberated regime tilltherelevant regulation isissued.S/NGBT/W/3/Add.18/Rev.2
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31. When anewservice becomes possible oravailable, whodetermines thestatus ofthenewservice
(whether itisbasic orvalue-added) andunder whatprocedure andtimeframe?
Ifthenewservice doesnotfallintothecategory oftheconcession services, thecompetition
ispermitted.