RESTRICTED
GENERAL AGREEMENT S/NGBT/W/3/Add.18
26October 1994
ONTRADE INSERVICES (94-2183)
Original: English Negotiating Group onBasic Telecommunications
COMMUNICATION FROM HUNGARY
Response toQuestionnaire onBasic Telecommunications
Theattached communication iscirculated attherequest ofHungary toMembers ofthe
Negotiating Group onBasic Telecommunications.S/NGBT/W/3/Add.18
Page2
PART I
Definition andMarket Structure
1. TheHungarian regulation doesnotdefine thebasic telecommunication. Theconcept ofbasic
telecommunications services isusedinstead. Theconcept isdefined incaseofpublic networks that
abasic telecommunications service isrespected assuchifitsusage isensured fortheconsumer by
thesocalled "subscriber 'scontract" without anyadditional agreement.
Ittheuseofaservice isconditioned byfiling anadditional claim and/or byobligation of
additional fee,thatservice cannot beconsidered basic service, butitfallsintooneofthecategories
oforvalue-added services.
TheHungarian regulation doesnottakethenetwork foranexclusive instrument oftheservice
andtherefore, itisnotinvolved inthedefinition ofservices.
TheHungarian ActonTelecommunications (ACT LXXII of1992) isstrongly service-oriented
andthusthatpartoftheGATT 'sdefinition which takes thetransport network forthepartofbasic
telecommunicationsdoesnotcoincidewiththeHungarianterminology.Ofcourse,thetransportnetwork
candeliver basic services aswellasother services.
Thecategories ofthetelecommunications services aredefined intheTelecommunications Act
(ActLXXII of1992).
"Telecommunication services canbeperformed byeither concession companies established
forproviding telecommunications services orbusiness organizations inwhich theStatehasamajority
ownership interest andisestablished forthepurpose ofcarrying outaconcession activity operating
pursuant toterms andconditions applicable totelecommunications concession companies (collectively
called "telecom organizations"). These areasfollows:
(a) Concession bound services, which arethestate'sresponsibilities toprovide:
- public telephone
- mobile radiotelephone
- nationwide paging system
- nationwide andregional distribution andbroadcasting ofpublic service radio
andtelevision programmes.
(b) Withtheexception oftheconcession services defined above, other telecommunication
servicesareliberalized,inparticularnationalpublicswitcheddatatransmissionservices,
maybeperformed byanyperson subject totheservice licence requirements setforth
inrelevant sections.
These services canberegarded avalue-added ones. Theconcession holder canprovide
theliberalized services without limitation. Ontheother handtheconcession holders
should provide access totheirnetworks forproviders ofliberalized services.S/NGBT/W/3/Add.18
Page3
2. Theregulationdistinguishesthetelecommunicationsnetworkandthetelecommunicationsservices
inthedefinition oftelecommunications services categories (ActLXXII of1992).
3. None.
Market structure
4. Concession bound services (ActLXXII of1992):
- public telephone
- mobile radiotelephone
- nationwide paging system
- nationwide andregional distribution andbroadcasting ofpublic service radio and
television programmes
5. Theconcessions areobtained bycompetition (ActXVIof1991), therulesofcompetition are
regulated bydecree (25/1993 (IX.9.) decree oftheMinister ofTransport, Communication andWater
Management). Intheregional (local networks) ormarket definitions andtheownership structure of
concession companies arethecompetence oftheMinister. Thecompanies remaining inlong-term
stateownership, e.g.those entitled tothenational concession, areexceptions. (ActLIIof1992,
126/1992 (VIII. 28.) Government Order).
Theconcessionsareexclusivebydefinition.Inthefieldofvoice(fixed)telephonythenationwide
rightofbuilding andoperating international anddomestic long-distance networks belongs totheNational
Concession Company (NCC, seebelow). Inprimary areas (local networks) theconcession contract
authorize onlythebuilding andoperating localcallsinthegiven geographical area.
Forcellular mobile telephony three andpaging service twonationwide licences areissued
respectively. Limited competition exists.
6. Participation offoreigners ispermitted withtheregulations according theanswers atthe
subsectors.
7. Nosuchlimitations exist.
8. Concession Agreements existfor:
(a) Inthefieldvoice telephony for:
- National Concession Company (MAT ÁVCo.)
- 20primary districts
(b) Inthewireless field:
- three mobile operator companies (oneNMT-900 andtwoGSM ones)
- twonationwidepagingconsortiatoimplementandoperateERMESpan-Europeanstandard
system.S/NGBT/W/3/Add.18
Page4
PART II
Competition
A. Subsectors
(a) Public switched telephone service
(i) TheGovernment granted bothforthesuccessor company oftheformer monopolist supplier
(MAT ÁVRt.)and12other newservice providers authorized forproviding local(socalled
primary district) services byconcession. Atthesame time, National Concession Company
wasformed which isauthorized fornational andinternational long-distance service. The
concession expires in25years (beginning in1993), andforthefirsteight years aterritorial
exclusivity isguaranteed bythestate. Thebiggest company, MATÁV,hasabout 33percent
offoreign shares while atthenewprimary concessionaires theshare isbetween 49and
75percent.MATÁVRt.haswonthetitleofNationalConcessionCompany(NCC)andbecame
concessionaire in38primary districts while other companies havewonintheremaining 15
districts.
(ii) Inthefieldofvoice telephony longdistance andinternational callsarerealized through the
backbone international network (allowed byonlyfortheNational Concession Co.exclusively
until2007):
(a) provision ofservice fromoneMember 'sterritory toanother Member 's(calltoaforeign
subscriber);
(b) provision ofservice onaMember 'sterritory fortheuserofanother Member (transport
ofthecallform abroad)
(c) provision ofservice onaMember 'sterritory foracitizen ofanother Member (TeleCard
service).
(iii) Limitation ofmarket access exists forservices which canbeprovided byaconcession holder
aftertheconcession agreement issigned.
(iv) National treatment forallliberalized services. Foreign participation isallowed inconcession
services upto30percentintheNational Concession Co.,75percentinprimary districts
andnolimitation inwireless services.
(v) Type orindividual approval ofimplemented technical devices ismandatory onthebasis of
obligatory Hungarian standards including domesticated standards oftheEuropean
Telecommunications Standardization Institute (ETSI). Newtrackprojects should havenetwork
licence too,andatlast,theswitching andtransmission equipment should acquire apermission
forimplementation.
Theservice provider should keeptheprescribed quality levelwhich ischecked bytheGeneral
Inspectorate ofCommunications (GIC) periodically. Incaseofdeterioration ofservice the
Ministry orders atariff reduction; inajustified case, canevenwithdraw theconcession.S/NGBT/W/3/Add.18
Page5
(b) Leased lineservices
(ii) Seesection A.(ii)(a)(International anddomestic leased lineservice isallowed tothenational
Concession Co.).
(iii) Theconcession holder andoperators ofcorporate networks areauthorized forthisservice too
forclosed usergroup.
(c) Leasing parts ofnetwork
See(b).
(d) Public landmobile radiotelephone service
(i) TheGovernment granted twoGSM service providers andoneNMT-450 service provider
concession whoarecompeting witheachother. Allcompanies haveamajor foreign share
(>49percent).
(ii) ThetwoGSMserviceprovidersusingthepan-EuropeanGSMstandardsandtheNo.7signalling
system. OneNMT-900 service provider ensures theinternational access onlythrough the
national transit network.
(e) Public paging service
(i) TheGovernment granted twosupplier companies concession which areincompetition. Both
companies haveabout 75percentforeign share.
(ii) Theconcession holders should usethepan-European ERMES paging system.
(f) National andregional distribution andbroadcasting ofpublic radio andTVprogrammes
(i) TheGovernment hasnotgranted concessions yetastheActonMedia hasnotpassed the
legislation. UntiltheLawonMedia could beinforce, thenationwide radioandTVprogrammes
aredistributed exclusively bytheAntenna Hungaria Co..
(ii) Broadcasting toabroad isrealized byearthbroadcasting stations andleased satellite channels.
(iii) Theaccess tothemarket isbarred untilthepassing oftheActonMedia.
(iv) Foreign equity participation isexpected.
(g) Public packet switched dataservice
(i) Themarket ofthesubsector isliberalized. Recently thereisonenational network, partly state
owned.
(ii) Inaddition tothenational supplier, several private networks areconnected tointernational
service provider 'snetwork (e.g.Internet).
(iii) National treatment exists.
(v) Inrespect ofequipment andnetwork, seesubsection (a)(v).Theestablishment ofHungarianS/NGBT/W/3/Add.18
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Name Registration office isinprogress. Starting ofitsactivity isexpected atthebeginning
of1995.
(h) Public circuit switched dataservice
(i) Themarket isliberalized, butthereisminor interest. Duetoleased lines, theservice strongly
depends onthebiggest telecom service provider, theMATÁVRt.
(ii) Forthetimebeing, onlynational suppliers exist.
(iii) (v)seesection g.
(i) Dataservice provided onsatellite
(i) Themarket isliberalized.
(ii) Theservice isprovided byforeign-Hungarian jointventures through foreign-owned satellites
andVSAT subscriber stations.
(iii) (v)seesection g.
(k) Telex service
(i) Themarket isliberalized, butactually there isonlyonenational public telexnetwork, owned
byMATÁV.
(ii) Seesection (a).
(l) Telegraph service
Seesection (k).Therelated postal service istheonlyservice provider forthetimebeing.
(m) ISDN service
Preparations forimplementation arecarried outbyMATÁVRt.Theservice isnotregulated
yet.Allconcession holders areauthorized tointroduce theISDN services using theirlocal
networks ,however, theISDN facilities havenotpassed typeapproval untilnow.
(o) Distribution ofradio andtelevision programmes
(i) Thecable TVmarket isliberalized. Majority ofcable television networks were being built
before theconcerning legal issues were published. InBudapest awireless distribution
"AM-Micro" isoperated. Foreign payTV(movie Channel) ispresent ontheHungarian market.
Theimitation distribution offoreign DBSprogrammes istoconclude copyright agreement.
National treatment.
(ii) Thedistributing networks transmit satellite programmes fromabroad aswellastheHungarian
public radio andTVchannels.
(iii) Restriction takes place duetofrequency management ofthewireless distributing network.
TheAM-Micro system usesthefrequency band around 10GHzandsubscriber 'sreceivers
ofsuchfrequency bandareavailable inthemarket.S/NGBT/W/3/Add.18
Page7
(iv) There arenorestrictions inrespect tocapital shares.
B. Categories
Local/long distance/international
1. Thetelephone connection islocalifithasbeenestablished within onelocality or-incases
ofseveral localities -within thefeeding areaofalocalexchange.
Theconnection islong-distance/national, ifitcrosses theborders oflocalarea, butdoesnot
cross theborder ofthecountry.
2. Theregulation oflong-distance andinternational connections differs asfollows:
(a) Forseven years from1993, onlytheNational Concession Company (MAT ÁVRt.)isauthorized
forproviding long-distance andinternational telephone access.
(b) Traffic-dependentfeesandtheirdistributionamongserviceprovidersaredefinedbyaMinisterial
Decree. Thefeesofinternational callsarestipulated ininternational agreements.
Nosuchdetailed regulation isthere forother subsectors oftelecommunication.
(i) Regulation restricts thenumber ofservice providers nowandforseven years on,namely:
- fortelephony, foreachprimary district-one,
- forGSM radiotelephony, twointhecountry,
- forERMES paging network, twointhecountry canoperate.
Incaseofdatatransmission, programme distribution, intheirwireless network, thefrequency
management imposes restrictions; forlackofnecessary number offreefrequency bands on
thegiven territory auction orlottery ismade toallocate theavailable freebands.
(ii) Modes ofsupply (a)and(b)arecarried outviatheinternational circuits. Thecase(c)takes
place withVSAT service which isliberalized. Mode (d)iscurrent aswell,oneofitsrealization
isthe"Hungary Direct" service enabling callsmade fromabroad toaccount ofthe(Hungarian
citizen) caller. Another introduced form istheTeleCard service offering thepossibility of
international callsmade byforeign citizens inHungary totheirbankaccount.
(iii) Seetheanswer toQuestion (i)
(iv) Seetheanswer toQuestion A.(a)
(v) Seetheanswer toQuestion A.(a)
Wired
(i) Theanswer actually coincides withthatgiven forlocal/long-distance/international withthe
addition thattheHungarian regulation usestheexpression "track projected" rather than"wired",
because thenational backbone network contains microwave linksaswellasoptical fibreones
which generally fallintothesame category asthewired tracks. Their leasing byother serviceS/NGBT/W/3/Add.18
Page8
providers isregulated inrespect offeesofusage. Otherwise thefrequency restrictions should
beconsidered forthewireless tracks. Ofprivate networks, theTelecommunications Act
highlights thecorporate ones, theowners ofwhich areauthorized toleaseoutcircuits orparts
ofthenetwork.
(ii) Seetheanswers given atChapter A..Forinterconnection ofnetworks ofdifferent suppliers,
prescriptions oftheFundamental Technical Plans should beconsidered.
(iii) When building track-project connections, itisbeing builtnotbytheNational Concessionaire
Company, anditcrosses theborder ofthelocalnetwork, theinvestor should enter anetwork
contract withtheNational Concessionaire which stipulates thetraffic-dependent feesandthe
responsibilities. Theterminal point ofthetrack should belocated inaccordance withthe
Fundamental Technical Plans.
(iv) Restrictions related toforeign investors areenforced through theconcession contracts. These
arevalid, however, onlyfortheservices andarenotvalid forinvestments ormaintenance.
(v) Seetheanswer toChapter A.
Wireless services
(i) Itwould beappropriate toseparate thewireless network providing autonomous services from
thewireless parts ofthetrack-projected networks.
(a) Public cellular radiotelephone, national paging, wireless dataVSAT, trunked wireless,
despatcher networks.
Their regulation hasafrequency management character while thefirsttworequire
concession (seeprevious sectors).
(b) Wireless tracks, localloopextenders andlineconcentrators.
Their regulation hasafrequency management character while requiring anetwork
licence.
(ii)-(iv) Seeattheservices.
(v) Besides afrequency permission, atypeapproval orindividual approval oftheequipment is
necessary.
Resale ofservices
3. Nonecessity forregulation hasoccurred untilnow.
4. Intheprivate networks interconnected withthepublic ones, resale ofpublic network access
isallowed forathirdparty. Thisisthesocalled PABX service which maybeprovided only
onprivate localnetworks, i.e.onPABX networks which doesnotcross theborder ofthegiven
public localnetwork.
(i) Forthetimebeing ,theconcession oftheNCC ensures exclusivity inrelation ofthenational
andinternational transit connections. Thus, theMinistry grants nolicence forsuchactivity
offurther companies, except forcorporate networks ofsome nationwide companies which mayS/NGBT/W/3/Add.18
Page9
transport traffic inbetween theirownsphere ofinterest andbetween theirownstations without
restriction. However, theyarenotallowed topasstransit callsoriginated andterminated in
thepublic network.
(iii) Themarket isliberalized inrespect ofthePABX service.
(v) ThePABX service provider isobliged touseanequipment withtypeapproval. Itsnetwork
should comply withtherequirements oftheFundamental Technical Plans.
Facility-based
5. Yes.
(i) Theregulation isreferred firstly totheservice providers andtherequirements oflicensing
areenforced tothenetwork investors oroperators through theservice suppliers. Ifitisleft
tothebasictelecommunications service providers whether theyinvest themselves ortheylease
theequipment fromanother investor company, theyoperate oritisoutsourced. Theservice
provider alone isresponsible forthequality ofservice.
Public/non-public supply
6. Yes. Thenon-public service providers areenforced tocomply withtherequirements ofthe
Fundamental Technical Plans tosuchanextent astheirusers canbeinterconnected withthepublic
network. Themarket ofthenon-public telecommunications isfullyliberalized andtheinner quality
levelofthenetworks isformed bythemarket. Thequality control activity oftheGeneral Inspectorate
doesnotcomprise thenon-public networks andthestatecommitments stipulated intheconcession
agreements donotcover these networks.
7. Thepublic access ismandatory forallsubsectors enlisted intheChapter A.
8. Suchnetworks areasprivate local, corporate andspecial ones(e.g.datatransmission forbanks,
some wireless services suchasdispatcher, trunked, PABX networks etc.):
9. Obligations andresponsibilities:
- Tocomply withtheFundamental Technical Plans which are:
- Structure Plan,
- Numbering Plan,
- Routing Plan,
- Transmission Plan,
- Signalling Plan,
- Synchronization Plan,
- Interconnection Plan,
- Dependability andReliability Plan,S/NGBT/W/3/Add.18
Page10
- 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,
- inthecase ofaconcessionaire, fulfilling theprovisional and
development obligations stipulated inthecontract.
10. Restriction onorganizing aprivate network:
- frequency usage onawireless network
- compliance withsome technical requirements when connecting tothepublic network.
- routing restrictions withrespect totheinterworking withthepublic network
(i) Thecorporate networks arecharacterized bythepossibility tolease apartorthewhole for
public service.
PART III
Regulatory Issues
1. According tothepractice themaking institution sends thedrafts oflawsandthestandards under
preparation totheconcession service providers forthepurpose ofexpressing theiropinion.
2. No,inthefieldofstandardization another Authority iscompetent.
3. Government levelregulation (ActLXXII of1992).
4. Thefrequency allocation istherightofCommunications Inspectorate, asastatebudget institute
operating under thesupervision ofMinistry ofTransport Communications andWater Management
(142/1993 (X.13)Government Order). Frequency Management isregulated bylaw(ActLXII. of
1993). Thedraftofthe"National Allocation Table ofFrequency Bands (NATF)" hasbeenprepared
and,atthetimeoftheintroduction, theregulation oftheprocedures willalsobedone.
5. Theregulations offrequency assignment mean anational treatment forallservice providers.
6. Numbering structure andnumber allocation applied inpublic telephone network (PSTN) and
theselection procedures areregulated under theauthorization ofTelecommunications Act
(ActLXXII of1992) bylaw(24/1993 (IX.9) Ministry ofTransport, Communications andWater
Management Order).S/NGBT/W/3/Add.18
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7. Therules ofnumbering according toanswer PART II,number 6.mean national treatment
forallservice providers.
8. International standards (ISO, CEN, CENELEC), international recommendations (ITU-T and
ITU-R), European Standards (ETSI) andinternational standards. Thedraft oflawforregulating
Standardization hasbeenprepared.
9. Atemporary regulation isapplied tonational standardization (42/1994. (III.25)
Government Order), which nearsregulations ofthisareatotheEuropean standardization andaccrediting
system.Inpractice,divisionoflabourisambiguousamongTelecommunicationsInspectorate,Hungarian
standardization Institute andthevoluntary andaccredited organizations.
10. Allequipment connected tothepublic telecommunications network issubject toofficial licence.
11. Theofficial licence istheonlypossibility.
12. Nosuchagreements arepublished bythegovernment.
13. Noregulation ispublished inthisarea.
14. Determination ofswitches applicable inpublic telephone networks (selection ofsystem) was
aGovernment decision.
15. Yes,discrimination isprohibited inthesense thatallthesubscriber terminal equipment is
compulsory toconnect tothenetwork thathasofficial licence.
16. Cooperationandinterconnectionofnetworksare,undertheauthorizationofTelecommunications
Act,regulated bylaw(158/1993 (XI.11) Government order). Thetechnological, economic andtraffic
conditions ofnetwork cooperation aretobeagreed upon inthenetwork agreement. Theagreement
istobepresented totheCommunications Inspectorate.
17. Theservice provider isobliged incaseitisgiven acontract offer inaccordance withthe
prescribed conditions.
18. Leased linescanbeconnected tothepublic network, butthisisnotqualified interconnection.
19. Incaseofpublic telephone services andmobile telephone services alsotheinterconnection
charges 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 isconnected totheproducers 'price index (price cap-regulation). Theinterconnection
charge includes onetimeconnection price, monthly price andthecharge forthecallforwarding.
20. Neither competition normerging ofcompanies isregulated specially intelecommunications
sector. TheCompetition Law(ActXVIof1990), asgeneral regulation, istobeapplied forthisarea
aswell. Thecompetition lawprohibits unfair competition, competition restricting agreements and
abusing power ofeconomic advantage. Thisareaisregulated alsobythelawforprohibition ofunfair
market behaviour (ActLXXXVII of1990) andthelawforsettling theprices (ActLXXXVII of1990).
21. Nosuchdefinition exists.S/NGBT/W/3/Add.18
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22. IncaseofmergingofcompaniestheCompetitionAgencyperformscontrol,supervisionfunction
forthepurpose ofprotection ofmarket participants.
23. Thegovernment decision (selection ofsystem) onthemanufacturers oftheexchanges tobe
applied inpublic telephones network maybeconsidered asrestriction ofcompetition.
24. Thecharges ofconcession bound services aredetermined under theauthorization of
Telecommunications Act(ActLXXII of1992) bylegislation, intheDecree No.: 30/1993 (XI.23.),
MinisterofTransport,CommunicationsandWaterManagement)andinthe
Decree No.: 13/1994 (III.17.), Minister ofTransport, Communications andWater Management.
25. Theofficial prices havebeendetermined withtheconsideration ofnational costs, price, and
income levels.
26. Theprices ofconcession bound telecommunications services aredetermined for1994 under
theauthorization ofTelecommunications Act(ActLXXII of1992) andthepricemaximum (price cap)
regulation isalsodetermined. Thetariff plans prepared yearly bytheservice providers areaccepted
andpublished bythegovernment.
27. Theprices ofconcession bound telecommunications services aredetermined under the
authorization ofTelecommunications Act(ActLXXII of1992) bytheprice maximum (price cap)
legislationDecreeNo.:30/1993(XI.23)MinistryofTransport,CommunicationsandWaterManagement
Order)andDecreeNo.:13/1994(1.17)MinistryofTransport,CommunicationsandWaterManagement
inawaythattariff packages canbeformed from thesubscription andtariff charges.
28. Thegeneralpriceregulationisappliedtothenon-concessionboundtelecommunicationsservices.
29. Theprices ofconcession bound telecommunications services aredetermined under the
authorization ofTelecommunications Act(ActLXXII of1992) bypricemaximum (price cap)legislation
Decree No.:30/1993 (XI.23), Minister ofTransport, Communications andWater Management and
Decree No.:13/1994 (1.17) Minister ofTransport, Communications andWater Management, andin
thisareaitisapplied toalltheservices.
30. There isnogeneral principle regarding allocation ofcosts andcost-oriented pricing.
31. Fixed accounting ratescanbecharged ininternational agreements.
32. Construction possibility ofownnetwork forthepurpose ofprovision ofconcession bound
telecommunications services isdetermined bythegovernment intheconcession contract. Establishment
oftrack oriented telecommunications.