liberalisation of the hungarian telecommunications market dr. ivan schmideg national communications...

Liberalisation of the Hungarian Liberalisation of the Hungarian TelecommunicationsTelecommunications market market

Dr. Ivan SCHMIDEGDr. Ivan SCHMIDEGNational Communications Authority, National Communications Authority,

[email protected]@nhh.hu

IDATE Conference 2004.IDATE Conference 2004.

IDATE Conference 2004 Nov.Schmideg 2

Telecomm market evolutionTelecomm market evolution11

1992 – 12,6 / 100 main line density (EU 48,0 / 100)– 2,3 / 1000 mobile density (EU 15,2 /1000)– Act LXXII of 1992 on telecommunications

• Concession-bound services: – fixed & mobile telephony, paging, broadcasting,

• Other services free – data transmission, leased lines

• Prices regulated – telephone: price-cap

• Hungary divided into 54 primary areas



1994– 2 providers (Westel--> T-Mobile; PGSM) launch

GSM 900 service– First phase of privatization of MATÁV

• 29 primary areas (incl. the capital) monopoly regions of MATÁV

• Tender in 25 primary areas (5 won by MATÁV 2 no bidder: service obligation for MATÁV)

– Concession agreements 25 years– Exclusive rights in telephony till:

• international & long distance 2001. Dec.• local in 31 areas 2001. Dec.• local in 6 areas 2002. May• local in 17 areas 2002. Nov.



1999– 3rd provider (Vodafon) launches GSM

900/1800, the 2 incumbents GSM 1800 service

– alternative service providers launch data services

– VoIP allowed


Evolution of legal backgroundEvolution of legal background2001-2002

– Act XL of 2001 on Telecommunications (23 December 2001)

• EU 1998 regulatory framework (liberalisation Directives) implemented

• legally liberalised market


StrengthStrength of 2002 legislationof 2002 legislationProvide legal background for liberalisationFollow the EU liberalisation directives

Introduction of asymmetric regulationSMP assignmentCost based interconnectionEstablish Comm. Arbitration Committee

Corporate decision making Reconciliation based on public hearing


WeaknessWeakness of 2002 legislation of 2002 legislationAdopt the concept of the 1992 Act

(regulating networks through services)Problems of concession contracts unsolvedLicensing regime survived (disguised into

notification)No real tools for consumer protectionNumber portability delayedRegulator not authorised to collect all

relevant data, increasing information asymmetry,


Interconnection remained a problem areaUnsatisfactory treatment of local acc.

deficitInadequate concept and definition of I/CIneffective regulation of Internet I/CLacking regulation of mobile termination

Universal service problematicAccess not according to social needsFinancing, contribution to fund not in

conformity with EU directives

WeaknessWeakness of 2002 legislation of 2002 legislation


Resulting telecom marketResulting telecom marketModerately developed fixed line

infrastructure

– 8 significant market players

• 5 geographical monopolistDeveloped mobile infrastructure

– 3 significant market players


PSTN service providersPSTN service providers

MATÁV

INVITEL

HUNGAROTEL

EMITEL

MONORTEL


Resulting owner structureResulting owner structure


Infrastructure sum upInfrastructure sum up Fixed line penetration saturated at a rather low

level – household penetration is ~69%

The mobile subscriber density is high, – the household penetration is ~69%– pre-paid 22%

The incumbent’s market share is ~78% The low fixed line penetration may hinder the

Internet usage


Telephone main lines HU and EUTelephone main lines HU and EU


Distribution of connected linesDistribution of connected lines


Mobile subscribers HU and EUMobile subscribers HU and EU


Hirschman-Herfindahl indexHirschman-Herfindahl index


Internet subscribers HU and EUInternet subscribers HU and EU


Distribution of Internet accessDistribution of Internet access


Broad-band Internet usersBroad-band Internet users

AU, B, DK, FI, NL, SW

EL, IRL, IT, L, P, UK


Evolution of legal backgroundEvolution of legal background2003-2004

– Act C of 2003 on Electronic Communications(31 December 2003)

– EU 2002 regulatory framework (harmonisation Directives) implemented seventh among the EU 25 first among the EU 10



– Reorganisation of NCAH

• Decision by a 7 member Board

• Representative of the Communications' Users Rights

– UMTS tender (4 frequency bands)

• Mix of auction and beauty contest,


Strength and weStrength and weaaknessesknesses Only 9 month elapsed difficult to judge

Competition begun (already two more service providers offer fixed line telphone services)

Interconnection prices down to the half (in several steps through the RIOs, already begun in 2002)

Mobile terminating fees going downMarket analysis in advanced stage

Financing of USO not correctly solvedSome duties remained with the minister, not

withNRA


Steps of harmonisationSteps of harmonisation Questionnaire (597 Addressees) decision by the

Board to issue 2 March 2004(~97% returned)

Methodology applied in the procedure initiated for definition of relevant markets, analysis of competition on the relevant market and its efficiency, designation of operators with significant market power, and imposition of obligations. Accepted by the Board 30 July 2004


Steps of harmonisationSteps of harmonisation Market 15 notified 31 August 2004

CION accepted 5 October Market 16 notified 22 September

CION accepted 15 October Markets 7, 8, 10, 14 draft decision

notification ~ November Markets 1, 2, 3, 4, 5, 6 Waiting for final comments

of NCA notification ~ in 2004

Markets 9, 11, 12, 13,18 Open consultation, notification 1stQ 2005

Market 17 IRG/ERG Questionnairenotification ~ end 2004

liberalisation of the hungarian telecommunications market dr. ivan schmideg national communications...

Documents

mobile density eu

main line density eu

low fixed line penetration

fixed mobile telephony

incumbents market share

mobile subscriber density

service obligation

incumbents gsm