liberalisation of the hungarian telecommunications market dr. ivan schmideg national communications...
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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.
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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
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Telecomm market evolutionTelecomm market evolution22
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.
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Telecomm market evolutionTelecomm market evolution33
1999– 3rd provider (Vodafon) launches GSM
900/1800, the 2 incumbents GSM 1800 service
– alternative service providers launch data services
– VoIP allowed
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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
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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
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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,
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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
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Resulting telecom marketResulting telecom marketModerately developed fixed line
infrastructure
– 8 significant market players
• 5 geographical monopolistDeveloped mobile infrastructure
– 3 significant market players
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PSTN service providersPSTN service providers
MATÁV
INVITEL
HUNGAROTEL
EMITEL
MONORTEL
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Resulting owner structureResulting owner structure
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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
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Telephone main lines HU and EUTelephone main lines HU and EU
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Distribution of connected linesDistribution of connected lines
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Mobile subscribers HU and EUMobile subscribers HU and EU
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Hirschman-Herfindahl indexHirschman-Herfindahl index
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Internet subscribers HU and EUInternet subscribers HU and EU
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Distribution of Internet accessDistribution of Internet access
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Broad-band Internet usersBroad-band Internet users
AU, B, DK, FI, NL, SW
EL, IRL, IT, L, P, UK
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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
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Telecomm market evolutionTelecomm market evolution2004
– 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,
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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
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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
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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
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