The Hungarian Communications Market Developments and ...

The Hungarian Communications Market Developments and Regulation between 2004 and 2008
growth of the share of alternative service providers in Hungary was
significantly higher than the EU average. On the basis of the above
information, it can be established that the Hungarian traffic market has
dynamically approached the EU average between 2004 and 2006.
The Hungarian indices show that before 2004 incumbent service
providers have managed to delay competition successfully. The
harmful effects of this are observable even today, as it is safe to say
that the later it comes to entry into the market, the less chance there
is for fierce competition to develop.
In the fixed access markets of all EU Member States competition
developed only very slowly. The past few years have, however, brought
about some changes also in this respect. Essentially due to the growth
of the DSL market, fixed access became more attractive for alternative
service providers. In addition, the provision of voice communications
through cable television infrastructure also became economically feasible,
which significantly contributed to the strengthening of competition
in the fixed access markets in those Member States with significant
cable television penetration. In respect of the EU average, the ratio of
consumers using access provided by alternative service providers has
nearly doubled between 2005 and mid-2007.
Figure 4.7: Ratio of consumers using access provided by alternative
service providers
%
14
12
10
8
6
4
2
0
6,1
0,6
EU average
HU
PL
SK
SL
CZ
7,9
3,0
2004 2005 2006
2007
Source: NHH and EU Implementation Reports 11, 12, 13
In this period, Hungary has also seen a dynamic development,
with the hardly noticeable share of alternative service providers in
2004 almost reaching nine percent by 2007. This value was somewhat
higher than EU average growth. Making a regional comparison,
only the Polish index was better than the Hungarian. However, it is
9,5
5,5
13,5
8,8
also noticeable that competition in the retail access market has also
been developing at a notable pace in other countries of the region.
In Hungary, it is mainly the cable television service providers that
generate access market competition. On the contrary, the role of
alternative service providers competing through unbundled access
to the local loop is much less marked than in a number of other
European countries.
In 2007, Teligen dealing with the comparison of communications
prices estimated monthly spending relating to the consumer baskets
(newly) defined by the OECD (three residential and two business
consumer baskets), assuming that in the given consumer structure,
rational consumers opt for the optimal tariff-package of the incumbent
service provider.
The spending of Hungarian consumers with low (600 calls per
year) and medium (1200 calls per year) traffic (in both cases using
Tariff Package “Felezô”) is in nominal terms among the lowest ones
in Europe. The spending of residential consumers with significant
traffic (2400 calls per year) in Hungary, using Tariff Package “Favorit”,
is in the middle of the pack. At the same time it is likely that,
with Tariff Package “Favorit nonstop plusz” introduced meanwhile
by Magyar Telekom for consumers with large traffic, the Hungarian
value of the service would have been significantly lower. Also in the
case of the consumer basket for micro-enterprises, the Hungarian
value is the lowest one in Europe (Package “Grátisz 500”). This offer,
even in the case of small and medium enterprises, is among the
cheaper ones and, in terms of purchasing power parity, the Hungarian
values would be in the middle of the pack or characteristic for
more expensive countries.
Summary
On the basis of the assessment of the effects of regulation, it can be
established that after 2004 positive developments have started also in
fixed traffic markets. The share of alternative service providers began
to dynamically grow, with Hungary’s underdevelopment significantly
diminishing as compared to the EU average. Prices also decreased, thus
making consumers able to experience the advantageous effects of both
lower prices and greater choice. The intensification of competition and
the processes beneficially influencing consumer prosperity are essentially
due to the obligations imposed by the Board in line with the Eht., in particular
to the decrease of interconnection tariffs from the previously high
level to around EU average. NHH has also enforced the improvement
of non-price conditions of interconnection, which facilitated the entry of
alternative service providers into the market.
Indices of the fixed access market investigated are not as bright as in the
case of traffic markets. It is true that the access market competition did
make a forceful start also in Hungary, this was owing to factors beyond
the scope of regulation, primarily the entry of cable service providers into
the market within the framework of the 3-play strategy.