The Hungarian Communications Market Developments and ...

The Hungarian Communications Market Developments and Regulation between 2004 and 2008
The publication of the wholesale framework agreement on the
countrywide IP bitstream access service was made part of the
content of the transparency obligation. Accordingly, the mandated
service provider shall publish in advance the service quality parameters
undertaken and the different quality levels, as required by
demand. As a result of such publication, in addition to the terms and
conditions of contract familiar to entitled service providers, further
important parameters are stipulated.
The decision also defines the limits of the quality conditions undertaken
and published by the mandated service providers. Quality
conditions cannot be inferior to those undertaken by the mandated
service provider with reference to its own retail service based on
wholesale service. This is to ensure that the retail service of the mandated
service provider is competing for subscribers with that of the
entitled service providers under the same terms. According to the
decision, the mandated service provider shall in advance stipulate
the penalty for non-performance. So, the consequences of certain
quality problems become calculable for entitled service providers.
As opposed to the previous decision, provisions on migration
have been added to the content of the transparency obligation. The
decision contains two references to migration: first, when the entitled
service provider providing service for the end-user is changed, and
second, when the entitled service provider remains unchanged but it
provides service for the end-user using another wholesale service. In
both cases, the mandated service provider shall publish in advance
the conditions of the procedure applied during the migration and the
detailed justification for the conditions. This provides entitled service
providers with more safety and predictability. Through this obligation,
the Board is to ensure that by making the administrative procedures
faster and simpler, the specified conditions help subscribers
and entitled service providers when switching to another service
provider or using a new wholesale input.
Migration regulations defined in the scope of the transparency
obligation make it possible for the service provider to develop the
access obligations according to the real needs of the entitled service
provider. Under the previous regulations, it was a potential competition
failure that entitled service providers were not able to replace
the existing access service by a more adequate obligation, because
they were afraid that during the migration subscribers would not
tolerate service downtimes due to procedure deadlines. In the same
way, the willingness of the subscriber to switch service providers is
greatly reduced if the change or migration causes long downtimes
due to procedure deadlines not acceptable for the subscriber.
A detailed list of elements has been added to the obligation of
non-discrimination, in the case of which the obligation shall, in any
way, take effect. Such parameters include the issues of service rollout,
technical parameters, quality and capacity parameters, financial
settlement, discounts, and declarations. The listed criteria review
the significant elements of the provision of wholesale services.
Contrary to the previous general obligations, this specific list gives a
further basis for both entitled and mandated service providers. The
unambiguous list facilitates the application and the fulfilment of the
obligation.
As opposed to previous general obligations, now concrete examples
elucidate those technical, quality and financial processes, in
which mandated service providers are required to ensure non-discrimination.
The publication obligation, in particular the part thereof
requiring mandated service providers to publish these parameters
also in relation to its own retail services, ensures that fulfilment of the
obligation can be adjudicated by both the Board and entitled service
providers.
The obligation of non-discrimination has been extended by concrete
examples in order to avoid differences in the flow of information
and in deadlines between the retail businesses of mandated
service providers in the wholesale market and the alternative service
providers.
The Board identified the transfer of market power to associated
markets as a new market failure, as incumbent service providers
have made wholesale DSL sales subject to subscribers having fixed
telephone subscriptions. For the elimination of this practice of competition
restriction, the Board obligated incumbent service providers
to provide so-called “naked” DSL wholesale bitstream access service.
The basis of this obligation is that the mandated service provider
shall not generally limit the use of its wholesale services by entitled
service providers. Consequently, this gave a good opportunity for
the alternative service providers to provide services for subscribers
who do not want to use fixed telephone services. Moreover, the decision
stipulated that the service provider should provide wholesale
bitstream access service using naked DSL in a quality that does
not make it technically impossible for entitled service providers to
provide, with the use of bitstream access service, their own special
services, e.g. Voice over DSL-service.
According to the expectations of the Board, the possibility of
voice over DSL-services, provided through wholesale bitstream access,
gives entitled service providers the opportunity to counterbalance
the transfer of the power of obliged service providers realised
in wholesale markets (market 12) to the market of fixed telephone
services (markets 1 and 2).
Results in an international context
Broadband Internet penetration is dynamically growing in each EU
Member State, with the EU average increasing by three hundred
percent from mid-2004 to the beginning of 2008. Growth in Hungary
has also been rapid, showing a similar rate to the EU average.