The Hungarian Communications Market Developments and ...

The Hungarian Communications Market Developments and Regulation between 2004 and 2008
tions and the regulatory recommendations formulated on basis of
the shortcomings detected into consideration.
Market effects
The main objective of the obligations imposed in the wholesale
market of termination segments is the promotion of the output retail
market competition, with ultimate results also for the consumers.
The effects and success of regulation may be measured by analysing
retail market processes, market shares, and prices.
The revenue market share of the obliged Magyar Telekom in the
retail market of leased lines with a bandwidth lower than 2 Mbit/s
continuously decreased during the period. In the retail market with
a bandwidth above 2 Mbit/s, the service provider had an even lower
share (only below ten percent between 2005 and 2007).
There are many players in the market, with their share, from time
to time, significantly fluctuating. The index indicating the extent of
market concentration (Hirschman-Herfindahl Index featuring the
sum-of-squares of the market share of players) shows a continuous
decrease, i.e. increase in the intensity of competition and decrease
in market concentration.
Figure 4.24: HHI (Hirschman-Herfindahl Index) in the leased line
market with a bandwidth lower than 2 Mbit/s
%
The analysis of retail prices seems to point towards competition in
the retail leased line market. At the same time, the results show different
pictures in the case of services with different bandwidths. The
average prices weighted by the market share of the four largest service
providers of the market (Magyar Telekom, Invitel, Pantel, GTS
Datanet) 35 decreased in real terms with reference to all bandwidth
categories from 2004 to 2006. However, this means constant prices
“only” in nominal terms in the case of services with low bandwidths
(lower than 512 kbit/s). In the case of services with higher bandwidths,
there was a considerable decrease also in nominal terms,
with the average price in 2006 being nearly forty percent lower than
in 2004.
Figure 4.25: Weighted average prices of leased lines
%
110
100
90