October 1999

Hungary Master Report

I- General Background

Telecommunications, postal services, frequency management and information technology

Until the end of the 1980s, the development of the Hungarian telecommunication infrastructure was not part of mainstream public investment politics. The number of main telephone lines per 100 inhabitants was only 1.17 in 1950 and it was only 9.62 at the end of 1989. These figures represented less than one third of the European average penetration. The small volume and technically outdated telecommunications system was linked to a rigid institutional background. A proportion of the country’s local telephone exchanges were manually operated in 1990 and a round-the-clock telephone service was not ensured in more than 700 communities. The rapid growth of the communication needs of the public and business spheres is indicated by the fact that while 55,000 people were on the waiting list for telephone lines in 1955, this number had risen to 607,000 by 1989.

The development of the Hungarian telecommunication system has accelerated significantly since 1993 and has become one of the infrastructure supports of the realisation of the objectives of the national economy.

The following were the main pillars of the renewal of the telecommunications sector:

• development and enhancement of networks and services with modern equipment;
• the modernisation of institutional frameworks,
• the development of the appropriate legislative climate.

Practically simultaneously with world tendencies, organisational and institutional modernisation took place within the telecommunications sector resulting in the separation of regulatory and service tasks. The modernisation of the legislative environment was achieved by the Act on Telecommunications, entering into effect in 1993. The Act identified public telephones, mobile radiotelephones, public paging and public broadcasting as services to be performed on the basis of concessions, and all other telecommunication and information technology services were classified as within the sphere of competition. The task of the government in this process is to promote the most comprehensive telecommunications policy also expected by the development of the national economy and the development of a regulatory circle with which the marketisation of the sector and the harmonious co-operation of the multi-player market can be ensured.

The concession process creating the conditions for the application of modern technologies and equipment, as well as the involvement of external financial resources proved to be the key element of the renewal and enhancement of Hungarian telecommunications. MATÁV Rt. won the concession to serve the international and domestic long-distance traffic, as well as the local public telephony in 31 primary areas, while 14 strategic investors in 23 local areas share the concession service right. Since 1990 and 1994, three concession mobile radiotelephone services have become available in the country. The two Pan-European systems of national public pager services started in 1994. Concessions regarding public broadcasting and distribution have not yet been created.

All these processes made telecommunication the most promising and most dynamically developing sector of the national economy, from a business point of view. Practically the entire marketisation of the telecommunications sector created the technical and economic background for the material quantitative development and qualitative improvement of the basic telecommunications services, the introduction of new services and the satisfaction of the signal transmission needs of information technology. Several domestic and foreign individual and associative businesses are interested in the telecommunications activities classified as within the sphere of competition. The overall liberalisation of the service market (not later than 2002, also regarding the services currently performed on the basis of exclusive concessions) and its development in line with the needs of the regulatory environment and EU directives offer an opportunity for further investment in the field and the broadening of the competition for service.

According to our expectations, all these contribute to the improvement of the quality of services, the enhancement of service developments, the gradual integration of information technology and telecommunications, and not the least, the competition thus created leads to the reduction of prices. The service success of the telecommunications market, transformed in its structure and activities, is indicated by the fact that at the end of 1998, the number of connected public main telephone lines grew to 3.4 million from the less than 1 million in 1990. With this, the 9.6 main lines per 100 inhabitants rate increased to 33 per 100 inhabitants by the end of 1998. The fact that the number of those waiting for lines shrank to one tenth of its former size, 600,000 in 1994 indicates that now an offer market has been created in public telephony. The overall automation of the telecommunication network has been completed. An around-the-clock accessible (callable) public telephone station is operating in each community of the country.

Network enhancement was achieved through digital technology, the extent of digitalisation reaches 70% in the country. This technological background made different value-added telephone services, as well as the transmission and handling of data-like information possible. The digital technology fits the needs of business, bank and commercial data exchange, the interconnection of information technology systems, the Internet access and the use of ISDN services, etc. The user demand for the analogue and the two digital radiotelephone services started in 1990 and 1994 respectively has shown a very rapid quantitative development and within two years the services were accessible in the entire territory of the country.

The number of mobile subscribers recorded at the end of 1994 grew 7.5 times by the end of 1998 and exceeded one million. GSM services can make connections to similar systems of about 60 service providers operating in 45 countries of the world. Usage experiences justify the entering into the market of further public radiotelephone service providers and the announcement of concessions for services in new frequency bands. The user demand for the two national paging services fell far behind the expectations. The 65% geographical coverage realised so far and the nearly 20,000 subscribers do not make it a definitive player in the telecommunications market.

While the number of public medium and short wave, as well as the FM radio broadcast stations and the backbone and transmission television stations did not change between 1990 and 1997 (206 stations), during this same time the number of commercial radio and television stations grew from 5 to 125 and the number of local broadcasting devices from 1 to 150. By now, the terms and conditions of community and individual access to satellite programmes are also available, including domestic programmes settled on satellites. The number of the subscribers to programmes available on the AM-micro broadcasting system grew from 22,000 to nearly 160,000 between 1990 and 1998. In 1994, 975 cable television companies operated in the country with a network of nearly 25,000 kms, offering an average of 11 programmes to 1.2 million subscribers. In 1996, 461 service providers had a network of 33,000 km, an average of 15 programmes and 1.2 million subscribers. The restricted nature and exclusive state property of radio frequencies make it a government task to provide for the economic, technical, legal and personal conditions of frequency management. In accordance with the acts on frequency management and broadcasting, the ORTT assigns the radio frequencies for broadcasting in a bidding procedure. Frequencies are available via the concession tenders announced by the Minister of KHVM, in connection with public telecommunications services. The Telecommunications Authority’s assignment and permitting rights extend in respect of the frequencies necessary for public and concession-free services, as well as the non-public and concession free telecommunications services with a unique assessment and an official frequency license.

The task of the Ministry of KHVM is the international harmonisation of the use of radio frequencies. Hungarian Post Ltd., which is self-financing, similarly to the postal services of the EU member states, is currently public property. Half of its core activities are composed of postal activities and a third financial. The Postal Act stipulates that it is a core service to provide a post office for every community with more than 600 people. The extent of the construction of the Hungarian Post stands well in international comparison. The Postal Act assigned postal core services to the sphere of concessions and other activities to competition (with the exception of the issue, circulation and withdrawal of postal valuables and stamps). At present, Hungarian Post has sold only its regional magazine distribution company, and it is a monopoly service provider in the rest of the areas. The government expects the partial privatisation of Hungarian Post, the assignment of core services into concession and the formation of competition conditions concerning many services.

1. General telecommunications Policy

The determinant line of the Hungarian telecommunications policy is the continuous effort towards liberalisation, so the elimination of the monopolies through concession and privatisation is in progress.

2. Institutional structures in charge of policy issues

2.1 Ministries responsible for the communications areas

Ministry of Transport, Communications and Water Management (KHVM): The 1071/1998 governmental decree defines KHVM’s functions – according to the developed nations’ practice and the expectations of the EU integration – as the following. The Ministry:

• creates an appropriate basis for communications strategy decisions,
• works out and sets communications policy and other conception plans before the Government,
• prepares the normative rules and their issue as provisions of law according to sectoral policy decisions,
• co-ordinates international communications, places regulation into the international framework and carries out integration tasks,
• prepares, maintains and evaluates concession contracts,
• ensures the active participation of social forums of reconciliation of interests in shaping regulation and making decisions at different levels.

2.2 National regulatory authorities

• Communication Authority (HIF): According to the governmental decree 142/93, the Communication Authority (in Hungarian: Hírközlési Fofelügyelet, HIF) is the licensing, supervising, regulatory and administrative agency for telecommunications, postal services, and frequency management in Hungary carrying out its activities under the control of the Ministry of Transport, Communication and Water Management. The HIF is a budgetary institution with nation-wide competence and independent cost management. Its President reports to the Minister of KHVM, and holds the status of Deputy State Secretary. The Minister is responsible for policy-making, legislation and granting concessions. In addition to the authority functions, HIF also assist the Ministry in the elaboration of preparatory studies on new acts, decrees and policy statements.

• National Radio and Television Commission (ORTT): The National Radio and Television Commission was established in conformity with the Act on Radio and Television (I/1996), as a legal entity under the supervision of the Parliament. Its members are elected for four years of the Parliament by a majority vote. The chairman of the Body is designated jointly by the Prime Minister and the President of Hungary. This body ensures the independence of the program suppliers, safeguards the freedom of the press, whose basic principles are laid down in the Constitution of Hungary. Its aim is to promote and safeguard the freedom of expression by encouraging new program suppliers to enter into the market, and by dismantling the existing information monopolies and by the preventing the creation of new ones. The Body has set up a Complaints Committee with five-year mandate for dealing with complaints in relation to violation of the principles of impartiality of information.

• Kormányzati Frekvenciagazdálkodási Hivatal (KFGH) = Governmental Frequency Management Agency: GFMA is responsible for the operative management of frequency issues in state administration such as police, military, fire authorities, etc. The common task of HIF and GFMA is co-ordination of frequencies between the governmental and civil frequency allocations.

2.3 Authorities allocating frequencies

• Frekvenciák Nemzeti Felosztási Táblázata (FNFT) = National Table of Frequency Allocation The Hungarian frequency management is based on the National Table of Frequency Allocation (NTFA) which is issued as a governmental decree and it is regularly revised. HIF frequency management experts are involved in elaborating and updating of NTFA. In line with this table and the elaborated national radio-communication concept propositions are prepared on the utilisation of the frequency spectrum. It is based on the analysis of current and the predicted demands in the telecommunications of the country considering global trends. The frequency sharing between governmental and civil users is also based on NTFA. HIF is chiefly concerned with the regulatory issues of radio communications, although, it’s regulatory liability covers the full scope of civil radio services.

The activity of frequency allotment involves working out regional and local frequency plans for radio systems. This also includes the national and international co-ordination of frequency plans and preparation of international agreements.

The regulatory functions are shared among some authorities:

• KHVM Frequency Management Bureau (Frekvenciagazdálkodási Iroda)
• Communication Authority (HIF)
• Governmental Frequency Management Agency
• National Radio and Television Commission
• Aviation Authority (Légügyi Hatóság)
• Navigation Authority

2.4 Economic Competition Agency (GVH)

The Economic Competition Agency is a public administration organ with its own budget and a national scope of action under the supervision of the Parliament It was founded in 1991. It is GVH’s duty to ensure the enforcement of the competition act. Within this scope, it carries out an activity of officially applying the law under legal control. As a consequence of the proceedings, GVH can interdict an enterprise violating the law from the activity through which it violates the law, and can also impose penalty.

The competition act defines the illicit activities as the following: unfair manipulation of consumers, statements restricting economic competition, taking an unfair advantage of economic superiority. GVH also operates as a grantor authority. In the case of a merger of companies with turnover exceeding the legal limit, GVH’s licence has to be applied for. GVH provides professional opinion on governmental competition policy, and in connection with decision making it is involved in codifying competition-related provisions of law. GVH, either within its own scope or on behalf of the Parliament’s Economic Commission, also conducts analyses on individual market sectors and how economic decisions and processes influence competition.

2.5 Consultative bodies

• Távközlési Érdekegyezteto Fórum (TÉF) = Telecommunication Conciliatory Forum: The Forum has the duty to reconcile the viewpoints of different interest groups inside the Forum and to form opinions on new decrees e.g. on tariff regulation of the PSTN, telecommunications investment contribution subscriber’s contracts etc. The Forum discusses these issues before being submitted for discussion between ministers. Only legal entities van enter the Forum and its members from three different interest groups as follows:

1. Users group including small users, private network operators, the organisations for information and database management, the Consumer Protection Agency, etc.
2. Entrepreneurs group including large operators providing nation-wide services, local telephone operators, paging and mobile service providers, supplying services under concession agreements, cable TV and broadcasting companies, National Association of Entrepreneurs, institutions, universities with relevant research, development and educational activities, representatives of the telecommunications industry.
3. Group of local governments, including the Association of Local Governments.

• Híradástechnikai és Informatikai Tudományos Egyesület (HTE) = Hungarian Scientific Society for Telecommunication

• Távközlési Mérnöki Minosito Bizottság (TMMB) = Telecommunication Engineering Qualification Committee The Committee of telecommunication experts was also created by the Act on Telecommunications and organised in 1993 as a professional committee of the Hungarian Scientific Society for Telecommunications (HTE). HTE incorporates all the telecommunications service providers, manufacturers, commercial companies, universities, regulatory bodies, etc. The members of the Committee (max. 30 experts) are elected by the membership of HTE and are appointed for three years.The main activities of the Committee include:
  
  1. formulating and expressing opinion on technical and economic aspects of governmental and ministerial decrees on telecommunication
  2. participating in discussions of the draft of decrees and bills
  3. introduction of own proposals for different aspects of telecommunications
  4. studying selected topics related to long-term development of telecommunications
  5. delegating of experts to ministerial bodies for evaluating tenders.
  6. From 1997 the scope of the Committee was extended to the field of informatics too.

• Nemzeti Hírközlési és Informatikai Tanács (NHIT) = National Council for Communications and Informatics The National Council for Communications and Informatics was also established by the Act on Radio and Television in 1996, involving the tasks of the National Frequency Management Council (established by the Act on Frequency Management). The 11 member Council is an advisory body of the Government. The Council submits proposals to the Government on:
  
  1. creation of a market-based regulation in communications promoting and safeguarding the principle of non-discrimination
  2. the scope and implementation of governmental tasks in communications
  3. general principles of frequency utilisation
  4. assurance of harmonisation between governmental- and civil-purpose frequency allocations
  5. representation of Hungarian viewpoint at world and regional conferences on radio and telecommunications

• Informatikai Érdekegyezteto Fórum (IÉF) = Conciliatory Forum for Informatics This Forum was also established by the Act on Radio and Television with functions similar to the functions of the Telecommunication Conciliatory Forum on the area of information technology and services.

2.6 Public telecommunications services

• MATÁV In 1998, 59,6% of the company’s shares were possessed by MagyarCom (joint company of Deutsche Telekom and Ameritech International), 6,6% by the Hungarian Government, 2% by EBRD, 1% by IFC, while the rest got into small investors’ possession through open quotation. MATÁV won national concession as for toll calls and international calls, and is a service provider in 36 zones among local telephone providers. (Apart from MATÁV, there are currently 13 local telephone provider companies in Hungary)

• Westel450 The wireless mobile phone market has developed fast in recent years. Westel450 Ltd. was established by MATÁV in 51%, and by US West in 49%. It has 70 000 subscribers. Westel900 and Pannon GSM received a 15-year concession in 1994 as for GSM mobile service providing, with an exclusive 8 years included. By the end of 1996, the system was operating throughout the whole country, and by the end of 1998, the number of subscribers who preferred to choose mobile services exceeded 800 000.

• Primatel consortium (Vodafone Air Touch, RWE Telliance, Hungarian Post Ltd., Antenna Hungária Ltd.), besides Westel and Pannon GSM, has in 1999 won the right for providing DCS1800 mobile telephone services, which has to be launched until the end of 1999 according to the concession contract.
  
• Euró-Hívó Co. and EasyCall Hungary Co. have been providing ERMES pager services for their subscribers since 1996.
  
• Antenna Hungária has been transformed into a company in 1992. Its 83,5 % is quoted by ÁPV, 3,5% by local governments, 4% by Antenna Hungária and 9,3% by private entities. The Government intends to decrease its ownership proportion to 50% + 1 vote. Antenna Hungária broadcasts the three national public service radio broadcasters’ (Kossuth, Petofi, Bartók) and two public service television broadcasters’ (MTV1, MTV2) transmission through its national ground network. It also broadcasts local and some nationalities’ programmes, and it has been transmitting the first Hungarian satellite television broadcaster’s (Duna TV) programmes since 1992.

2.7 Public service broadcasters:

To ensure public service broadcasting and to protect its independence, the Parliament establishes the Hungarian Radio Public Endowment (Magyar Rádió Közalapítvány), the Hungarian Television Public Endowment (Magyar Televízió Közalapítvány) in Act I of 1996 (Media Act), and, on its founder’s initiative, reorganises the Hungária Television Public Endowment (Hungária Televízió Közalapítvány). According to the Media Act, the Hungarian Radio Public Endowment and the Hungarian Television Public Endowment establishes the Hungarian Radio public limited company (Magyar Rádió Részvénytársaság) and the Hungarian Television public limited company (Magyar Televízió Részvénytársaság) through closed foundation for fulfilling the tasks of the international public service radio and television. The Hungarian Radio (Magyar Rádió Rt.) and the Hungarian Television (Magyar Televízió Rt.) operate as public limited companies of individual proprietorship established by the Hungarian Radio Public Endowment and the Hungarian Television Public Endowment. Duna Television also operates as a public limited company (Duna Televízió Rt.). The public limited companies have a non-negotiable share. The Hungarian Radio and the Hungarian Television provide public service broadcasting for the vast majority of the nation’s citizens, while Duna Television provides similar services principally for Hungarians living beyond the frontiers of the Hungarian Republic.

2.8 Public service televisions:

• MTV1 (ground) Magyar Televízió Rt
• MTV2 (ground and satellite) Magyar Televízió Rt.
• Duna TV (satellite) Duna Televízió Rt.

2.9 Public service radios:

• Kossuth Magyar Rádió Rt.
• Petofi Magyar Rádió Rt.
• Bartók Magyar Rádió Rt.

3. International connections and agreements

3.1 The European Union and the issue of legal harmonisation

In the Act I of 1994, Hungary announced the European Convention, signed in Brussels on 16^th December 1991, on creating a partnership between the Republic of Hungary and the European Communities and their member states. Based on the partnership agreement, an extremely broad legal harmonisation process started. The deadlines and appointed times are prescribed by statutory rules of governmental decree level (2174/1995. /VI.15. / governmental decree, 2343/1995. /XI. 16. / governmental decree). Hungary has taken significant steps in the field of union acquis, practically; it is statable that the current legislation process meets the requirements of the European law. As the legal harmonisation related to communications and privacy is scheduled to the period after 1998 according to the EU White Book of 1995, much yet remains to be done by the Hungarian legislators in this field.

3.2 Conventions

Hungary is involved in some significant international conventions related to the information sector (the Geneva Convention of 1971 since 1975, the Geneva Treaty of 1989 since 1995, WIPO’s treaty on copyright issues, and copyrights in lectures and sound recordings since 1998, TRIPS Agreement since 1994, ERO Agreement since 1996, WIPO’s trademark treaty since 1998). Reciprocal agreements also play an important role (e.g. an agreement between the governments of the Republic of Hungary and the United States of America on intellectual properties, announced MK 1993/173.).

4. Regulatory framework

4.1 Historical overview

The development of telecommunications and the reform of the regulatory framework have been simultaneous process in Hungary. In the years of the centrally planned economy the regulatory functions and the service provisions were not separated.

Up to 1989, the telecommunications regulation also followed the main concepts of the centrally planned economy, favouring state-owned monopolistic organisations. The Postal Act II/1964 stated that postal and telecommunication matters are governmental activities.

In the past few years, new laws were drafted and passed by the Hungarian Parliament providing the legal framework for the creation of a liberalised market environment.

4.2 Present general legal situation

The Act XVI of 1991 on Concession declares that one of the possible ways of efficient operating of state property is the transfer of this right to appropriate companies under concession agreements. The Act on Concession created the possibility of privatising the telecommunications sector and determined the minimum share of the state ownership.

In 1992 the Act LXXVII on Telecommunications (in force from July 1993) the responsibilities of the state are, inter alia, as follows:

• Development of a national telecommunications policy and the creation of conditions necessary for its implementation
• Control over the telecommunications market
• Provision of public telecommunications services for disabled people
• Exercising ownership rights over telecommunication property owned by the state
• Fulfilment of authority duties in telecommunications
• Economic, technical regulation and legislation aimed at ensuring the technical and traffic integrity of national telecommunications networks
• The control over electromagnetic spectrum for radio-communications for civilian and governmental utilisation is exercised by the state exclusively in Hungary. The Parliament passed the Act LVII of 1993 on Frequency Management. This act defines the functions of the Minister of KHVM as follows:
• Determination of qualitative, technical and technological conditions for basic technical plans, rules and services relevant to frequency usage
• Exercising state ownership rights arising form frequency utilisation
• Representation of the Republic of Hungary in international organisations dealing with the frequency management

The enactment of the Act No. I of 1996 on Radio and Television, called „Media Act" was preceded by long debates and was the outcome of the prolonged procedure while widely differing viewpoints and various interests had to be converged. The objectives of the Act is to ensure:

• Free and independent radio and television broadcasting considering the freedom of expression
• The freedom of disseminating objective and impartial information
• Preventing the creation of a monopoly situation in information provision
• Promotion of culture at international and national levels

4.3 Principle provisions of law

The most important decrees that have already been in force, without aiming at completeness, are:

• The Fundamental Technical Plan on Telecommunications (1993)
• Concession Procedure and Administration Fees for the Telecommunications Sector (1993)
• Regulation of Tariffs of the Public Telephone Services (1993)
• Interconnection of the Telecommunications Network, Licensing of their Interworking and Network Contracts (issued by the Government 1993)
• Tariff Routing Plan of the Public Switched Telephone Network (1994)
• Regulation of Tariffs of the Public Mobile Telephone Network (1994)
• Election of the board and members of the National Body for Radio and Television (Resolution of the Parliament 1996)
• Licensing Telecommunications Services (Issued by the Government in 1997)
• Frequency registration and Usage Fees (Issued by the Government in 1997)
• National Allocation Table of Frequency Bands (Issued by the Government in 1997)
• Requirements Associated with Consumer Protection and Quality of Service of the Particular Telecommunications Subscriber’s Contracts, as well as on the Quality Inspection by the Authority (1997)
• On the Telecommunications Subscriber’s Contracts (issued by the Government in 1997)
• Basic principles of the new telephone tariff regulation system entering into force as of 1 January 1998 (Joint statement by the Minister of Transport, Communications and Water Management and the Minister of Finance)

4.4 Issues

4.4.1. Liberalisation

4.4.2 Licensing

• Interconnection of the Telecommunications Network, Licensing of their Interworking and Network Contracts (issued by the Government 1993)
• Licensing Telecommunications Services (issued by the Government in 1997)

4.4.3. Tariff principles

• Regulation of Tariffs of the Public Telephone Services (1993)
• Tariff Routing Plan of the Public Switched Telephone Network (1994)
• Regulation of Tariffs of the Public Mobile Telephone Network (1994)
• Basic principles of the new telephone tariff regulation system entering into force as of 1 January 1998 (Joint statement by the Minister of Transport, Communications and Water Management and the Minister of Finance)

4.4.4. Quality of Service
Requirements Associated with Consumer Protection and Quality of Service of the Particular Telecommunications Subscriber’s Contracts, as well as on the Quality Inspection by the Authority (1997)

4.4.5. Interconnection
Interconnection of the Telecommunications Network, Licensing of their Interworking and Network Contracts (issued by the Government 1993)

5. Freedom and protection

5.1 Copyrights and intellectual property rights

In Hungary, a broad protection is in effect in the field of intellectual composition (copyright, trade law protection), also with a strong support of criminal law (the violation of copyright and related rights is punishable independent from value limit and even in case of negligence).

The new copyright act, promulgated in 1999 (LXXVI. Act of 1999), introduced a uniform legislation after the practically renewed, dismembered, decree-level former law. The Act meets the requirements of the present international (Union Agreement of Bern, Universal Copyright Convention, the Rome Convention, the Geneva Convention, WIPO-contracts, TRIPS-agreements) and EU (the Commission’s 91/250/EEC, 92/100/EEC, 93/83/EEC, 93/98/EEC principles) legislation, but has not yet settled the creation of protection of those databases not suitable for ensuring copyrights, which was postponed to 2001.

The new copyright act provides wider opportunity to apply common law enforcement, and by extending the scope of the reprographic charge on photocopiers, the bulk royalties on individual media, and the author’s exclusive rights, the author and the rightful person to assert the right will be placed into an extraordinarily strong position.

5.2 Privacy, data protection, consumer protection

In Hungary, both the data protection and information privacy, and the freedom of information are regulated on a high standard, and it is principally the former area that forms a sophisticated, new, and after all independent legal field. Hungary is in a more advantageous position in this field both professionally and in regulation than the other former socialist countries. One of the reasons for this is because an interdisciplinary group has already started to do theoretical work, collect western experience, and to develop a subsequent Hungarian legislative conception since the early 80s, which proved to be beneficial after the change of regime. The right for data protection and information privacy is included in the Constitution as a fundamental right.

Constitution of the Republic of Hungary

Chapter XII

Fundamental Rights and Duties

Article 59

(1) Everyone in the Republic of Hungary shall have the right to good reputation, the inviolability of the privacy of his home and correspondence, and the protection of his personal data.

(2) For the enactment of the law on the protection of personal data the votes of two thirds of the MPs present are required.

• The most important, frame act is the combined data protection and freedom of information Act, DP-FOIA in short, or Act LXIII of 1992 on Protection of Personal Data and Disclosure of Data of Public Interest in its whole name; as a matter of fact, it follows the Canadian solution in this way. This act interprets the right for the protection of personal data not as a traditional protective right, but as an active right of self-determination (informational self-determination). The aim of the act is "to guarantee the right of everyone to exercise control over his or her personal data and to have access to data of public interest, except as otherwise provided by law under this Act." DP-FOIA is technology-neutral, with a wide coverage area; thus it covers all the areas of data handling. It includes the fundamental conditions of data handling; the rights of the persons concerned (data subjects) and their enforceability, the possibilities of legal remedy and compensation. The publicity of data of general interest is everyone’s legal due, which comprises not only the publication of these data, but also involves getting to know and copy them. This act contains provisions as to create the institution of the Parliamentary Commissioner for Data Protection and Freedom of Information, and keep a Protection Register. Considering the characteristics of both constitutional rights regulated in DP-FOIA, their restriction can only happen in an act, and not by a lower level of regulation, and their substantial content can be restricted by no act. (Partial regulations based on legal authorisation can of course be determined by inferior statutory rules.)
  
  Exceptions to the main rule of the publicity of data of public interest are regulated by another separate act called Secrecy Act, or Act LXV of 1995 on state secrets and office secrets. This act determines the twofold system of criteria of the possible legal declaration of state secrets: the formal criteria include the possibility of placement among secret areas listed in the appendix of the law, the evaluation process and the appropriate handling of the document, while the content-based criterion is that the data in question should seriously interfere with the interests of the Republic of Hungary. In order to downgrade or hand over the data, one can turn to the court or the Commissioner for Data Protection and Freedom of Information even by referring to the content criteria.

The general rules of DP-FOIA are unwrapped by a set of sectoral acts. Independent acts of higher importance are:

• Act LXVI of 1992 on the Registration of Personal Data and Addresses of Citizens
• Act XX of 1996 on Identification Modes and Use of Identification Codes Replacing the Personal Identification Number
• Act LXVI of 1995 on Public Records, Public Archives, and the Protection of Private Archives
• Act CXIX of 1995 on the Handling of Name and Address Data for the Purposes of Research and Direct Marketing
• Act XLVIII of 1997 on the Handling and Protection of Medical and Related Personal Data

Besides independent acts, a couple of other acts also include chapters, sections or appendices to determine the legal conditions of the handling of personal data, like the police, national security and higher education acts. There are also a number of decrees containing data handling rules authorised by the above acts.

• The violation of data handling rules will lead to criminal prosecution, e.g. unlawful data handling, abuse of special categories of personal data, in the Criminal Code. The most important special institution of the field is the Commissioner for Data Protection and Freedom of Information, who is elected for six years, together with two other parliamentary commissioners; in summer 1995, for the first time. Its authority extends over both the public and the private sector, and it simultaneously supervises the enforcement of the protection of personal data and the publicity of information of general interest. Its scope of duty also involves the investigation of complaints, the professional instituting of inquiries, expressing an opinion on bills related to data handling, and keeping a Protection Register. As a consequence of its investigations, it provides recommendations, which are not obligatory (except for downgrading state and service secrets) to be implemented, but their acceptance rate is very high. It makes its recommendations public, and the annual reports are published in Hungarian and English. As a first step in the distribution of the so called „Canadian model", the system of local representatives of information rights is set up, together with the leaders of Bács-Kiskun County.
• The Constitutional Court plays another important institutional role. Plenty of its resolutions dealt partially with rights and legislation considering data handling. One of the best known is the 15/1991 (IV. 13.) AB Resolution, which concluded that the use of the universal personal identification number was unconstitutional.
• In 1993, Hungary signed, and in 1997, it ratified the European Council’s Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data, 1981.
• Hungary is a member of the OECD, and it meets the requirements of OECD’s Guidelines on the Protection of Privacy and Transborder Flow of Personal Data, 1980.
• Hungary applied for admission to the European Union; its data protection legislation, laid down in the Data Protection Directive, 1995 (Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data.), fully meets the requirements of the EU. In order to reach total conformity, only smaller modifications are needed in this area, for example in the field of transborder data flow among others.
• The most important legislative issue in this field was the modification of DP-FOIA and other acts dealing with data handling, in summer 1999, when DP-FOIA, in conformity with the European practice, introduced the concept of data processor, which has more limited responsibilities than the data controller.

5.3 Electronic protection, legal protection and safety (encoding, electronic purchasing)

A number of institutions appeared in 1999 in the Hungarian law, which, in conformity with the latest developments of the union legislation, created a wide area for the spreading of electronic purchasing. The 17/1999. (II.5.) Governmental decree on contracts between people far from each other contains a regulation compatible with the 97/7/EC Principle, the 18/1999. (II.5.) Governmental decree on unfair conditions in contracts with customers contains a regulation compatible with the 93/13/EEC Principle, while the 77/1999. (V.28.) Governmental decree on different rules considering the issue and use of instruments of electronic payment contains a regulation compatible with the 97/489/EC recommendation.

In the area of electronic services, the data privacy requirement asserts itself in a wide scope (LXXII. Act of 1992 on telecommunications, LXIII, Act of 1992 on the protection of personal data and the publicity of information of public interest). The new legislation (CXIX. of 1995 on the handling of names and addresses with the direct aim of collection of orders) makes real efforts to suit the requirements of the related public right (108. European Council Agreement, the Council’s Recommendations).

There is no legislation on civilian cryptography at the present moment, the scope of the 43/1994. (III. 2.) Governmental decree refers only to data under the encryption obligation considered to be state and service secret. The use of cryptographic devices for personal purposes is allowed. The authority can have access to information delivered online in case of suspicion of serious crime and by leave of court.

The Hungarian legislation has not yet put the issue of regulating electronic signatures on the agenda, which will only take its turn after passing the EU directive, no sooner than 2001. The comprehensive study of the issue of electronic commerce is in progress at a professional level.

5.4 Freedom of expression and information

The freedom of expression and the freedom of the flow of information, and the right to get to know and disseminate information of public interest are included in the Constitution among fundamental rights.

Article 61

(1) Everyone in the Republic of Hungary shall have the right to freedom of expression and to receive and impart information of public interest.

(2) The Republic of Hungary shall recognise and protect the freedom of the press.

(3) For the enactment of the law on the publicity of data of public interest and the law on the freedom of the press the votes of two thirds of the MPs present are required.

(4) For the enactment of the law on public radio, television and news agencies, and on the appointment on their leaders, the law on licensing of commercial radio and television broadcasting, and the preventing of monopolies of information, the votes of two thirds of the MPs present are required.

6. Principles considering the Information Society

Hungary has not yet created an official strategy, a developed conception on information society. In 1995, in co-operation with civilian experts, a document titled National Information Strategy (NIS) was created and made public. No real steps have been taken in the direction of implementation until 1999, the government’s information strategy, practically, covered only state administration (principally central state administration). A proposal on the governmental co-ordination of informatics and telecommunications was submitted to the government in 1997, and the Government Committee for Informatics and Telecommunications was also set up that year. The Office of the Prime Minister charged an expert group with the commission of creating a professional discussion paper in January this year, which was finished by the end of March, with the title ’Hungarian response to the challenges of the Information Society’ (but it only became public in September). This document made efforts on a professional basis to outline priorities and chart a course for actions for the government, paying considerable attention to the European Union’s Green Papers and policy of information society, the convergence of telecommunications, and the public informatics sector. The draft is currently in the status of inter-departmental co-ordination, but in the hopes of the Office of the Prime Minister, it will be submitted to the government this year. Not having thoroughly considered principles represented at government policy levels, we make an attempt in the following to briefly summarise the subject areas according to details included in the professional discussion paper.

6.1 General principles

Even the first document defining the Hungarian Government’s information policy included at policy level that Hungary build the implementation of information society basically on private initiatives, the market representatives. The government’s role is to provide environmental conditions (legislation, economic environment, providing the infrastructure, and making its own organisation and operation more effective), and, in the economic sphere, to find competitive solutions. This is decisively confirmed in all latest governmental documents.

"The developed world is in a transition towards the information society. Hungary cannot withdraw itself from the changes on the threshold of the access to the European Union. The convergence of informatics, telecommunications and the media and their incorporation into all aspects of the economy and society brings fundamental changes to our lives." The Office of the Prime Minister plays a prominent role in this process. „The Office deals with the governance and co-ordination of governmental activity, arranges comprehensive government strategies and plans, fulfils administration policy duties, and takes part in planning and fulfilling high-priority governmental missions in informatics including telecommunications. Its functional responsibility comprises the co-ordination of the development of the strategy considering the transition to the information society, and the co-ordination of the state administration informatics." (1066/1999. (VI.11.) Governmental decree on the further development of the co-ordination of state administration informatics).

6.2 IT application areas

6.2.1 Government (national, regional, local)

Since 1993, a series of governmental decrees have defined the co-ordination of the informational improvement of government and state administration agencies (1039/1993. /V.21. /, 1106/95. /XI.2./, 1066/1999. /VI.11./). In the preparations of the Hungarian information strategy, the requirement of a servicing state and civil administration, and a citizen-friendly conduct of affairs appears visibly. This manifests itself in outlining three programs: government without paperwork (the information management of the government and the administration should happen digitally), one-counter conduct of affairs (the electronic conduct of affairs should also help in the solution of complex matters through the application of fully digitised, utility-like basic databases), community linkage (the public administration, with the application of the available digital devices, should help citizens and local communities, create community Web sites, and support the establishment of online communities).

6.2.2 Education

At the present moment, all the Hungarian secondary schools are online, but the computer supply of the educational institutions and the Internet access of primary schools are only partly solved. Computer literacy is part of the curricula, a high number of schools possess computer laboratories. The National Tele-education Committee (Nemzeti Távokatatási Tanács) has also started its operation. The aim is to achieve that all the Hungarian schools have access to the Internet, have a computer room, all the school staffs are supplied with computers, and school libraries also have access to the Internet. A new pedagogy built upon a wide variety of electronic curricula and online contents should be created, which is able to use interactive multimedia applications. The necessary material resources, however, are not yet completely available.

6.2.3 Transport

The structure of the Hungarian industry has significantly changed since the change of regime bearing more and more marks of an economy that is operating within a framework of subcontractors and co-operations. This requires such (digital) logistic solutions as digital mapping and satellite-based global tracking and positioning system. It is not yet developed how and to what extent the government will participate in the creation of the necessary infrastructural networks.

6.2.4 Public Health

The creation of a system that is personalised (all personal health information, medical history, anamnesis, etc.) fully integrated (links all health institutions and institutional levels), based on information technology, protected to the greatest possible extent (data protection), accessible for the rightful people without restrictions, identical to EU standards considering health informatics developments.

6.2.5 Other areas

By recognising the actual role and importance of the information industry (CT service sector), and if it is made possible through market-conform governmental measures, it can be transformed into a leading sector of the domestic economy. Hungary can become a point of junction not only as a consequence its geographical location, but because of its role played in informatics. This requires an increased state intervention on the part of the government (support, and the development of preference systems), and the support of participation in research and development programs. These issues can be facilitated significantly by the fact that Hungary is part of the EU’s 5^th Research and Technology Development Skeleton Programme (resolution 3/99 of the Association Council (Társulási Tanács), promulgated with the 114/1999 /VII. 30./ governmental decree).

 

II - Ongoing Developments

1. Changes underway in the regulatory framework

1. 1 The liberalisation of telecommunications and new areas of development

Besides the first place Primatel consortium (Vodafone Air Touch, RWE Telliance, Hungarian Post Ltd., Antenna Hungária Rt.), Westel and Pannon GSM won the tender for providing DCS1800 mobile services, and they are to start operation by the end of 1999 according to the concession contract.

MATÁV’s monopoly will end in 2002, thus creating a completely liberalised market. According to the modified Telecommunications Act of 1999, the concession contract winner telephone service providers (including MATÁV) will only be allowed to be part of the cable television market within serious limitations. The decision, which is in conformity with the European Union’s expectations, the requirements of the competition laws, and the platform of the government, makes an opportunity for the cable television companies after the termination of the concession to enter the market of telephone service providing with a competitive chance against telephone companies who are currently in a monopolistic situation.

UPC Hungary are planning to provide Internet access through its cable systems. In Nagykanizsa, experimentatively, the Internet can already be accessed. In Miskolc and in Budapest, the Internet will be accessible in the second part of the year. UPC Hungary’s objective is to provide an integrated communication and entertainment service.

1. 2. New legislation and arrangements in the codification phase

New legislation in the codification phase covers the following areas:

A uniform communication act is under construction under the leadership of the Ministry of Transport, Communications and Water Management (KHVM) paying attention to the requirements of the legal harmonisation of our EU accession

The creation of the legal environment for electronic commerce, and in connection with, and apart from it, the creation of the legal conditions for digital signatures and electronic document handling. The Ministry of Transport, Communications and Water Management (KHVM), together with the IM and in co-operation with other departments is working on the principles of digital signatures paying attention to the EU Commission’s draft legislation. The preparatory works for the regulation of electronic commerce are underway. During the regulation of electronic commerce, we pay significant attention to the creation of protective measures for the protection and security of data available online. It is mainly GM and KHVM that takes part in these works.

The clarification of the responsibilities and liabilities of Internet Service Providers. As for the responsibilities and liabilities of the media considering information dissemination in the scope of the service, we wish to create a Hungarian legal environment, which is in conformity with the EU Commission’s provisions of law and draft legislation. KHVM has already started to work on this issue.

Announcing international standards including the standardisation of digital signatures and cryptography. Hungary wishes to participate actively in shaping the above standards. Handling limited resources

1. 3 Frequency management

Frequency management has to ensure the necessary frequency spectrum for radio communication devices both for telecommunication and non- telecommunication purposes. That is why the government has to provide the economic, technical, legal, and personal conditions, and the institutional framework for an effective modern frequency management. Paying attention to these points, it has to organise the research and development basis of frequency management, promote the creation of the essential system for measuring services and the complex system for radio control, surveillance and noise suppression, and has to create their appropriate information background. According to international harmonisation and co-ordination responsibilities, the government facilitates the optimal frequency usage conforming to national economic and national security criteria, and harmonises frequency use with the purpose of radio communication including the consistent actualisation of the National Table of Frequency Allocation (NTFA).

In order to achieve the above goals, a continuous reconciliation of civilian and governmental frequency use has to be performed, with special consideration of the consequences of Euroatlantic integration. It is principally the task of the reorganisation of frequency spectra valuable for civilian telecommunication purposes that the state has to fulfil by providing an appropriate regulatory and material background. For frequencies required for valuable services, a fee has to be paid, according to the characteristics of the service, for fixing and using the given frequency. The fee settled by the state has to be adjusted to the occupied spectrum’s width, stimulate the maximally economical use of the frequency band, and it has to promote that the service providers and other users apply more sophisticated, up-to-date systems. As frequency is a limited resource with exclusive state ownership, its allocation happens through advertising tenders for concession. Within the frame of its standardisation function, the state regulation has to solve the problem of fixing the harmful limit of electromagnetic waves to our health, and the decreeing of the obligatory application of standards on the conditions of electromagnetic compatibility.

1.3.1 Number management

The numbering domain of the country’s uniform telecommunication network and the character series (name and address directory, generally referred to as numbering domain in the following) for the identification of subscribers is a limited national value. The domestic telephone numbering system has to also be adapted to the international recommendations. The international and, strictly speaking, the European efforts for unification, and the satisfaction of service providers’ needs has to be taken into consideration. Bearing these entire in mind, it is reasonable to take out the numbering system, which is being considered as a technical plan according to the effective law, and to reorganise the whole system of the condition environment by shaping a complex economic regulation, with special attention to satisfying the needs of new services (ISDN, PCS, etc) and new service providers in a unified manner.

1.3.2 Utilisation of land

The country’s unified telecommunication network, the telecommunication devices, and all the equipment on the real estates take up room. Not having an appropriate regulatory frame, the real estate utilisation rights can set a bar against the improvement of the different telecommunication networks and the services that are provided on these networks. According to the current decrees, theoretically all telecommunication networks have the same chance to obtain the land (purchase, appropriation, line right, servitude) they claim on public roads and on publicly owned lands (above, under or near those). The existing public utilities hinder the construction of new networks, especially in public places and road networks of confined capacity. Thus there is a demand for creating conciliatory mechanisms between public utilities and for clarifying the extent of the right for the utilisation of lands occupied by existing public utilities in bottleneck places. Besides, efforts have to be taken towards the collective and simultaneous positioning of public utilities. It seems obvious that the state shall not interfere in contractual relationships between individual public utilities, but in case of country planning issues it cannot avoid to create the lawfulness of the official assistance. It is reasonable to set up a comprehensive national communication database in order to be able to improve the handling of limited resources and to effectively develop the communication infrastructure in general.

2. Media and telecommunication markets: privatisation, foreign investment, mergers, procurement

Currently, the greatest changes in the ownership structure are taking place in the cable television market, which resulted in a keen competition between some significant networks as a consequence of the regulations of the Act on Telecommunications (the two outstanding competitors in this market are MATÁV and UPC Hungary. In July, UPC Hungary purchased Szab-I-Net public utility company, thus becoming a long-range determinant factor in the country’s eastern region. In Budapest, UPC Hungary cable television service provider operates as the successor of Kábelkom and Kábeltel cable television service providers.

3. Changes in IT policy

Information Society, Information Technology, Legislation

This field has for a long time been just a neglected part of the Hungarian government policy, which has manifested itself in the (lack of) legislation. Meanwhile EU conform laws were being enacted in other legislative areas, even the fundamental professional and legal IT related preliminary studies and programmes of work in conformity with the legislative efforts of the Union were missing. Legislation was fragmentary; some provisions of law in conformity with the EU directive were being codified without a subsequent (or preceding) IT based supervision of the effective Hungarian law, the elaboration of a harmonisation program.

The Ministry of Transport, Communications and Water Management (KHVM), the department responsible for preparing the way for the regulation of the new area has taken considerable steps towards a shift since the inauguration of the new government. Professional spadework has commenced and is underway in a number of areas including data protection.

The enactment of the new, unified Act on Communications will be an extraordinarily significant step, which will equally adopt the direction of the European law and the related most important international conventions in the field of postal services (97/67/EC), networks, interconnections, network access (97/33/EC), licensing (97/13/EC), defining market representatives (95/62/EC, 98/10/EC etc.) and other conceptual definitions.