ESIS extension / Hungary / Regulatory Developments / Master Report

Under the former political system between 1949 and 1988, the economy was centrally planned and directly controlled by the government, and the development of infrastructure was not given priority. In 1988 telephone density in Hungary was only 8,1 main lines per 100 inhabitants, or merely 25% of the European average (32/100).

Following the 1990 political changes in Hungary, an intensive development of telecommunications was initiated. The rapid progress was called for by the need to create a market economy, to integrate with Europe and to meet the pent-up demands for telephony. The key objective was to reach a telecommunication level equivalent to the needs of Hungary as a European nation by not later than the year 2000. In order to fill in the gaps a multi-phase development strategy was adopted.

In the first phase between 1990 and 1993, the strategy for developing telecommunications mainly aimed at the creation of a national digital network infrastructure, which was the basis for quantitative development in the following periods. Investments amounted to three-quarters of the revenues, allowing the construction of a high-capacity digital overlay backbone network, which inter-connects the 54 primary exchanges. This nation-wide backbone network consists, for the most part, of single mode optical fibre links and for a smaller part, of digital microwave systems. In the capital, Budapest, a digital interexchange junction network has also been established, based on optical and digital microwave facilities. Since 1991 solely digital exchanges have been set up.

In the second phase between 1994 and 1997, apart from introducing the most important new services for business customers, the highest priority has been given to the intensive quantitative enhancement of telephone services, and the entire automation of the telephone network has been completed. It is expected to meet all the effective demand for telephones in this year. Plans are being made to introduce SDH technology in the national backbone network as well as in the junction network in Budapest and to participate actively in Central-European regional network projects.

In the third phase between 1997 and 2000, the strategic focus is shifting to the extension of a variety of business communication and information services and to the improvement in quality and diversification of services at relatively reduced tariffs.

In the fourth phase, following the year 2000, the main emphasis shall be laid on the introduction of advanced telecommunications services including high-tech intelligent services and personal telecommunications as well as the broadband ISDN multimedia services.

In 1998 the teledensity exceeded 30 main lines per 100 inhabitants and the digitalisation rate increased to 80. Early in the year 1997 the automation of the telephone service was completed, and the waiting list almost disappeared. As regards teledensity, compared with a CAGR (Compound Annual Growth Rate) of 5,6 % in the 80s, this figure has exceeded "4 % in the 90s.

By the end of 1995, Hungary had a mobile penetration of 2,6, by the end of 1996 4,7 subscribers per 100 inhabitants, in 1998 this exceeded the level of 10%. The number of Internet host computers and terminals has doubled in the last years as in the industrialised countries.

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.

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 from 1990 (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 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 National Radio and Television Commission (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.

Separation of Operational and Regulatory Functions, Postal and Telecommunications Services: 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.

Telecommunication services (including radio and television broadcasting), together with postal services were regulated and provided by a single state-owned organisation, the Hungarian PTT (in Hungarian: Magyar Posta). Frequency management and tests of electromagnetic disturbances were also the tasks of the Hungarian PTT. The Act and its implementation order mandated the Hungarian PTT as a first instance authority dealing with licenses and complaints in telecommunications dedicated networks.

The first telecommunications development was based on loans from the World Bank and the European Investment Bank by credit contracts signed in 1990. In order to meet the demands of foreign lenders the system of cross-subsidies had to be ended between the post and telecommunications. As a first step, the operational and regulatory functions were separated in 1989, when the Ministry of Transport, the predecessor of the Ministry of Transport, Communications and Water Management (KHVM) took over the regulatory functions, and two authorities were established as: Postal and Telecommunications Inspectorate and Frequency Management Institute.

In 1990 the postal, telecommunications services and broadcasting were separated by creating three companies as: Hungarian Telecommunications Company (Matáv), Hungarian Broadcasting Company (later renamed Antenna Hungária) and Hungarian Postal Enterprise. At that time all the three organisations remained in state ownership and later all of them were transformed into stock holding companies.

The 1071/1998 governmental decree defines KHVM’s (Közlekedési, Hírközlési és Vízügyi Minisztérium) functions – according to the developed nations’ practice and the expectations of the EU integration – as the following:

According to the governmental decree 232/1997. (XII.12.) the Communication Authority (Hírközlési Fofelügyelet) 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 duties and rights of the HIF on telecommunications (including broadcasting and frequency management) and post, transferred by the relevant acts and decrees can be grouped into three areas:

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 National Radio and Television Commission (Országos Rádió és Televízió Testület) 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.

The Governmental Frequency Management Agency (Kormányzati Frekvenciagazdálkodási Hivatal) 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.

Hungarian frequency management is based on a National Table of Frequency Allocation (Frekvenciák Nemzeti Felosztási Táblázata) 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 ad 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 Economic Competition Agency (Gazdasági Versenyhivatal) is a public administration organ with an own budget and a national scope of action under the supervision of the Parliament 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.

Advisory councils and boards have been established by the Acts to promote the fulfilment of their objectives, making the Minister responsible for requesting the standpoint of these bodies. There are five advisory councils established by the Telecommunication Act and Media Act for supporting the development of the telecommunication, broadcasting and information sector.

The Forum (Távközlési Érdekegyezteto Fórum) 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:

Users group including small users, private network operators, organisations for information and database management, the Consumer Protection Agency, etc.

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.

The committee of telecommunication experts (Távközlési Mérnöki Minosito Bizottság) was also created by the Act on Telecommunications and organised in 1993 as a professional committee of the HTE (Híradástechnikai és Informatikai Tudományos Egyesület). HTE incorporates all the telecommunications service providers, manufacturers, commercial companies, universities, regulatory bodies, etc. The Committee (max. 30 experts) are elected by the members of HTE and are appointed for three years.

From 1997 the scope of the Committee was extended to the field of informatics, too.

National Council for Communications and Informatics (Nemzeti Hírközlési és Informatikai Tanács) 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:

This Forum (Informatikai Érdekegyezteto Fórum) 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.

Matáv Rt.: 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.

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.). Public limited companies have one 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.

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 stable 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.

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.).Kormánya közötti megállapodás a szellemi tulajdonjogról, kihirdetve: MK 1993/173. sz.,).

The development of telecommunications and the reform of the regulatory framework have been simultaneous processes in Hungary. In the years of the centrally planned economy, similar to the majority of the European countries, the regulatory functions and the service provisions were not separated. The dynamics of the market economy, however, required the reshaping of the Hungarian telecommunications sector. During the first two phases of telecommunications development, when the establishment of national digital network infrastructure and the intensive quantitative enhancement of telephone services were targeted, a technical type of regulation was required with an authority responsible primarily for a wider scope of technical licensing and supervision. In the third and fourth phases, when the strategic focus has been shifted towards the diversification of business communication, advanced telecommunications and information services, a market-based regulation is increasingly needed to replace detailed technical regulations, with a main emphasis on rules which ensure the fairness of free competition.

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.

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. In the field of telecommunications these operations cover the following services:

The Act on Concession created the possibility of privatising the telecommunications sector and determined the minimum share of state ownership.

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

The Act on Telecommunications was amended in 1997, aiming at the harmonisation with the relating acts.

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 LXII of 1993 on Frequency Management, which defines the functions of the Minister of KHVM, inter alia, as follows:

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 a prolonged procedure while widely differing viewpoints and various interests had to be converged. The objective of the Act is to ensure:

This Act must be applied to the Hungarian radio and television programs and their broadcasting. The Act provides for, among other things, the establishment of some institutions and authoritative functions to promote its implementations.

Principle provisions of law	Aim	Date
Act of Concession (XVI/1991)	Efficient operating of state property is	1991
Act of Telecommunications (LXXII/1992)	Development of a national telecommunications policy ad the creation of conditions necessary for this implentation	1992
Act of Frequency Management (LVII/1993)	Determination of qualitative, technical and technological conditions for basic technical plans, rules and services relevant to frequency usage	1993
Act on Radio and Televison (I/1996)	Free and independent radio and televison brodacasting considering the freedom of expression	1996

In accordance with the above acts, governmental and ministerial decrees, statements have been issued and are being elaborated. The most important ones of these that have already been in force, without aiming at completeness, are:

4.4.1. Liberalisation

	Phase of liberalisation	Comments
Infrastructure
Public telecommunication network	Liberalised network construction and operation	Matáv Rt. And 13 local concession companies
Local telephone networks	id	Matáv Rt. And 13 local concession companies
Leased lines	id	N.a.
Alternative infrastructure (Public road, railway, power service providers, etc.)	id	N.a.
Broadcasting and cable TV	id	Number of broadcasting stations in 1997: Public service radio and television 206 Commercial radio and television 125 Local radio and television 150 Number of cable television service providers in 1996: 461
Voice telephony
Local communication	Liberalisation from 2002	Matáv Rt. And 13 local concession companies
Long-distance domestic	Liberalisation from 2002	Matáv Rt.
International communication	Liberalisation from 2002	Matáv Rt.
Providing voice services for closed user groups	liberalised	N.a.
Mobile communication
Analogue	liberalised	Westel Rádiótelefon Ltd.Approx. 140000 subscribers
GSM digital	liberalised	Westel 900 Rt. Approx. 710000 subscribers Pannon GSM Rt. Approx. 440000 subscribers
DCS 1800 digital	Based on a concession contract, three service providers start their operation until the end of 1999	1.Primatel consortium (Vodafone Air Touch, RWE Telliance, Hungarian Post Ltd., Antenna Hungária Rt.) 2. Westel 900 Rt. 3. Pannon GSM Rt.<O:P</O:P
Pager	liberalised	Euró-Hívó Co. and EasyCall Hungary Co. have been providing ERMES pager service since 1996
Satellite communication	liberalised	8 licences for providing service. The biggest are: Matáv, Antenna Hungária, Banknet, GTS, etc

Up to 1989, telecommunication services together with postal services were regulated and provided by a single state-owned organisation, the Hungarian PTT (in Hungarian: Magyar Posta). The Postal Act II/1964and its implementation order mandated the Hungarian PTT as a first instance authority dealing with licenses and complaints in telecommunications dedicated networks. In "990 the postal, telecommunications services and broadcasting were separated by creating three companies as: Hungarian Telecommunications Company (MATÁV), Hungarian Broadcasting Company (later renamed Antenna Hungária) and Hungarian Postal Enterprise. At that time all the three organisations remained in state ownership and later all of them were transformed into stock holding companies. 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. Act LXXII of "992 on Telecommunications (in force from July 1993) grouped telecommunication services into two categories:

a) concession-bound services, listed in the Concessions Act, where the actual number and scope of concessions to be issued are defined by the Ministry (KHVM);

b) competitive services, all other services, where licenses are granted by the unified authorities for the non-concession service providers.

The Telecommunications Act defines the procedure of granting local concessions. Accordingly, the municipalities in a primary area concerned could ask the Ministry to call a tender for local telephone concession. This procedure was implemented for the first time in 1994, when the Ministry invited a tender on provision of PSTN in 25 primary areas. (Municipalities in 29 primary areas accepted MATÁV as local operator.) As a result of the evaluations 9 partly foreign-owned consortia won 18 out of 25 areas. They established 13 local telephone operator companies, as Emitel (3 primary areas), Déltáv (2),Hungarotel (2), Digitel 2002 (2), Monor-Tel (1), Jász-Tel (1), Kelet-Nógrád Com (1), Pápatel (1), Rába-Com (1), Dunatel (1), Egomcom (1), Kisdunacom (1) and Bakonytel (1). MATÁV, the national incumbent operator won in 5 primary areas, and two other so-called fallback primary areas continued to operated by MATÁV. (According to the law, in areas where nobody intends to provide telephone service, MATÁV is charged with the task). MATÁV won local telephone concessions altogether in 36 primary areas, including the capital city and a nation-wide concession for providing long distance and international services for 25 years, but exclusively only for 8 years. Recently the concession services comprise about 90% of the existing telecommunications market in Hungary.

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

(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).

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 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 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.

(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 recognize 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 licencing 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.

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 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

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).

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 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.

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.

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.

2. Changes in IT policy

2.1 Information Society, Information Technology, Legislation

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.

4.4.1. Liberalisation

5.2 Privacy, data protection, consumer protection

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

6. Principles considering the Information Society

6.1 General principles

6.2 IT application areas

6.2.1 Government (national, regional, local)

6.2.2 Education

6.2.3 Transport

6.2.4 Public Health

6.2.5 Other areas

II- Ongoing Developments

1 Changes underway in the regulatory framework

1.1 The liberalisation of telecommunications and new areas of development

2. Changes in IT policy

2.1 Information Society, Information Technology, Legislation