January 2001

Hungary Master Report

This Master Report covers the whole period of the ESIS project surveying the Countries of Central and Eastern Europe, March 1999 - January 2001 inclusive. 

1. Introduction and Summary

2. Information Society Policy

2.1 Historical overview and general legislation

The LXXII. Act of 1992 on telecommunications is suitable for providing a transparent and normative system of conditions for market players, together with a modification until the start of the complete liberalisation, that is the enforcement of the unified communication law, and with the LXII. Act of 1993 on frequency management.

The amendment, which has recently come into effect, includes new instructions in order to prevent the creation of natural monopolies of cable television services and to force back the superiority of telecommunications organisations.

The shaping of the national telecommunications policy is the Government’s duty adjusted to the Government’s liabilities. Taking this into account, in accordance with the forming and implementation of branch politics, the modification does not make the approval of the telecommunications policy a must for the Parliament.

The principles of the Unified Communication Act became known to the government at the end of 1999. According to that, the law ensures the protection of services, users and data, and states the responsibilities of market representatives by defining the conditions of the providing and demanding of services. The law harmonises the legal sources of the European Union and other international treaties and agreements in the field of telecommunications services (97/33/EC), postal services (97/67/EC), networks, interconnections, network access (97/33/EC), licensing (97/13/EC), determining market representatives (95/62/EC, 98/10/EC etc.)

The Prime Minister appointed a government commissioner for information technology in 2000. Zoltán Sík has considerable experience both in the business competition sphere and government. Heads of the main divisions of the Information Technology Commissionership are Péter Szemerei (Information Society), Anna Dessewffy (Regulation), Gábor Kleinheincz (Electronic Government). Because of the restructuring of the government leadership, the draft bill on electronic signatures and document will only come before the Parliament in 2001. According to this, qualified signature authentication will be a service bound to licence. The full conclusive force of the qualified electronic document will be settled in the civil rules of court. The modification of the company act in 2001 creates the conditions for data movement between customers and the registry court. At the same time, full company publicity will be realised.

In February 2000, the Parliament modified the Detailed Regulations of Programme Allocation, or the cable law as referred to in the everyday language. It is intended to be kept on the books until the validation of the Unified Communication Act, in which the regulations of programme allocation can be perfectly embedded. The modification divides programme allocation duties between the Communication Authority and the National Radio and Television Commission.

The Communication Authority (HIF) launched an inner restructuring project in the autumn of 1999. This step was needed because of new tasks, activities in connection with the unified communication act, improved regulatory activities, and the further strengthening of HIF’s quality and market inspection activity. The most important element of the change is that an individual market influencing branch will be established inside HIF, which deals with price regulation, HIF’s strategy, and regulation in general, etc. A new, unnamed vice president coming from the competition sphere will direct this branch.

2.1.1 Liberalisation in telecommunication and new areas of development

In terms of the European opening of the markets, the Internet can also be used for voice transmission (Internet telephony) in Hungary since the summer of 1999, according to defined conditions. In case this happens through a modem connecting to a telephone line with the help of a computer, the service provider does not have to get a license. In case of services substituting for traditional telephone, the exclusiveness of public-purpose telephone service concessions of Matáv (Hungarian Telecommunications Company Ltd.), and local telephone companies has to be respected.

PanTel Rt. got the first license for providing Internet-based telephone services, which it launched in autumn. Those contracting with them can make their domestic and international calls 20-40% cheaper than before. There are two mobile telephone service providers who started to provide voice transmission over the Internet instead of Matáv’s lines in the case of international calls. Cable television companies have been updating their networks. One reason why it became necessary is because a law prescribes that networks should be modernised, made star point until 2003. On the other hand, the networks in this way will be capable of two-way data transmission besides television. Hungary’s fourth radiotelephone service provider, Primatel consortium (Vodafone) entered the Hungarian market in the autumn of 1999. At the same time, the contracts of Pannon GSM Rt. and Westel 900 Rt. were also modified, based on which these two firms will be entitled to provide DCS 1800 services.

2.1.2 Information society, information technology, legislation

In the Ministry of Transport, Communications and Water Management (KHVM), which at first was responsible for the preparation of the field’s legislation, professional codification has accelerated since the new government entered office. Besides the Unified Communication Act, the draft bill on electronic signatures will also get in front of the Parliament in 2001.

In the meantime, at the beginning of 2000, 21 Hungarian information technology and telecommunications companies signed a collaboration agreement in order to accelerate the building of the information society and to spread the Internet culture. A series of programmes started in 2000 with the title ‘2000, year of the Internet’, exhibitions, conferences are organised on the legal regulation concerning the Internet.

2.1.3 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. 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.

2.1.4 Regulatory framework

The development of telecommunications and the reform of the regulatory framework have been simultaneous process in Hungary. In the first two phases of the development of telecommunications, when the main objective involved the establishment of the national digital network infrastructure and an intensive quantitative development of telephone services, a technical type of regulation was required with an authority that is principally responsible for technical licensing and a wide spectrum of supervision. In the third and fourth phases, when the focus of the strategy directed towards business communication and advanced telecommunication and information services, a market-based regulation became required instead of a detailed technical regulation with the main emphasis on rules that ensure fair 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.

2.1.5 Act on Concession

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, concession-based economic activities cover the following services:

• public purpose telephone service
• public purpose mobile radiotelephone service
• national public purpose pager service
• national and regional allocation and transmission of radio and television programmes

2.1.6 Telecommunications Act

The LXXII Act of 1992 on telecommunications (with effect from July 1993) among others determines the following government duties:

• making a national telecommunications policy and the creation of the necessary conditions for its implementation;
• supervision of the telecommunications market; harmonisation of concession contracts, ensuring equal conditions for those entering the market, and controlling the activity of dominant service providers;
• provision of telecommunications services for the disabled;
• exercising property rights over telecommunications property under state ownership;
• fulfillment of authoritative task related to telecommunications;
• economic, technical and legal regulation ensuring the technical and traffic integrity of national telecommunication networks;
• supervision of telecommunication service providers and network operators;
• taking the necessary steps if the concession contract is cancelled prior to its termination date due to unanticipated reasons, or the violation of the chartered company.

The law divides telecommunication services into two categories:

a) services bound to concession, which are listed by the Concession Act. The number and the areas covered by the concessions are defined by the Ministry;

b) services falling into the competition sphere: all the rest of services, which can be provided by anybody, based on official licence.

The law was modified in 1997 and 1999, partly for a better concordance with the related laws, and partly in favour of a closer approach to the competition market environment.

2.1.7 Act on Frequency Management

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 the technical, economic and legal conditions of frequency use
• 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, harmonisation and allocation of the utilisation of the radio frequency range, allocation of frequency bands, and making this public
• Representation of the Republic of Hungary in international organisations dealing with radio telecommunication and frequency management
• International co-ordination of technical data of radio telecommunications devices and networks

2.1.8 Act on Radio and Television

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

In December 2000, the Parliament voted for the remittal of MTV’s HUF10 billion public dues. According to the two-year plan of the central budget, the public service television will receive a central government subsidy of HUF1,3 billion next year and HUF1,5 billion in 2002.

2.1.9 Decrees

In accordance with the listed laws, government and ministerial decrees were enacted or being developed. The most important decrees without aiming at completeness are:

• KHVM decree on the fundamental technical plans of telecommunication networks (1993)
• KHVM decree on the numbering plan of public telephone network (1993)
• KHVM decree on the structure plan of the public telephone network (1993)
• KHVM decree on the concession competition procedures of telecommunication services and the charges of the procedure (1993)
• Government decree on the Interconnection of the Telecommunications Network, Licensing of their co-operation and Network Contracts (1993)
• Government decree on the establishment of an organisation for frequency management for government purposes, and the order of governmental frequency management (1994)
• KHVM decree on the traffic routing plan of the public telephone network (1994)
• KHVM decree on the charges of demanding public mobile radiotelephone services (1994)
• KHVM decree on the single access fee for the creation of a public telephone service access point (1995)
• a Parliament resolution on the election of officials and members of radio and television associations (1996)
• Government decree on the Licensing Telecommunications Services (1997)
• Government decree on the Frequency registration and Usage Fees (1997)
• Government decree on the National Allocation Table of Frequency Bands (1997)
• Government decree on a single communication authority, and the modification of some of statutes concerning communication (1993 and 1997)
• Government decree on the 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)
• Government decree on Telecommunications Subscriber’s Contracts

The backbone of codification currently is the codification of the new unified communication act (EHT). Its most critical area is the co-operation and interconnection of service providers.

The theses for the legal regulation of electronic signatures, electronic document are made ready, currently their harmonisation is in progress. The RTTE statute and the related 25 ETSI standard naturalisation are under preparation as well as the translation of 13 EMC ETSI standards. The proposition on the everyday use of electronic documents, in accordance with community principles, makes it necessary to statutorily declare that electronic signatures should be approved of. Qualified signature authentication will be a service bound to licence. The full conclusive force of the qualified electronic document will be settled in the civil rules of court.

The modification of the company act in 2001 creates the conditions for data movement between customers and the registry court. At the same time, full company publicity will be realised.

2.2 Umbrella Policies and national IS strategy

2.2.1 Principles related to the Information Society

At the present time, Hungary does not have 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. However, no real steps have been taken in the direction of implementation until 1999, and the government’s information strategy, practically, covered only state administration (principally central state administration). In 1997, a Government Commissionership for Information technology and Telecommunications was set up. The Office of the Prime Minister charged an expert group with the commission of creating a professional discussion paper with the title ’Hungarian response to the challenges of the Information Society’. The programme outlined in this document manifested itself in the information technology chapter of the so-called Széchényi-plan in 2000.

2.2.2 General principles

Even according to the document defining the Hungarian Government’s information policy (Proposition for the Government on the governmental co-ordination of information technology and telecommunications, February 1997), Hungary build the implementation of information society basically on private initiatives, the market representatives. This aspect was also confirmed by the latest government documents. The Prime Minister’s Office played the role of a co-ordinator in this process.

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. This makes an opportunity for the cable television companies after the termination of the concession to enter the market of telephone service provision with a competitive chance. Internet access through cable systems is also to be introduced. Currently, some experiments are underway in some settlements.

2.3 IS Application Areas (general overview)

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).

Regional and local radio broadcasting stations in 2000 took the legal opportunity that was already provided by the media act four years ago. Two national radio broadcasting stations announced to make network contracts with some local stations. By its network contract, Rádió 1 and Juventus achieved 35 and 65 percent coverage respectively. The National Security Service has now become able to continuously tap the mobile telephone communication of organised criminal groups. The Hungarian Government has been purchasing the required equipment since 1996, and at the same time it statutorily forced telecommunication service providers to build the equipment necessary for eavesdropping at their own costs.

In 2001, the budget has to give up on HUF10 billion customs and turnover-tax income as a result of canceling the customs of information technology products. Hungary will soon join the Singapore Agreement ensuring information and mobile communication products’ exemption from customs duties.

The five equally 3,5 GHz frequency blocks were knocked down after simultaneous bids. Its utilisation could create a fierce competition in the telecommunications market. As a preparation for the competition, the government modified its decree on the rules of frequency auctions at the end of 2000. The Communication Authority announcing the auction advertisement settles the initial price, the date of the auction then five blocks are distributed among the applying service providers. 9 to 12 months after that comes the auction of the 26 GHz range.

As from September 2000, Matáv made it possible to use its ASD technology based on its ISDN service. The Communication Authority (HIF) consulted alternative service providers and the Economic Competition Agency (GVH) on its potential superiority, which gave Matáv a licence to use ASD technology for ten years.

The authority obliged Matáv that it should develop the conditions for the wholesale trade of ADSL data transmission technology within two months and make it possible for market players to get access to its ADSL junction points from 1^st November.

2.4 Government and administration (national, regional, local)

The 1071/1998. (V. 22.) Government Resolution on communication policy declares that it is a strategically important issue to create a regulatory scheme, which is in accordance with our international liabilities in all aspects, and provides the foundation for the regulatory system of the information society.

The information committee of the Budapest general assembly submits its own information management principles in 2001. According to the committee, the 1,2 billion forints the capital received for selling the pipe network should be spent on the development of municipal institutions and the customer service in offices.

2.5 Telecommunications and Internet

Matáv intends to acquire sources for its mobile branch of business and Internet development by issuing bonds in the form of an auction. The dominant telecommunication service provider can raise money for a longer period through corporate bond issue, and foreign investors will also be more accessible this way. The bond will also be introduced on the Budapest Stock Exchange (BÉT). According to sources one third of its HUF385 billion sales turnovers in 2000 stem from the rapidly developing mobile telephony and Internet data transmission.

Matávnet Ltd., which is in 100 percent ownership of Matáv, transforms to a public limited company. The primary capital of the new firm is HUF 1,56 billion, which is just 20 million more than the nominal capital of the company limited, but to compensate for the negative earnings reserves the parent company gave further HUF809 million. The reason for this step was probably that the competition in the Internet market is becoming livelier.

The German government is engaging in a technological battle against American companies in Hungary, and it wants to crowd them from the European market, according to a Congress hearing in Washington. The American Permanent under-secretary for Foreign Affairs was informed that Deutsche Telekom prohibited Hungarian Westel to use American technology when developing its mobile network. Benjamin Gilman thinks that it will now be decided what sort of industrial standard makes headway in UMTS. The American US West Telecommunications Company was a former co-owner of Westel, so American developments could also make their way during the development.

Westel Mobile Company Ltd. in November steps out into the world with its world class packet switched data transmission technology, GPRS. Westel Mobile Company Ltd. conducted successful tests for the Hungarian implementation of packet switched data transmission technology (GPRS), and in November 2000, it was the first in Hungary to switch on the new technology in the operating Budapest network. The system is supplied by Ericsson at the first stage. Using the current technology and GPRS devices, by occupying four time gaps, 30 kbps speed is feasible.

Satelit television also appeared on the Internet with its 24-hour broadcast. This is the first Hungarian television to start webcasting. The Cultural and Programme Servicing Company Ltd. founded the television in April with HUF 20 million subscribed capital.

The National Police Office’s (ORFK) Directorate against Organised Crime said the vast majority of Internet crimes committed in Hungary during the past two years involve paedophilia or pornography. The system of Internet department stores has not yet been created in Hungary and the user group is not so large either as to make perpetrators being motivated by economic crimes. In Hungary the number of computer crimes is hardly measurable while this type of crime comprises 5 percent of all crimes in other Interpol countries.

2.6 Electronic Commerce

CA IB Securities Rt., in collaboration with the Austrian CAIBON.COM Internet Services AG, has started the online trade of stocks listed on the Budapest Stock Exchange. The fees of electronic broker trading are lower than in conventional trade, the commission is 0.8% instead of CA IB’s 1%. CAIBON’s home page also offers market news and analyses. The page is available in several languages; the security of online trade is the highest currently possible, with three levels of verification. The trade of investment funds is planned to start by the end of the year, and the international stocks circulated by CA IB Securities Rt. and the Bank Austria Creditanstalt Group as of 2001 on the system.

The online trade of stocks is currently hindered by the fact that the law on online customer recognition has not been accepted yet. Thus, with the acceptance of the encryption procedures, substantial progress is expected in 2001. Last year three banks started online services, with 10,000 users, this year six banks had 41,100 clients. Estimates for next year say that 15 banks will provide electronic banking services to 112,000 customers.

According to the national Consumer Protection Association, electronic commerce in Hungary developed energetically in 2000. Hungexpo Co. Ltd. also arranges the international information and communication technology exhibition in 2001. Based on the experiences of the first two exhibitions, the fair will be restructured, and the Info will be divided into two parts. B2B will be for decision-makers, while B2C will be for the public.

2.7 Education and research

Currently, all Hungarian secondary schools have network connection, the furnishing of educational institutions with computers and the Internet access of primary schools, however, are only partly solved. Information science (computer skills) is part of the curricula, and plenty of schools have computer laboratories. The National Teleteaching Council also started its operation.

In the course of a joint competition by the Soros Foundation and Sulinet Klub Association, 500 teachers could get home computers and information technology training free of interest and without having to pay the initial installment. Competition winners can get their computers without an initial installment through a gross HUF9000 installment paying for 24 months. Further conditions include participation in the one-year teacher extension-training program in the form of teleteaching.

The Inter-university Telecommunication and Information Centre (ETIK), founded in 1998 by the Budapest University of Technical and Economic Sciences and the Loránd Eötvös University of Arts and Sciences, expanded by three new members: Antenna Hungária Company Ltd., Compaq Computer Hungary Ltd. and the Computer Science and Automation Research Institute of MTA.

The Hungarian Catholic radio – Eger started its 24-hour broadcast reaching 500,000 listeners of the north-eastern region of the country. The studio takes over similar programs from Radio Vatican and BBC.

2.8 Transport

The Hungarian industrial structure has gone under significant changes since the change of regime. It reflects more and more signs of an economy operating in a subcontracting and co-operational system. This requires such new digital-based logistic solutions as navigation and tracking based on digital map and satellite connection. The means and extent of government undertaking necessary for creating the required infrastructure networks, however, is not elaborated.

The elected court organised beside the Hungarian Chamber of Commerce and Industry, referring to the infringement of the media act, invalidated the contract between ORTT and the Hungarian Automobile Club, which allows the broadcasting of the clubs radio.

2.9 Healthcare

The establishment of a highly secure information technology based system started in Hungary, which is personally bound, perfectly integrates all personal medical data and reports, links all medical institutions and institutional levels, ensures data security, available for the people entitled to it without restrictions, and is in accordance with EU standards concerning medical information technology.

The online newspaper Praxispiac (Practice Market) provides news to users since the passing of the law on the privatisation of medical practices. At the Internet address www.praxispiac.hu, those interested can read the text and the enacting clauses of the law on independent medical activities. In addition, visitors to the site can also read the previous issues of the paper, including interviews with, among others, the Minister of Health, the ministerial commissioner of privatisation, the state secretary of the Interior Ministry responsible for local governments, the chair of Parliament’s committee on health care, MPs, the mayor of the year, and leaders of local governmental organisations.

Visitors to the site can read guides to the recently developed credit schemes. The web page offers advertising space for operation rights, which will be free for sale and purchase as of January 2001. Praxispiac offers guidelines for the possible aspects of the market evaluation of practice rights.

2.10 Labour

Postal trade unions hold out the prospect of a demonstration if the employer refuses to accept their wage-raise demand. Postmen were promised an 8,5 percent increase in wages for this year. In the meantime, the inflation exceeded the rate that was prognosticated earlier, so postmen demand a further wage-raise of at least 4 percent. The planned staff decrease affecting 2,000 employees would cause Matáv a HUF6 billion expense, according to experts, which together with other single expenses will probably reduce the company’s profit.

2.11 Competition

The National Consumer Protection Association (OFE) initiated competition commission proceedings against Matáv for violating antitrust laws regarding tariff rises. Being aware of the tens of billions of Matáv’s profit, OFE expresses its dissatisfaction and lack of comprehension for this amount of tariff rise. On the meeting of the Economic Competition Agency’s (GVH) Competition Council, UPC Hungary Ltd. undertook that in 6 months it will finish the conversion of TV2 and RTL Klub programs into the medium cable program package instead of the most expensive one in the largest settlements and will also start doing so elsewhere. A proceeding has been initiated by the competition supervising authority because of a suspicion that the company took an unfair advantage of its economic superiority. GVH noticed that the firm provided the popular Hungarian TV2 and RTL Klub programs exclusively in its most expensive program package. UPC Hungary Ltd. counts with 100’000 new subscribers this year – currently it is present in 30 Hungarian settlements having 503’000 subscribers. UPC Hungary Ltd. has been in the 100 percent ownership of the Dutch parent firm since the end of March 2000, which was the time when they purchased the 20,75 percent share of the First Hungary Fund for 63,9 million euros.

According to the Market Monitoring Directorate of the Communication Authority, out of all the active Hungarian GSM telephone users 55,33 percent was Westel Mobil, 39,27 percent Pannon GSM and 5,40 percent Vodafone subscriber. The number of mobile subscribers per 100 inhabitants in the country at the end of June amounted to 22,43. The report also reveals that based on the previous month the number of active GSM subscribers has been increasing by the same amount, 5,5 percent, for the fourth consecutive month.

2.12 Access for all

The 1,400 competitors who can preferentially purchase PC and Internet access in the course of the Családinet program were drawn. 30,000 people applied for the program. After paying in the first instalment of HUF29,000, adults having a verified monthly income of at least HUF32,000 can buy personal computer and Internet access in preferential instalments paying HUF6,800 each month for three years. A consortium constituted by Compaq, Matáv, Vivendi and Post Bank entered for the competition invited by the government. The collaboration agreement between the National Association of Telecottages and Microsoft Hungary, signed on 28 September, will enable more than 500,000 citizens not having an own computer to use the most up-to-date software. According to the contract, Microsoft provides the utilisation right of all its general user software products and development tools free of charge for the members of the Hungarian Telecottage Association and the nonprofit hosting organisations of the telecottage network.

2.13 Copyright, 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.

The Hungarian television also sells its last significant property, the HUF4-billion archive. MTV hands over old productions to a television company called Filmmúzeum. A new television channel was launched under the same name to broadcast old, mainly Hungarian films and other programmes. Filmmúzeum only got the right to broadcast, while property rights stay at MTV.

2.14 Public access to data

The National Child and Youth Parliament (OGYIP) has launched a new home page as of August 15 by the name of csakhogytudd.hu (“just so you know”), which they hope will provide all the necessary answers that young people might have concerning their lives. The youth organisation, which has almost one million members and 68 member organisations, launched the electronic news page to create the greatest information database for those Hungarians aged between 15-30 living in Hungary or in neighbouring countries. After the current trial run, the workers of the youth organisation will expand the web page by the middle of the month with lodging possibilities in the Carpathian Basin and in Europe, documents aiding the work of civil organisations, and a wide range of scholarship opportunities. The list of the latter includes not just the applications available in Hungary, but also those higher education programs announced by the European Union.

2.15 Privacy, data protection, consumer protection

The National Consumer Protection Association took objection against Matáv’s new customer service system and services. The civil consumer protection organisation also took objection that the consumer service offices are closed, thus ending the opportunity for a face-to-face conduct of affairs. Several people complained about the overload of the telephone customer service and the impatient, refusing behaviour, the sometimes off-hand manner treatment due to this and also about not getting substantial responses.

As from the summer of 2000, MATÁV has launched its caller identification service in its geographic area of service – 36 of the country’s 56 prime zones. Users who subscribe to the service – if they purchase a phone or a supplement suitable for displaying phone numbers – can see the number of the person calling, if the caller did not have his number classified. Initially the service will be available to 70% of MATÁV subscribers; the clients of the three GSM-based mobile phone companies, and the nation-wide ISDN subscribers, but the range will be gradually expanded to include 0660-type mobile phones and the rest of the fixed-line subscribers. Parallel to the launching of this service, MATÁV has centrally authorised the possibility of displaying phone numbers. The phone number of the caller is displayed even if it was requested to be treated in the phone book or at the directory assistance as a hidden (“secret”) number by the customer. Subscribers still have the opportunity, if they wish, to prohibit the display of their phone number before each call.

2.16 Security

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. An interdisciplinary group already started to collect western experience and develop a subsequent Hungarian legislative conception in the early 80s. The right for data protection and information privacy is included in the Constitution as a fundamental right.

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 cannot be restricted by any acts. (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 two-fold 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.

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.

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 Trans-border Flow of Personal Data, 1980. Hungary’s 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 trans-border 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.

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.) Government decree on contracts between people far from each other contains a regulation compatible with the 97/7/EC Principle, the 18/1999. (II.5.) Government decree on unfair conditions in contracts with customers contains a regulation compatible with the 93/13/EEC Principle, while the 77/1999. (V.28.) Government 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.) government 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 Alliance of Information Technology Enterprises (IVSZ) has established a specialised group on information security. The activity of the specialised group would include the question of the security of networks and communication, as well as of verification and Internet publishing. The specialised group, to be formed on August 30, wishes to play an active role in the development of the legal background of information technology security, defining and representing the uniform opinion of the profession.

2.17 Freedom of expression and information as far as the distribution via electronic networks is concerned

The freedom of expression and information flow as well as the right to get to know and disseminate data of public interest is fundamental constitutional rights. According to the presidency of MÚOSZ, some recent experiments aiming to interfere with the operation of the mass media are troublesome. According to the association’s standpoint, some public characters attempt to put pressure on the media to avoid certain unfavourable statements and information referring to them to be made public.

2.18 Others

Hungary is now 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).

3. Institutions and organisations in charge of IS regulation

3.1 Ministries

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.

The Prime Minister appointed a government commissioner for information technology in 2000. Zoltán Sík has considerable experience both in the business competition sphere and government. Heads of the main divisions of the Information technology commissionership are Péter Szemerei (Information Society), Anna Dessewffy (Regulation), Gábor Kleinheincz (Electronic Government). There is no surplus budgetary source for the establishment and operation of the new apparatus. They have to manage the 16 billion forints, which was originally given to the Ministry of Transport, Communications and Water Management (KHVM) for this field.

As one of his final measures, László Nógrádi, minister for transport and water management, dismissed Tamás Varjú, president and chief executive officer of the Hungarian Post. The minister leaving his post on 1^st December designated István Kalmár, chairman of the post’s board of supervision, deputy chairman for information technology of the Revenue Office, as his successor.

János Fónagy, the successor of László Nógrádi, minister for transport and water management, was sworn in as the new minister at the end of November and entered on his official duties on 1^st December.

3.2 National regulatory authorities

In 2000, the government delegated Ernő Simonyi as president and Zoltán Sík, Gyula Sallai and József Bajó as members of the National Communication and Information Council. The National Communication and Information Council (NHIT), consisting of eleven members, gives expert opinion and makes propositions for the government on information and communication issues. Other three members of NHIT were delegated by ORTT, while the additional members were delegated by the Telecommunication Conciliatory Forum, the Hungarian Academy of Sciences, Inforum and the Federation of Technical and Scientific Societies. The delegation of the president of the council is valid for four years.

3.2.1 Communication Authority (HIF)

According to the governmental decree 142/93, the Communication Authority 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.

The Government in its 232/1997. (XII.12.) decree designated the Communication Authority (HIF) to fulfil the professional official duties in the field of communications. HIF, based on this authority, ensures the effectiveness of the Government’s communication policy in collaboration with government agencies, especially the Ministry of Transport, Communications and Water Management (KHVM).

HÍF’s authorities and liabilities in the field of communication (including telecommunications, postal and information services as well as broadcasting and frequency management) can be divided into three categories according to the prevailing laws:

• regulation,
• licensing and supervision,
• technical and information background support of basic activities.

HÍF’s president is elected by the competent minister on the proposal of NHIT.

No changes occur in the basic activity of the Communication Authority during liberalisation as statutes specify these.

3.2.2 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.

3.2.3 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.

3.3. Office for the protection of economic competition

The Economic Competition Agency is a public administration organ with an 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. In the case of a merger of companies with turnover exceeding the legal limit, GVH’s licence has to be applied for. The Economic Competition Agency condemned the leading domestic telecommunications service provider two times in a month. In July 2000, GVH established the fact that Matáv took an unfair advantage of its economic superiority when it only provided its IP-based international voice and fax transmission service for chartered fixed line and mobile telephone service providers, while it excluded other companies. Matáv could not provide a reason acceptable by competition laws for its refusal, so the competition council fined the company for HUF5 million.

Again, proceedings were conducted against Matáv because of a suspicion that it took an unfair advantage of its economic superiority when GVH noticed that the company in its regulations narrowed down the subscription services offered in the so-called small customer package compared to the laws.

At GVH the supplementary examination of the resolution is underway, which allowed Matáv to acquire the 100 percent of Westel’s share. At the beginning of the year, GVH authorised the transaction only on conditions of certain undertaking, which rigidly involved that Matáv shall not handle other service providers in a discriminative manner. Whereas, in the exhibition rooms of the telecommunications company still only Westel’s services are offered. Besides that, in one of its campaigns Matáv changed the traditional telephone lines to ISDN lines of those Matáv customers who purchased Westel subscription.

In the meantime, an investigation is under process on Vodafone’s initiative in connection with a Matáv advertisement, which advertises that the charge of local calls in the peak hours is just a fragment of that of mobile calls.

3.4 Consultative councils

The telecommunications act and the media act established five consultative councils to support the development of the telecommunications, broadcasting and the information sectors.

3.4.1 Telecommunication Conciliatory Forum (TÉF)

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:

• Users group including small users, private network operators, the 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.
• Group of local governments, including the Association of Local Governments.

3.4.2 Hungarian Scientific Society for Telecommunication (HTE) including the Telecommunication Engineering Qualification Committee

The Committee of telecommunication experts was 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 authority of the Committee expanded by the field of information technology from 1997.

3.4.3 National Communication and Information Council (NHIT)

The National Communication and Information Council 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:

• creation of a market regulation in communications promoting and safeguarding the principle of non-discrimination
• the scope and implementation of governmental, official and professional official tasks in communications
• general principles of frequency utilisation
• the allocation of the radio frequency range for civil and governmental purposes
• representation of Hungarian viewpoint at world and regional conferences on radio and telecommunications

3.4.4 National Table of Frequency Allocation

Please see section 6.2.1.

3.4.5 Information Conciliatory Forum (Inforum)

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.

3.5 Organisations in charge of the promotion of the IS

The alternative telecommunications service providers – currently partners of the monopolistic Matáv, but its will-be competitors – GTS, Novacom, PanTel, UPC and Vivendi handed in a document to the Communication Office of the Ministry of Transport, Communications and Water Management (KHVM) including their jointly shaped opinion on the upcoming unified communication act (EHT). According to this document, Matáv, referred to as the dominant service provider after the liberalisation, should not be allowed to start from a position in which it yet preserves its quasi-monopolistic position because the new law will not involve a regulation on the use of its networks and charges. Regarding codification, the number of participants expanded to 9 from 5 after the joining of Antenna Hungária, British Telecom, Pannon GSM and Vodafone. The aims of the new economic group with interest enforcing weight are unaltered. The “telecommunication nines” indicated the great responsibility of the codifiers and lawmakers, since EHT will also decide on the chance of the country’s economic modernisation. Its final text will have to support the information society strategy of the Széchenyi and Neumann plans developed by the government. The nines consider EHT the most important law of the decade.

4. International relationships and agreements

5. Market: Privatisation, foreign investment, mergers, acquisitions, call for tenders…

6. Standards