LOCAL LOOP UNBUNDLING IN HUNGARY Local Loop Conference, 5th July 2005, Bucharest Sandor Szilágyi National Communications Authority, Budapest

LLU in Hungary Consultations at operators in 1999  full rejection Communications of EC  Regulation 2887/2000 Preparations of legal conditions in Hungary: Act No. 40 of 2001: on Telecommunications Governmental Decree No. 175/2001 on Unbundling of the Subscriber’s Loop and on the Related Procedures Content of the Act No. 40 of 2001 concerning LLU: new definitions (subscriber’s loop and its full and shared unbundling, telephone operators with SMP, obligation for publishing RUO etc.) establishing an Arbitrary Committee Content of the Decree No. 175/2001: new definitions (colocation, MDF, remote switching units etc.) obligations for operators having SMP on the fixed telephone market (incl. all services) structure and content of a RUO

LLU in Hungary 5 operators having SMP – concession companies since 1993 (originally 14, boiled down by mergers to 5) Experiences: technical problems (colocation – physical/virtual/remote, withdrawal of loops from unbundling, access to MDF etc.) economical issues (cost accounting, difference between full and shared) one-off and monthly prices (cost of contractual procedure, high checking prices etc.) price squeeze has been an obvious trend (remarks of Hungarian Competition Office) imperfect harmonization of the Regulation (e.g. „subloop” is omitted) no LLU transaction at all (new entrants preferred CS or calling card service) In the eve of joining EU in 2004, a modified Act became necessary

LLU in Hungary Harmonisation with „acquis” Act No. 100 of 2003 on Electronic Communications inclusion of subloops and local bitstream access as mandatory cost assesment based on FDC modelfor LLU „local loop” instead of „subscriber’s loop” Three major decrees has been issued: Governmental Decree 277/2003 on the Reference Offers, on Network Contracts and on Detailed Rules of Procedure Thereof Ministerial Decree 18/2003 (IHM) on the Rules of Cost Accounting of Electronic Communications Services Ministerial Decree 16/2004 (IHM) on the Market Definition, Market Analysis, on the Identification of Service Providers Having SMP and on the Basic Principles of Imposition of Their Obligations

LLU in Hungary Experiences: SMP is assessed upon the previous regime (fixed telephone companies used to be concession companies) prices decreased especially for shared loop (near to EU average) RUOs do not refer to local loops not in use (EU Regulation does not use the word „subscriber”) first signs of life: 2 framework contracts signed, 2 in preparation (although no loop used by the new entrant exists so far) Expectations: slow increase, but not significant shared loops are dominant compared with full unbundling (to date: shared loops, 0 fully unbundled loops in use)

LLU in Hungary Debate: facility-based or service-based competition? „Service-based (e.g. LLU) may be right in short term, but only facility-based can foster a real competition in terms of quality, scope and free combination with prices” „LLU is the only way to invite customers at special scenario (e.g. in residential buildings)” „LLU prices should be considerably high in order to stimulate new entrants to construct their own infrastructure” „LLU prices should be fairly low in order to avoid price squeeze” „LLU should be extended to high capacity (fiber) loops too” European Commission has promised to re-examine the issue Thank you for attention!