Informative material for MSS service providers on the frequency use authorisation procedure in Hungary and their related obligations

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1 Informative material for MSS service providers on the frequency use authorisation procedure in Hungary and their related obligations 1. Objective of This Informative Material 1 On 13 May 2009, the European Commission announced the winners of the pan-european MSS bid. The objective of this informative material is to provide information to the winning service providers of the 2 GHz ( MHz / MHz) MSS bid on: the criteria in force in Hungary regarding the provision of electronic communications services that require frequency use, the notification procedure of electronic communications services, the main rules of procedures related to frequency use authorisation, the rules connected to radio equipment: placing on the market and notification of equipment, the management of interference, the main obligations of telecommunication service providers, fees and payment obligations, the main statutes on telecommunication. We would like to point out that this summary provides assistance in navigating through statutes and public administration procedures, but does not act as a substitute for the thorough knowledge of said statutes and procedures. 2. Basic Principles of Frequency Use Authorisation For winners of the 2 GHz MSS bid announced and carried out by the European Commission, the legal basis for the frequency use authorisation in the MSS system s satellite segment is provided by Government Decree No. 346/2004 (XII. 22.) Korm. on the establishment of the national allocation of frequency bands (hereinafter referred to as: FNFT) and Decree No. 35/2004. (XII.28.) IHM of the Ministry of Informatics and Communication on the rules of the use of frequency bands (hereinafter referred to as: RAT). Subscriber equipment is exempt from individual authorisation obligation. All other land stations of the system fall under the individual licensing obligation. For the sake of simplicity, the term land station shall hereinafter be used in the present document in reference to fixed location land stations that are different from subscriber terminal equipment. (e.g. gateway, control unit, land station for modulation connectivity or complementary land station) 3. Appointment of Official Contact Persons The official language of public administration procedures in the Republic of Hungary is Hungarian. Furthermore, the legal criteria for the provision of electronic communication services by non-resident telecommunication entrepreneurs extend beyond the scope of telecommunication regulations (e.g. taxation, rules of settlement for business purposes, construction administration procedures). With respect to the complexity of the above and the official language, it is recommended for foreign telecommunication enterprises to appoint a representative who is familiar with Hungarian law and is suitable for liaising with public 1/7

2 administration organs. The list of main telecommunication statutes is included in a separate annex. 4. Settlement Obligation of Non-Resident Service Providers According to Act XXIV of 1988 on the investments of foreign persons in Hungary, nonresident companies may only carry out independent business activities within the territory of the Republic of Hungary within the framework of settlement for business purposes. 5. Steps of the Public Administration Procedure 5.1. Compulsory Notification of Service Provision Intent Act C of 2003 on electronic communications (Electronic Communications Act) regulates the provision of electronic communication services in Hungary. Act LXXVI of 2009 on the general rules of starting and carrying out service provision activities, effective as of 1 October 2009, governs issues not regulated by the Electronic Telecommunications Act. Pursuant to the legislation in force, the primary requirement for the provision of electronic communication services is the notification of service provision intent to the Hungarian Communications Authority (NHH). Simultaneously to the reporting to the NHH, the service provider must also notify the National Security Special Service of the contents of the report. All natural or legal entities or organisations without legal entity are entitled to operate an electronic communication network or to provide service on an electronic communications network if they meet the criteria set forth in the legislation. If no individual authorisation is required for the use of the radio frequencies needed for service provision, then the service provision may be carried out freely following the reporting of service provision intent. The intent to begin service provision must be reported to the NHH along with the planned launch date of service provision as well as data content set forth in the legislation. Pursuant to Article 7 (2) c) of European Union Directive 626/2008/EC, service providers must fulfil all commitments undertaken in the bid. If the MSS service provider has also undertaken other commitments in the bid pertaining to the service above the data content to be reported on a compulsory basis, it must indicate this in its request. Act C of 2003 on electronic communications contains the detailed rules of reporting service provision intent. The procedure is liable to duty. The current amount of the procedure fees are set out in the chapter entitled Fees, Payment Obligations. The legal criteria for the exclusive use of the frequency required for the operation of the system for winners of the 2 GHz MSS bid announced and organised by the European Commission is ensured by the FNFT and the section of the RAT applicable to the given frequency band, in accordance with the European Commission Directive 2007/98/EC. If no fixed location land stations belonging to the system are installed within the territory of Hungary, the service provider do not have to submit any application to the Hungarian Communication Authority to obtain further authorisations. 2/7

3 5.2. Authorisation of Land Stations In the event that, in accordance with the service provider s plans, the MSS system also includes land stations installed on the territory of Hungary (besides subscriber terminal equipment), the procedure detailed below shall be applicable. The service provider shall be entitled to install and operate Complementary Ground Component (CGC) stations only in territories where the satellite segment cannot ensure adequate service for the target area within the MSS system s footprint. The installation and operation of land stations requires an individual frequency licensing procedure. The individual authorisation procedure comprises two steps: - a frequency assignment procedure, which in this case refers to the issue upon request of the decision certifying authorisation of frequency use, - the issue of a framework authorisation Frequency assignment The decision certifying authorisation of exclusive frequency use for land stations is issued to winning bidders selected by the European Commission in its Directive 2009/449/EC by the Hungarian Communication Authority (hereinafter referred to as: NHH) upon separate request submitted following the registration of the service provision intent. The procedure, initiated upon request, is liable to duty. Applicants must contact the NHH once for the issuance of the decision certifying authorisation of frequency use, prior to the installation of the first land station. The issued decision entitles the service provider to manage blocks for the frequency band obtained within the framework defined by said decision. This decision, similarly to the usual procedures applicable when issuing authorisations of frequency use for the provision of services, shall be deemed equivalent to the decision assigning the frequency in the course of judicature by the Authority. In case of frequency use for the provision of services, there is no fee for engaging frequency. In the course of the procedure initiated upon request, the service provider shall receive the decision granting authorisation of exclusive frequency use from the Authority. Based on this, the service provider may begin planning and installing the network s land stations in line with the schedule defined in its business plan. Following installation of the stations, a radio licence must be requested for their operation. The procedure for obtaining the radio licence is detailed in the chapter entitled Issuing a Radio Licence. The opportunities ensured by frequency block management are first set out by the decision certifying authorisation of frequency use, following which the framework authorisation defines the authorised modifications Issuing a Radio Licence Following the installation of land stations, the authorised party / service provider submits an application to the NHH for the issuance of a radio licence. The procedure for the issuance of a radio licence qualifies as a public administration procedure, and is therefore liable to duty. 3/7

4 Based on this request, the Authority issues the framework authorisation for the land network. The authorisation s owner shall be required to pay a so-called network fee starting from the first day of the month following the issuance of the framework authorisation. The framework authorisation thus obtained entitles the authorised party to operate a land radio network and also includes its boundary conditions. With the authorisation of frequency use obtained for service provision, the winner of the MSS bid gains entitlement to block management. Accordingly, the service provider is entitled to modify or expand the frequency use of land stations within the obtained frequency band as defined in the service or network development schedule, or to install new stations as required. Data on the modifications carried out in the land network shall be reported by the service provider in line with the schedule of the changes, but not more frequently than once in a month, prior to beginning of operation. A station fee shall be paid on the stations reported by the service provider and registered by the Authority. The current amount of the fee is contained in the decision issued on the basis of reported data, which enters into effect on the first day of the month following the entry into force of the decision. A general rule regarding the operation of radio equipment is that only radio equipment, which complies with the rules of distribution (putting on market) and has an individual radio licence, or is exempt thereof pursuant to the RAT may be operated. The conditions of distribution and the reporting procedure for equipment are detailed in the following chapter Distribution and Notification of Equipment Communication equipment satisfying the fundamental criteria set forth in Section 80 of Act C of 2003 if they satisfy the other criteria set forth in the separate statute may be freely distributed within the territory of Hungary. Decree No. 5/2004 (IV.13.) IHM of the Ministry of Informatics and Communication, which transposes Directive 1999/5/EC to Hungarian law, governs the distribution of radio equipment. Its personal scope extends to manufacturers, importers, distributors, certifiers, installers and users of the equipment, both natural persons and legal entities or organisations without legal entity, Hungarian branches of foreign firms and representatives thereof. Its material scope includes radio equipment and electronic communication terminal equipment. The intent to distribute radio terminal equipment operating within the European harmonised frequency bands does not have to be reported. The intent to domestically distribute equipment operating within non-harmonised frequency bands must be reported to the Communication Authority four weeks prior to introduction on the market. Compliance of radio equipment or electronic communication terminal equipment with fundamental criteria must be certified with a declaration of conformity sent to the Authority. The current RAT contains the list of radio equipment for harmonised band radio applications. Manufacturers must provide the following for equipment to be distributed in Hungary: - technical documentation, - clearly visible certificate of conformity, 4/7

5 - declaration of conformity, - user guide in Hungarian, - displaying interface identification on the packaging and in the user guide. Pursuant to the effective legislation, only radio equipment meeting criteria of distribution may be operated. The list of reported equipment registered by the NHH can be found at 6. Management of Interference If reports of interference due to operation of MSS service stations are received in connection with other equipment, the service provider shall take appropriate action to correct the problem following notification by the NHH. If stations of the MSS network are affected by interference from an external source, the NHH shall take appropriate action on the basis of the report to correct the problem. In the event of interference within its own network, the NHH shall not conduct investigations. 7. Obligations of Service Providers The obligations of service providers are identical to the obligations of service providers providing electronic communications services in Hungary set forth in the relevant legislation. Act C of 2003 defines the fundamental obligations of service providers. The main obligations of service providers are, non-exhaustively: - reporting the service provision intent, - reporting subscriber and user interface technical parameters, - providers of subscriber electronic communication services are required to formulate general terms of contract, - reporting the general terms of contract, - cooperation with the National Security Special Service for collecting confidential data, - bona fide cooperation with the operators of other networks during linking and the joint use of communication facilities, - use of unified identification, - separate accounting for other activities provided the service providers in question also carry out activities other than communication, - obligations related to subscriber contracts, - receiving and managing subscriber complaints and reports, - defining and publishing service quality targets, - appending itemised subscriber invoices, - informing subscribers, - operating an emergency hotline in case of telephone services, - ensuring directory assistance/ directory inquiries in case of telephone services, - obligatory data disclosure towards authorities, - compliance with data management rules set forth by legislation. 5/7

6 Besides the stipulations set forth in Hungarian legislation, the obligations and common conditions set forth in Directive 626/2008/EC, as well as the voluntary commitments undertaken in the bid also apply to MSS service providers. The NHH supervises satisfaction of obligations based on its authority set forth in legislation, and may apply sanctions and fines if necessary. In case of severe breach of terms, the Authority shall notify the European Commission. With its decision, the NHH may oblige those performing electronic communication activities to disclose data pertaining to electronic communication services and activities, even if these are qualified as confidential. Legislation regarding communication and the provision of services is available in English at the following address: 8. Fees, Payment Obligations Hungary s legal tender is the forint (HUF). All payment obligations shall be exclusively settled in Hungarian forints Amount and Method of Duty Payment The public administration procedure is liable to duty, pursuant to legislation. The duty shall be paid with a duty stamp on the document initiating the procedure. The current amount of the duty is HUF 2200 per application Market Surveillance Fee Communication service providers shall pay a surveillance fee to cover the expenses incurred in relation to the NHH s activity. The amount thereof is subject to change, and is defined by the current Ministerial Decree. The amount of this fee may be 0.35 % of annual net sales revenue, pursuant to legislation Frequency Reservation Fee In case of authorisation of frequency use for the provision of services, no frequency reservation fee is required Frequency Usage Fee Fees related to frequency management shall be determined by the Minister for Telecommunications in agreement with the Minister for Taxation Policy in the form of a decree, based on Act C of 2003 on electronic communications. Frequency use fees are defined by Decree No. 6/1997 (IV.22.) KHVM of the Ministry of Transport, Communications and Water Management (hereinafter referred to as: Fee Decree). No frequency usage fee is required for the satellite segment and subscriber equipment. The frequency usage fee payable for CGC stations that improve the quality of land service, shall be determined based on the rules applicable to mobile services for the purpose of service provision, in line with the Fee Decree in force. 6/7

7 The frequency usage fee comprises two parts: the network and the station fee. The network fee and the station fee calculated for land stations shall be paid based on the invoice sent by the NHH Network Fee The basis of the network fee is the width of the frequency band obtained in the bid and expressed in khz, and the unit price for the usage area determined based on the size of the area selected for the provision of the service. The service provider shall pay the fee following the finalisation of the framework authorisation defined in Section 5.3 based on the sent invoice Station Fee: Fee Payable for Land Stations The monthly fee payable for large aperture stations of mobile and free-to-air broadcasting services is 0.5 times the frequency band used by the station expressed in khz When determining the fee payable for CGC stations, the fee applicable to mobile services for the purpose of service provision shall be taken into account. The applicable fee per station for each frequency that can be used simultaneously is HUF 7.3/kHz/month. In case of duplex frequency use, both the transmitter and the receiver equipment s frequency band shall be taken into account. Depending on channel distribution (channel spacing), a discount defined in the Fee Decree shall apply to the fee payable for stations. Notes: 1 The amendment procedure of Hungarian legislation required for the launch of a satellite mobile service is still in progress. The entry into effect of the amendment of the Government Decree on the establishment of the national allocation of frequency bands( FNFT) and the Decree of the Ministry of Informatics and Communications on the rules of the use of frequency bands (Table of Radio Applications, RAT) will allow the winners of the bid to report their electronic service provision intent. Budapest, 27 November /7

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