Hungary - One step closer to digital switch-over

Friday, February 1st, 2008 
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Having obtained the approval of the ad hoc committee of the Parliament, the National Communications Authority (NHH) posted for public debate on its website the documentation of the tender invitation announced for national terrestrial digital television (DVB-T*) and radio (T-DAB*) free-to-air broadcasting, which is to serve as the basis of the digital switch-over.

The aim of the digital switch-over is to use the frequency set, deemed a national asset, in a way more efficient than at present, to improve media pluralism, to create sustainable and efficient market competition in digital broadcasting, to improve consumer information and awareness and to promote disadvantaged social groups’ access to digital services.

In accordance with Act LXXIV of 2007 on the rules of broadcasting and digital switch-over, NHH shall publish the final tenders after the consultation, by year end in 2008, after obtaining a new approval from the ad hoc Committee of Parliament, however, NHH plans to publish the final tenders as early as spring this year. In this case, the winner of the tender would be announced in the summer of 2008 and terrestrial digital free-to-air broadcasting could be started in Hungary as early as this year.

According to the Act, winners of the tender may be granted operating licence for 12 years. NHH plans to announce two calls for proposals, one for the operating licence to five digital television broadcasting networks (multiplex) and the other for the operating licence to a digital radio broadcasting network in the VHF band.

The launch of terrestrial digital free-to-air broadcasting

According to the invitation to tender posted for consultation, terrestrial television broadcasting shall be launched on three multiplexes in 2008 and the winner applicant can provide a mobile-TV (DVB-H*) service as well on the third one. Free-to-air broadcasting shall commence on the radio multiplex also this year. Two further television multiplexes, for which a call for tenders will also be announced, will be available for free-to-air broadcasting after the present national analogue terrestrial free-to-air broadcasting has been terminated. In the European Union, and thus in Hungary, too, analogue terrestrial free-to-air broadcasting shall be replaced by its digital counterpart on 31 December 2011, at the latest.

Television multiplexes will have to reach 94% of the population and, similarly, 94% of the population is to access radio multiplexes after the networks have been fully built up. The planned date for digital switchover in the area of radio broadcasting is the end of 2014.

Participants – exclusions

Any natural or legal person, company without legal personality or any other entity that complies with the financial and technical conditions may apply for the tender. Technical eligibility is subject to a minimum of 5 years’ experience gained by applicant or its subcontractor in the building-up and operation of radio-communications networks.

“¢ No enterprise may participate in the television tender, including enterprises associated in terms of management, either independently or as a consortium member,
a) the total number of the subscribers of which exceeds three hundred thousand on television broadcasting markets with the exception of broadcasting provided through the digital television free-to-air broadcasting network,
b) which provides programmes under Act of 1996 on radio and television broadcasting (Rttv.), targeted primarily at the territory of Hungary.

“¢ No national radio programme provider may participate in the radio tender, including enterprises associated in terms of management, except for the national public service radio programme provider as defined in Rttv., and national providers of public radio programmes.

Tender fee

Pursuant to the consultation documentation, applicants may submit an offer for the amount of both the one-off and the revenue-based tender fee. The one-off fee for the television free-to-air broadcasting tender is a minimum of HUF 300 million, and the revenue-based tender fee is at least 3% of the annual revenue. The one-time fee for the radio free-to-air broadcasting tender is a minimum of HUF 50 million and the revenue-based tender fee may not be less than 0.5% of the annual revenue.

Assessment criteria

Television tender:
“¢ making available a free-access programme provider who ensures new terrestrial broadcasting in general themes;
“¢ commitments relating to the broadcasting fees of public service programme providers;
“¢ commitment relating to the introduction of supplementary interactive digital services;
“¢ commitment more favourable than the schedule set for the building-up of the free-to-air broadcasting network and the free-to-air broadcasting station;
“¢ commitment more favourable than the schedule of the planned public access
“¢ commitment relating to the suitability of digital receiver decoders for use in interactive services;
“¢ commitment more favourable than those stipulated in the call for tenders in respect of the information of users and subscribers and to an eventual discount and sponsored distribution of the digital receiver decoder;
“¢ commitments more favourable than those stipulated in the call for tenders in respect of participation in the anticipated switch-off of the national analogue terrestrial television broadcasting concerned;
“¢ commitment relating to the one-off and the annual revenue-based tender fees;
“¢ Application of the MPEG-4 digital signal processing and compression standard;
“¢ commitment to create the possibility of a broadcasting service on a DVB-H network.

Radio tender:
“¢ offering programmes of national public programmes provider radios
“¢ commitments relating to the broadcasting fees of public service programme providers
“¢ commitment more favourable than the schedule set for the building-up of the free-to-air broadcasting network and the free-to-air broadcasting station
“¢ commitment more favourable than the schedule set for the planned public access
“¢ commitment relating to the one-off and the annual revenue-based tender fees
“¢ implementation of a system based on advanced coding procedures.

The state of television “reception” now and in the near future

According to the June survey conducted by NHH among the population, at present, 99% of Hungarian households has television sets, whereas half of the households has at least two sets. 23% of the households can access (analogue) terrestrial reception only (this technology is used by 31% altogether).

In spring 2007, 61.3% of the households were subscribers to cable television services and almost 450,000 households subscribed to satellite services following the significant growth seen by the last year. In recent years, the number of households equipped with individual satellite apparatuses or roof or room antennas decreased to a great degree. In the last 2 years, these platforms were abandoned by 60 thousand and 180 thousand households, respectively, but there are still almost 1 million households in Hungary where television programmes can be received in no other way.

On the whole, digital switch-over will improve competition in the television market between the various platforms, and could thus contribute to the reduction of prices, the improvement of the quality of services, the extension of the programme range offered and to the dissemination of new digital services.

Documents on the call for proposals can be accessed and, following registration, can be downloaded from: http://www.nhh.hu/?id=hir&cid=3490&mid=1706&lang=hu

*Abbreviations
DVB-T – Digital Video Broadcasting – Terrestrial
T-DAB – Terrestrial Digital Audio Broadcasting
DVB-H – Digital Video Broadcasting – Handheld