Hungary - Digital switch-over about to start

Having the approval of the ad hoc committee of the Parliament, the National Communications Authority of Hungary (NHH) posted for public debate on its website the documentation of the tender call 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, being 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 line with Act LXXIV of 2007 on the rules of broadcasting and digital switch-over, NHH shall publish the final tenders after the consultation, by 31 October at the latest. The winner of the tender is expected to be announced at the beginning of 2008 and terrestrial digital free-to-air broadcasting may be started in Hungary as early as next year.

According to the Act, winners of the tender may be granted operating entitlement for 12 years, which may on one occasion be prolonged for another 5 years. NHH plans to announce two calls for tenders, one for the operating entitlement to five digital television broadcasting networks (multiplex) and the other for the operating entitlement 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 second one out of these three. Free-to-air broadcasting shall commence on the radio multiplex in the next year, too. 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 85% is to access radio multiplexes after the networks have been fully built up.

As a result of the Regional Radiocommunications Conference held in Geneva in 2006 with 101 countries attending, Hungary disposes of 8 television and 3 radio multiplexes altogether during the digital switch-over. As for the utilisation of the 3 television and 2 radio multiplexes not contained in the present call for tenders, the respective decision will be taken in the future.

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 the applicant or its subcontractor acquired in the building-up and operation of radiocommunications 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
“¢ undertakings relating to the broadcasting fees of public service programme providers
“¢ undertaking relating to the introduction of supplementary interactive digital services
“¢ undertaking more favourable than the schedule set for the building-up of the free-to-air broadcasting network and the free-to-air broadcasting station
“¢ undertaking more favourable than the schedule of the planned public access
“¢ undertaking relating to the suitability of digital receiver decoders for use in interactive services
“¢ undertakings more favourable than those stipulated in the call for tenders in respect of the information of users and subscribers and to the eventual discount and sponsored marketing of the digital receiver decoder
“¢ undertakings 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
“¢ undertaking relating to the one-off and the annual revenue-based tender fees.

Radio tender:
“¢ offering programmes of national public programmes provider radios
“¢ undertakings relating to the broadcasting fees of public service programme providers
“¢ undertaking more favourable than the schedule set for the building-up of the free-to-air broadcasting network and the free-to-air broadcasting station
“¢ undertaking more favourable than the schedule set for the planned public access
“¢ undertaking 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. 23% of the households can access (analogue) terrestrial reception only (this technology is used by 31% altogether).

According to 2007 spring data, 61.3% of the households has subscribed to cable television services and almost 450,000 households have 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 and 180 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 shall improve the competition in the television market between the various platforms, thus contributing to the reduction of prices, the improvement of the quality of services, the extension of the range offered and to the dissemination of new digital services.