Hungary - NCAH announces invitation to bids for digital broadcasting

Tuesday, March 25th, 2008 
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BUDAPEST — The National Communications Authority of Hungary (NCAH) [Nemzeti Hírközlési Hatóság (NHH)] announced an international tender for the operation rights of five terrestrial digital television broadcasting networks and a digital radio broadcasting network in the VHF range on Tuesday. At the press conference discussing the details of the bid invitations, Mr Dániel Pataki, President of NCAH said that results of the bids are expected to be announced in the summer of 2008 and that digital terrestrial broadcasting, which offers a perceptibly more modern service and the possibility of the introduction of several new features as compared to analogue broadcast, may well commence in Hungary as early as this year.

NCAH hopes that terrestrial digital television broadcasting will increase competition in the television broadcasting market and will, at the same time, contribute to the provision of a much wider range of programmes to 20-25 percent of all Hungarian households currently equipped only with indoor or roof aerials.

With a view to making digital switchover possible, invitations to bids for national terrestrial digital television broadcasting (DVB-T) and terrestrial digital radio broadcasting (T-DAB) have been announced by NCAH with the approval of the ad hoc committee of the Hungarian Parliament and in line with the results of the professional consultations carried out in February this year.

In accordance with Act LXXIV of 2007 on digital switchover (Digital Switchover Act), the successful bidders of both the television broadcasting and radio broadcasting tenders will be granted multiplex operation rights for a period of 12 years.

According to the bid invitations, successful bidders will decide on the compression method to be used and will determine if other programmes, in addition to public service programmes, will be available for free or only for a subscription fee as part of television multiplex services. It is also for the future multiplex operator to decide which channels apart from the ones stipulated in the Digital Switchover Act and the bid invitations will be available from the very start of multiplex services and which other channels will be included in the programme range at a later time.

According to the invitation to bids, terrestrial radio and television broadcasting must be commenced on two multiplexes in 2008, whereas the successful bidder may also offer handheld TV (Digital Video Broadcasting – Handheld; DVB-H) services using the third television multiplex. Broadcast using the other two television multiplexes can be started once the currently available nationwide terrestrial analogue broadcasting has been terminated. In the European Union, and thus also in Hungary, terrestrial analogue broadcasting must be replaced by digital broadcasting by no later than 31 December 2011.

Both audio and video multiplexes, after both networks have been fully completed, must be available to 94 percent of the population. As far as audio broadcasting is concerned, the planned date of digital switchover is the end of 2014.

Bidders can submit their bids by 11 a.m. on 24 April 2008 at the latest.

Eligibility and disqualifications

The bidding procedure is open to natural persons, legal persons, business associations without legal personality and other organisations meeting the specified economic and technical requirements. The condition of technical eligibility is that the bidder or its subcontractor shall have 5 years of experience in the construction and operation of radio communications networks.

A business entity or a business entity in control relationship with the aforementioned business entity that can be characterised by the following may not take part in the video broadcast bid, either independently or as a member of a consortium:

“¢ the total number of its subscribers exceeds 300,000 in the television broadcasting markets except for broadcasting performed by digital television broadcasting networks;
“¢ it performs programme provision within the scope of Act of 1996 on radio and television broadcasting (Broadcasting Act) primarily to the territory of the Republic of Hungary.

National radio programme providers or business entities in control relationship with the aforementioned provider may not take part in the radio broadcasting bid, with the exception of national public service radio programme providers and national public radio programme providers as per the Broadcasting Act.

Bidding fee

Bidders can also make offers in respect of one-off and annual sales revenue-based bidding fees. As far as the video broadcasting bid is concerned, the one-off fee is a minimum of HUF 300 million, and the sales revenue-based bidding fee is a minimum 3 percent of the annual sales revenue. As far as the radio broadcasting bid is concerned, the one-off fee is a minimum of HUF 50 million, and the sales revenue-based fee is a minimum 0.5 percent of the annual sales revenue.

Evaluation criteria

With reference to the video broadcasting bid:
“¢ making available new terrestrial broadcasting programme providers with general programmes and free access;
“¢ commitments relating to the broadcast license fees of public service programme providers;
“¢ commitment relating to the introduction of interactive associated digital services;
“¢ commitment to the construction of free-to-air broadcasting networks or programme transmitters earlier than as per the required schedule;
“¢ commitment to ensuring residential access earlier than as per the required schedule;
“¢ commitment to making digital receiver decoders suitable for interactive services;
“¢ commitments to providing information to users and subscribers and to the possible preferential and discounted commercialisation of digital receiver decoders offering more favourable conditions than the ones required in the bid invitation;
“¢ more favourable commitments relating to participation in the earlier discontinuation of the affected national analogue terrestrial television broadcasting as compared to those required in the bid invitation;
“¢ to one-off and annual sales revenue-based bidding fees;
“¢ application of MPEG-4 digital signal processing and compression standard;
“¢ commitment to making broadcasting service on the DVB-H network available.

With reference to the radio broadcasting bid:
“¢ commitments relating to the broadcast license fees of public service programme providers;
“¢ commitments to the construction of free-to-air broadcasting networks or programme transmitters earlier than as per the required schedule;
“¢ commitment to ensuring residential access earlier than as per the required schedule;
“¢ implementation of a system based on more advanced coding procedures;
“¢ incorporation of the programmes of national public radio programme providers in the range of available programmes;
“¢ commitment to one-off and annual sales revenue-based bidding fees;
“¢ commitment to the provision of associated digital service;
“¢ commitment relating to the broadcast of regional radio programmes offering information to citizens dominantly through public life and news programmes.