Hungary - Telecoms, Mobile, Broadband and Forecasts

This report covers trends and developments in telecommunications, mobile, Internet, broadband, digital TV and converging media including VoIP and IPTV developments. Subjects include:

• Market and industry analyses, trends and developments;
• Facts, figures and statistics;
• Industry and regulatory issues;
• Infrastructure;
• Major players, revenues, subscribers, ARPU, MOU;
• Internet, VoIP, IPTV;
• Mobile voice and data markets;
• Broadband (FttH, DSL, cable TV, wireless);
• Convergence and digital media;
• Telecom market forecasts for selective years to 2019.

Researcher:- Paul Kwon

Current publication date: September 2009 (8th Edition)

Next publication date:- September 2010

Executive Summary

BuddeComm's annual publication, Hungary - Telecoms, Mobile, Broadband and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Hungary.

Building on the success of past economic reforms, Hungary joined the European Union focused on raising living standards. In the process Hungary built up a high level of public and private debt, much of which was denominated in foreign currencies. The global financial crisis impacted Hungary significantly with the Hungarian forint devaluing considerably before later stabilising, in part due to Central Bank's decision to set relatively high interest rates. The country's economic woes led to the International Monetary Fund, the EU and World Bank extending emergency loans in October 2008, with the government required to implement unpopular measures such as lifting taxes and reining in spending. Real GDP growth is expected to turn negative during 2009 and 2010. Inflation is expected to ease due to softening consumer demand.

Despite the slowdown in spending, the telecom market will fare relatively well given the essential nature of most telecom services although competition may increase as mass market and business customers increasingly look for value. Hungary's fixed telephony market is served by a number of regional incumbents as well as well-established cable TV operators.

Internet usage is high and broadband the preferred Internet access platform. DSL is the most popular form of broadband access, although the reach of cable TV networks means that cable is widely available and the second most popular platform. The demand for bandwidth is driving deployment of higher speed platforms, such as FTTx and EuroDOCSIS 3.0 for existing cable TV networks. Catering for the large Internet user base are useful online services and applications, fostering the development of an Internet society, a trend recognised and encouraged by the government through investment and policy. It is hoped that Internet society development will increase productivity and improve the standard of living.

Hungary's broadcasting market is evolving due to media convergence trends and competition. Standard definition and high definition digital TV is available via terrestrial TV, cable TV networks, satellite and IPTV. Competition has intensified due to the increased number of service providers and introduction of packaged offerings such as triple play. Legislative changes have paved the way for consolidation within the cable market, one of the most fragmented in the EU.

Hungary's mobile market, like that of its Central European counterparts, has matured with penetration rates surpassing 100%. Services are offered by three mobile network operators, all of which are majority or wholly-owned by Western European operators. With mobile SIM card penetration at saturation levels, the mobile network operators have shifted focus to increasing ARPU levels, encouraging prepaid users to take up postpaid services as well as encouraging spending and uptake in the underdeveloped mobile broadband and content market. 3G/HSDPA networks have been deployed to support delivery of mobile broadband services; competing network deployments have led to increased transfer speeds.

Key highlights:

• Approximately 40% of households enjoy fixed broadband access. DSL and cable alone represent nearly 95% of all fixed broadband connections. The incumbent announced plans in late 2008 to invest in FTTx infrastructure during 2009-2013 reaching 780,000 households, as well as upgrade existing cable networks with EuroDOCSIS 3.0 technology to 380,000 households.
• Encouraging business usage of e-government services is evident, with up to 56% of businesses using e-government services to obtain information, forms and return forms online. Recognising the potential market, the incumbent launched a project to introduce and demonstrate Internet society applications related to the health care, education, public administration, tourism and culture.
• A healthy digital TV market is evident; digital terrestrial TV broadcasts based on DVB-T and DVB-H technology commenced in December 2008 and a total of five satellite-based digital TV platforms are in service. Cable TV is widely available, with approximately 80% of households able to access CATV networks. The incumbent introduced a wholesale IPTV offering in June 2009; a number of alternative operators have taken up the wholesale offer and commenced offering competing IPTV services.
• Mobile broadband is the next growth opportunity for mobile network operators, as mobile broadband penetration is currently at 3-5%. Mobile TV is also a potential growth area following the launch of mobile broadcasting based on DVB-H in December 2008.

The following notes provide some background to our scenario forecasting methodology:

• This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.
• The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.
• All statistics for GDP, revenue, etc, are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

• 1. Key Statistics
• 2. Telecommunications Market
  • 2.1 Overview of Hungary's telecom market
• 3. Regulatory Environment
  • 3.1 Background
    • 3.1.1 Unified Telecommunications Act 2001
    • 3.1.2 Electronic Communications Act 2003
    • 3.1.3 EU Regulatory Framework
  • 3.2 Regulatory authority
    • 3.2.1 Nemzeti H?-rk??zl?(C)si Hat??s??g (NHH)
  • 3.3 Telecom sector liberalisation in Hungary
    • 3.3.1 Privatisation
    • 3.3.2 Interconnect
    • 3.3.3 Access
    • 3.3.4 Number portability
    • 3.3.5 Carrier selection (CS) and carrier preselection (CPS)
• 4. Fixed Network Operators in Hungary
  • 4.1 Market overview
  • 4.2 Magyar Telekom
    • 4.2.1 International expansion
  • 4.3 Hungarotel Co (HTCC) / Invitel
  • 4.4 Monor
  • 4.5 GTS-Datanet
  • 4.6 Antenna Hung??ria
• 5. Telecommunications Infrastructure
  • 5.1 National telecom network
    • 5.1.1 Magyar Telekom
    • 5.1.2 Alternative operators
  • 5.2 International infrastructure
  • 5.3 Telecoms & IT
    • 5.3.1 Overview
• 6. Wholesaling
  • 6.1 Overview
• 7. Internet Market
  • 7.1 Overview
    • 7.1.1 Internet statistics
  • 7.2 Hungary's emerging Internet society
    • 7.2.1 Legislation
    • 7.2.2 E-commerce
    • 7.2.3 E-government
    • 7.2.4 E-health
    • 7.2.5 E-education
• 8. Broadband Market
  • 8.1 Overview
    • 8.1.1 Fixed broadband statistics
  • 8.2 Cable modems
  • 8.3 Asymmetrical Digital Subscriber Line (ADSL)
    • 8.3.1 Fibre-to-the-Home (FttH)
  • 8.4 Wireless broadband
    • 8.4.1 WiFi
    • 8.4.2 Internet via satellite
• 9. Convergence
  • 9.1 Media convergence
  • 9.2 VoIP telephony
  • 9.3 Overview of broadcasting market
  • 9.4 Free-to-Air (FTA) TV
    • 9.4.1 Magyar Televizi?? (MTV)
    • 9.4.2 TV2
    • 9.4.3 RTL Klub
  • 9.5 Digital TV (DTV)
    • 9.5.1 Broadband TV (IPTV)
    • 9.5.2 Cable TV (CATV)
    • 9.5.3 Satellite-based pay TV
    • 9.5.4 Digital Terrestrial TV (DTTV)
• 10. Mobile Communications
  • 10.1 Overview of Hungary's mobile market
    • 10.1.1 Mobile statistics
  • 10.2 Regulatory issues
    • 10.2.1 GSM licences
    • 10.2.2 3G licence awards
    • 10.2.3 Mobile Termination Rates (MTR)
    • 10.2.4 EU roaming tariffs
    • 10.2.5 Mobile Number Portability (MNP)
  • 10.3 Mobile technologies
    • 10.3.1 Digital
    • 10.3.2 Third generation mobile
  • 10.4 Major mobile operators
    • 10.4.1 T-Mobile
    • 10.4.2 Pannon GSM
    • 10.4.3 Vodafone Hungary
  • 10.5 Mobile voice services
    • 10.5.1 Prepaid cards
  • 10.6 Mobile data services
    • 10.6.1 Short Message Service (SMS) / Multimedia Messaging Service (MMS)
    • 10.6.2 General Packet Radio Service (GPRS)
    • 10.6.3 Push-to-talk (PTT)
    • 10.6.4 Enhanced Data for GSM Evolution (EDGE)
    • 10.6.5 BlackBerry
    • 10.6.6 Mobile broadband
    • 10.6.7 Mobile TV
  • 10.7 Mobile content and applications
    • 10.7.1 T-Mobile
    • 10.7.2 Vodafone Hungary
    • 10.7.3 Pannon GSM
    • 10.7.4 M-commerce (micropayments)
  • 10.8 Mobile marketing
    • 10.8.1 QR code readers
    • 10.8.2 Vodafone live!
• 11. Forecasts
  • 11.1 Forecast fixed broadband subscribers - 2009 - 2012; 2018
    • 11.1.1 Scenario 1 - higher broadband subscriber growth
    • 11.1.2 Scenario 2 - lower broadband subscriber growth
  • 11.2 Forecast 3G subscribers - 2009 - 2012; 2019
• 12. Glossary of Abbreviations
  • Table 1 - Country statistics Hungary - 2008
  • Table 2 - Telephone network statistics - 2008
  • Table 3 - Internet user statistics - 2008
  • Table 4 - Broadband statistics - 2008
  • Table 5 - Mobile statistics - 2008
  • Table 6 - National telecommunications authority
  • Table 7 - Magyar Telekom interconnection rates - 2006 - 2008
  • Table 8 - Magyar Telekom financial data - 2007 - 2008
  • Table 9 - Magyar Telekom residential, business & payphones in service - 2005 - 2008
  • Table 10 - HTCC financial data - 2007 - 2008
  • Table 11 - Fixed lines in service and teledensity - 1995 - 1996; 1998 - 2009
  • Table 12 - Total international Internet bandwidth - 2000 - 2008
  • Table 13 - Workplace network usage by network type - 2004 - 2008
  • Table 14 - Total IT hardware spending breakdown by hardware type - 2007
  • Table 15 - Total IT software spending breakdown by software type - 2007
  • Table 16 - Total IT hardware services spending - 2007
  • Table 17 - Total IT software services spending - 2007
  • Table 18 - Wholesale lines by type - January 2009
  • Table 19 - Access agreements with Magyar Telekom by type - 2006 - 2008
  • Table 20 - Cost of local loop unbundling and shared access - 2006 - 2008
  • Table 21 - Internet users, subscribers and penetration rates - 1999 - 2009
  • Table 22 - Internet penetration among businesses by employee size - 2004 - 2008
  • Table 23 - Percentage of businesses receiving orders online by employee size - 2004 - 2008
  • Table 24 - Items purchased online by individuals - 2008
  • Table 25 - Online purchases by age group - 2008
  • Table 26 - Take up of e-government services by businesses - 2004 - 2008
  • Table 27 - Take up of e-government services by individuals - 2004 - 2008
  • Table 28 - Fixed broadband subscribers by access type - January 2009
  • Table 29 - Fixed broadband subscribers and penetration rate - 2000 - 2008
  • Table 30 - T-Kabel broadband subscribers - 2004 - 2008
  • Table 31 - Magyar Telekom ADSL subscribers - 2001 - 2008
  • Table 32 - UPC homes passed - 2003 - 2008
  • Table 33 - UPC subscribers by service type - 2003 - 2008
  • Table 34 - UPC financial data - 2006 - 2008
  • Table 35 - T-Kabel cable subscribers - 2002 - 2008
  • Table 36 - Mobile operators, subscribers and annual change - 2008
  • Table 37 - Mobile subscribers and penetration rate - 1995 - 1996; 1998 - 2009
  • Table 38 - 3G network coverage per operator - May 2009
  • Table 39 - T-Mobile financial and operational data - 2004 - 2008
  • Table 40 - T-Mobile churn, subscriber acquisition costs & ARPU - 2005 - 2008
  • Table 41 - Pannon GSM financial and operational data - 2005 - 2008
  • Table 42 - Vodafone Hungary average monthly ARPU & MOU - 2005 - 2007
  • Table 43 - Prepaid subscribers by operator - 2002 - 2008
  • Table 44 - GPRS coverage per operator - May 2009
  • Table 45 - Mobile broadband subscribers and penetration rate - 2005 - 2009
  • Table 46 - Mobile Internet subscribers per operator - 2009
  • Table 47 - Total mobile Internet data transferred per operator - 2008 - 2009
  • Table 48 - Average mobile Internet data transferred per operator - 2008 - 2009
  • Table 49 - Forecast fixed broadband subscribers - higher growth scenario - 2009 - 2012; 2018
  • Table 50 - Forecast fixed broadband subscribers - lower growth scenario - 2009 - 2012; 2018
  • Table 51 - Forecast 3G subscribers - lower & higher growth scenarios - 2009 - 2012; 2019
  • Exhibit 1 - EU regulatory framework for communications
  • Exhibit 2 - Access, the local loop and unbundling - an overview
  • Exhibit 3 - Number portability defined
  • Exhibit 4 - Overview of CS and CPS
  • Exhibit 5 - The Economist Intelligence Unit (EIU) annual E-readiness criteria
  • Exhibit 6 - Overview of media convergence
  • Exhibit 7 - 2G spectrum awarded