1. - 1 - Dániel Pataki President National Communications Authority of Hungary EPP-ED - Public hearing Brussels 30 May 2005 Implementing the Electronic Communications Package – the Hungarian experience

2. - 2 - HUNGARIAN BASIC CONDITIONS Country-specific challenges and possibilities should be considered when regulating Weaknesses Relatively low income (GDP/capita: 7 k vs. 21 k EU25 ave) Strong digital divide (56% of inhabitants digital illiterate) High rate of rural population (37% of inhabitants live in villages) Relatively low fixed line penetration (35% vs. 53% EU25 ave) Strengths Relatively high mobile penetration (86% vs. 83% EU25 ave) Relatively high cable penetration (56% of households vs.32% EU25 ave) GDP: 2003 data; penetrations: 2004 YE

3. - 3 - SNAPSHOTS OF REGULATORY MEASURES Hungary is a front runner in implementation of NRF Hungary 2 nd of EU25 and 1 st of EU10 in market analysis procedure 0 notified market < 5 5-1010-1515 < EU15 EU10 11 member states UK HU AT, FI, PT, IE, SE DKFR, EL, DE SK, SI, LT Both mobile and fixed wholesale charges have reached EU15 average in the last 2 years

4. - 4 - HIGHLIGHT OF SOME RESULTS Regulatory efforts on the wholesale side are effective even at retail level Alternative operators have appeared in the voice services even in the residential segment (Tele2, UPC, etc.) Broadband is experiencing strong growth (doubled during last year) Retail price decrease 1 st time ever in Hungary

5. - 5 - MARKET VISION NCAH seeks competition among different platforms as medium term objective of regulation Wireless Wireline VoiceInternet/DataBroadcasting PSTNDSL xDSL play VoCTV cable mode m CTV/ DVB-C GSM GPRS/ EDGE 3G/4G DVB-H (?) DVB-T WiFi/ WIMA X PLCFTTx VSAT NarrowbandBroadband Leading technologiesChallenging technologies

6. - 6 - CONCLUSIONS Experience shows the adequacy of NRF, although it faces challenges by technological and market development Experience of implementation Adequate for EU10 Immediate results for established markets Resource intensive procedure Role of wireless in rural areas Challenges of the changing environment Technological changes NGN Emerging markets Convergence of services Issues for NRF review More focus needed Reduce by regrouping some of 18 markets Permit lighter analysis on non- focus areas Flexible spectrum policy Need for new regulatory approach (interoperability, ex-post regulation) Convergence of regulation?

7. - 7 - Thank You for Your Attention! daniel.pataki@nhh.hu