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3G Mobile Tender Winners to be Selected by December

The state expects to announce the winners of Hungary's third-generation (3G) mobile tender by early December, Gyula Simon of communications authority NHH said at a public hearing. The tender will be announced by late August, while the deadline for submitting bids will likely be set for early November. The IT ministry will grant a maximum of four licenses; the 2004 budget calculates with revenues of HUF 15.8 billion from the sale of licenses.

3G services could be launched as early as 2006, NHH president Daniel Pataki said.

Pataki stressed he sees the timing of the tender as "ideal," as Hungary "will enjoy the benefit of latecomers," hopefully avoiding the pitfalls of "over-licensing" and exorbitant bidding wars that characterized earlier 3G auctions in western Europe. "We believe that 3G will boost competition, and therefore we would welcome new entrants to the market," Pataki emphasized, adding that at the same time, "we do not intend to impose an unfair burden on incumbent providers."

Simon added that in order to narrow the competitive disadvantage of new players, the tender will include provisions such as the granting of GSM licenses to new entrants and applying more lenient network development requirements.

Representatives of Hungary's three mobile providers, while welcoming the long-awaited tender procedure, expressed concerns at the hearing over several aspects of the government's plans, and also criticized what they saw as the unresponsiveness of NHH officials at the public hearing. Karoly Fiala of Hungary's largest mobile provider T-Mobile Hungary said a one-off fee of HUF 5 billion would be acceptable, but that thereafter, license fees should be proportional to revenues from the service. "This is a risky business, and the state should share a part of that risk." Citing western European examples, Fiala argued that granting just three licenses instead of four would be sufficient.

Gyozo Drozdy, deputy CEO of Hungary's second largest provider Pannon GSM, proposed no such limitation on the number of providers, but expressed concerns over network development obligations, citing negative experience with civil lawsuits over base station installations. Representing the third mobile provider Vodafone, Pal Marchart said there are still considerable obstacles to the profitability of the service. These include the limited supply of compatible handsets, the lack of 3G applications, high investment costs, and a general lack of customer demand.

(Interfax 26.vii.04)

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