National Communications Authority

Digital terrestrial level broadcasting will be launched by the end of the year in Hungary

At its Friday session, the relevant committee of Parliament approved the decision of the National Communications Authority (NHH), pursuant to which over the course of the digital switchover process the tender issued for the operation of the national terrestrial level television and radio program broadcasting networks had been awarded to Antenna Hungária Zrt., reported the NHH.

Subsequent to the successful tender, by the end of this year mobile television services may commence; in over half of the country’s territory at least 5 television stations and in nearly one third of the country 12-18 radio stations will be accessible free of charge via digital terrestrial level program broadcasting.

The launch of terrestrial level digital television broadcast services, as NHH hopes, will strengthen competition and expand and diversify offerings within the television and radio markets, while at the same time, contribute to 20-25 percent of Hungarian households that are currently watching television only with a room or roof antennas now gaining access to a choice of programs broadcast at a higher quality than currently and from a much more diverse range of programs.

NHH issued its national terrestrial level digital television (DVB-T*) and radio (T-DAB*) program broadcasting tenders on March 25th, facilitating the basis of digital switchover. In response to the tender issued for the operation of the five terrestrial level digital television program broadcasting networks (multiplex), the companies Antenna Hungária Zrt. and Digital Broadcasting Kft., while for the operation of the single terrestrial level digital radio program broadcasting network operating in the VHF band, Antenna Hungária Zrt., and Magyar Rádió Zrt. have submitted their bids by the April 24th deadline. All bids were valid in respect of both form and content.

The invitation to tender defined an objective system of evaluation. Over the course of evaluation, NHH used this objective system throughout the ranking of the bids, and its evaluation complied with the recommendation of the government committee, independent of the Authority, responsible for evaluating the tender.

Following the substantive evaluation, pursuant to the Act on digital swirtchover, NHH submitted its proposal and the draft of the Authority Agreement to the Parliamentary Committee on June 23rd. The Parliamentary Committee had 15 days to issue its decision. On July 7th, the Committee, taking advantage of its lawful option to do so, submitted a proposal that was more in-depth than the previous one, although corresponding to the content of the original one; this was adopted by the Committee on Friday.

TV:

Of the 100 points that could be attained within the framework of the television tender, Antenna Hungária received 88.509 points, while Digital Broadcasting received 83.781 points. The winning television bidder opted for a more advanced technology, i.e. the MPEG 4 compression technology, providing a more diverse selection of offerings, and offered a more favourable public program broadcasting fee than its competitor. Both bidders agreed to launch mobile television services (DVB-H), and free access to national commercial channels (Viasat3, Humor1), along with the provision of interactive supplemental digital services.

In line with the obligations undertaken by the winning bidder, digital terrestrial level television services shall be launched in 59 percent of the territory of Hungary, while mobile television services shall be launched in an area covering 16 percent of the country (in Budapest), still this year.

The successful bidder of the television program broadcasting tender, shall, instead of the minimum HUF 300 million one-time fee, pay a one-time fee of HUF 360 million, while the revenue-based tender fee that it has agreed to – in accordance with the obligatory minimum – shall be 3 percent of annual revenues. The other bidder made submitted its proposal for a one-time fee of HUF 400 million and a 3 percent revenue-based fee.

Altogether the successful bidder wins the right to operate altogether 5 multiplexes. Of these it shall begin program broadcasting as early as this year on the “A” and “C” multiplexes, as well as on “B,” used for mobile television services; it will presumably be able to launch services on the “D” and “E” multiplexes – after current analogue terrestrial level broadcasts are halted in 2011 – in 2012.

The publication of the result of the tenders may take place within 30 days following committee approval, with the Authority Agreement to be entered into within 45 days.

RADIO:

Similarly, 100 points could be attained in the radio tender. Of the bidders, Antenna Hungária received 90.007 points, while Magyar Rádió received 85.158 points. The winning radio service provider, just like its competitor, had selected the DAB+ (i.e. the more advanced) compression technology, while at the same time offering a more favourable public service program broadcasting fee than its competitor, and also offering a more favourable schedule concerning the construction of the networks and household access.

The winning bidder of the tender invitation issued for the rights to operate the radio program broadcasting network will pay a one-time fee of HUF 60 million instead of the mandated minimum of HUF 50 million, while the revenue-based tender fee, pursuant to the prescribed minimum, shall be 0.5 percent of annual revenues. The other bidder proposed a one-time fee of HUF 125 million and a 3 percent revenue-based fee.

As agreed to by the winning bidder, digital terrestrial level radio services shall commence in over 31 percent of the territory of Hungary this year.

Pursuant to the procedures of the Act on digital switchover, both the winners of the television and the radio tenders secure a so-called multiplex operational right for a period of 12 years.

The winner of the television and radio tenders have to establish a 100 percent fully owned business association pursuant to the invitation to tender and it is this company that shall acquire the multiplex operational right, while at the same time it is this company that shall bear the duties and obligations listed in the invitation to tender and its own bid.

In the European Union – and therefore in Hungary as well – analogue terrestrial level television program broadcasting has to be replaced by digital broadcasting at the latest by December 31st, 2011. In the field of radio broadcasting, the planned date of digital switchover in Hungary is the end of 2014, assuming that the coverage of the network reaches the prescribed level.

Both radio and television multiplexes, following the complete construction of the network, must be accessible by 94% of the population.

July 25, 2008, Budapest

*Abbreviations:

DVB-T – Digital Video Broadcasting-Terrestrial
T-DAB – Terrestrial Digital Audio Broadcasting
DVB-H – Digital Video Broadcasting-Handheld

Additional information:
Spokesperson György Márton
+36 20 931-2233