Following the introduction of Flip Otthon, the NMHH conducted investigations in two ex officio general supervisory procedures and fined Magyar Telekom HUF 50 million for conduct interfering with the proper functioning of the wholesale broadband market and HUF 25 million for its GTC containing infringing contract terms.
When determining the amount of the fines, the Authority took into account the severity, recurrence, continuation and period of the infringement, the financial advantage gained by the infringer with the infringement, the harm to interests caused by the infringement, the number of individuals whose interests were harmed or jeopardized, and the impact of the infringement on the market. The Operator complied with the provisions in the provisional measure.
Gaining unlawful competitive advantage over wholesalers
At the end of the first ex officio general regulatory supervisory procedure launched on 26 May, the NMHH concluded that by introducing the Flip Otthon tariff plan on 16 May, Magyar Telekom had not complied with its obligations of transparency, equal treatment, verifiability of cost orientation and fees as well as access and interconnection as set in the Authority’s 2011 Decision concerning the wholesale market. Therefore, the Authority adopted a provisional measure prohibiting the Operator from entering into subscriber agreements on the Flip Otthon tariff plan or providing subscriber service on the basis of subscriber agreements already concluded. When the procedure was launched the Operator amended its GTC as of 28 May and suspended marketing of the Flip Otthon tariff plan; however, at the same time, it launched its Flip Otthon+ plan, the regulatory compliance of which has also come into question.
Based on the Infocommunications Act and EU laws, Telekom, as an operator with significant market power, could not have conducted a market practice suitable for restricting competition. Indeed, if such an operator increased its offering with a new tariff plan including internet access service that was significantly different from the existing ones, the operator would be required to offer the planned service to other operators at least 30 days before the service is launched and at the wholesale price approved in advance. Telekom failed to submit a request to this effect to the Authority so potential competitors did not get a chance to offer their subscribers alternatives to Telekom’s service; therefore, the interests of subscribers could have been harmed.
In compliance with the obligation of “equal treatment” imposed on it, Magyar Telekom should have provided eligible operators with a wholesale service associated with newly offered internet access service and any related information to the same standards it applies to its own Flip Otthon tariff plan in order to ensure that eligible operators are able to reproduce the internet access service included in the Flip Otthon tariff plan, enter the market with such service and offer it to subscribers. In addition, by breaching this obligation, Magyar Telekom also violated the “transparency” requirements specifically aimed at ensuring that the terms applicable to wholesale services provided by an operator are publicly available and thereby accessible to peers.
The decision taken by the President of the NMHH is final, but the Operator may ask for court review.
Applying infringing contract terms
Launched on 31 May, the second ex officio general regulatory supervisory procedure identified infringements with regard to several provisions of the Flip tariff plan’s GTC that entered into force on 16 May, 29 May, 1 July and 1 August, fur which the Operator failed to comply with laws and regulations. Setting clear general terms and conditions serves the purpose of protecting the rights of both the operator and the subscriber and ensures clarity between vendor and customer. The Electronic Communications Act and the NMHH Decree on the Detailed Rules of Electronic Communications Subscriber Agreements clearly address the conditions of, and the modalities to amend, subscriber agreements and the Operator failed to comply with these provisions when offering the Flip Otthon service plan.
Measures incorrectly envisaged by Telekom in the GTC included service suspension should a subscriber fail to use customer support in compliance with the conditions laid down by the Operator. It unlawfully applied the termination of subscriber agreements in the case of past due payments; furthermore it imposed charges for troubleshooting and the first itemised call list on residential subscribers. In the case of service restriction, it is considered an infringement, contrary to the requirements laid down by law, to make the internet access service completely unavailable instead of reducing its qualitative or other characteristics, and complying with relocation requests beyond the deadline set by law.
The Authority required Telekom to restore legality with regard to subscribers who were subject to Telekom’s infringing GTC provisions and thus suffered a disadvantage. Telekom must submit an action plan on the method and timetable for achieving legality to the Authority, amend its GTC, prepare the applicable action plan and publish a communication on its website, ensuring that the infringement is made widely public in order to protect subscribers.
The decision taken by the Office of the NMHH is not final; the Operator may lodge an appeal to the President of the NMHH.