More transparent market regulation and enhanced subscriber protection

The new NMHH decree enhances the protection of subscribers’ rights and ensures transparent market regulation

Published: 2 April 2015

The National Media and Infocommunications Authority (NMHH) has renewed the foundation of consumer protection, aligned to the professional and social demands of the digital age. Entering into force on 1 August, the new Decree of the President of the NMHH on the Detailed Rules of Electronic Communications Subscriber Agreements provides efficient protection to consumers and creates a more transparent regulatory environment in the communciations market.

Karl Károly, Aranyosné Börcs Janka, Karas Monika, Lapsánszky András, Takách Zsuzsanna (587x254px)

L-to-R: Károly Karl, Head of the Department of Infocommunications Surveillance; Janka Aranyosné Börcs Director General, Monika Karas President, András Lapsánszky, the Head of the NMHH's Legal Department and Zsuzsanna Takách Director of Communications

Following a series of professional and social consultation, in the framework of a complex and comprehensive legislative process, on 30 March Dr. Monika Karas, President of the NMHH, announced a new decree (NMHH Decree No. 2 of 2015 (III. 30)) regulating electronic communications subscriber agreements. The enhanced guarantee elements of the Decree are intended to reform the foundation of communications consumer protection.

Owing to the increased clarity of the regulation, the law application practice of market participants will also become simpler.

“This Decree re-adjusts some important proportions between service providers and subscribers. Consumers will become equal partners to service providers, and their exposure in their contractual relationship will be reduced in the future”, said NMHH President Monika Karas at the announcement.

She emphasised that “the new regulation serves the interest of service providers as well, as the application of general legal principles will become more specific and simpler to apply in daily practice”.

“We aligned new, predictable, contemporary and clear rules to everyday situations”, pointed out the significance of the changes the NMHH President.

Coming into effect gradually from 1 August, on the one hand, the new Presidential Decree responds to the fierce competition in the communciations market, the accelerated development of technology, the multitude of service varieties (appearance of smartphones, the gaining ground of mobile internet) and the transformation of the legislative environment (Civil Code); on the other hand, the outcome and conclusions of the administrative supervisory procedures conducted in recent years underpinned the outdatedness of the old decree. A new piece of legislation came into being, offering a comprehensive solution to numerous worrisome violations of subscribers’ interests. It also facilitates a uniform and clear understanding of the service provider practices emerging in the past four years and the establishment of a genuine partnership between the service provider and the subscriber.

The Decree affects nearly 20 million subscriber agreements

The new regulation contains a number of extra guarantees for the increased protection of subscriber rights. In respect of communications subscriber rights, the NMHH attaches a high priority to the guaranteed protection of consumers and subscribers’ communications-specific consumer rights, harmonised to EU sources of legislation. The Decree affects the entire Hungarian population and nearly 20 million subscriber contracts (landline telephone, mobile phone, television and internet services).

Transparent and clear regulation

The structure of the General Contract Conditions has been modified in the spirit of clarity and transparency: subscribers will be able to compare the contract conditions prescribed by individual service providers more easily, and navigate effortlessly through the General Contract Conditions of their own provider. For the protection of minors, the General Contract Conditions must also include information pertaining to the availability and use of filter software and other services. While the substantive elements of the General Contract Conditions have been strengthened, the number of the obligatory substantive elements in individual subscriber agreements has been reduced significantly. In determining the substantive elements of the contract, the Decree places the emphasis on the specificities of the legal relationship between the two parties (term, fees). In order to ensure the disclosure of the contents of subscriber contracts, in case of non-written contracts the provider is required to submit, free of charge, a written document to the subscriber with the contract details.
Implied contracts, fixed-term contracts Rules pertaining to implied contracts – which were subject to various interpretations in the past – are about to change. The NMHH re-regulated the process of the conclusion of implied contracts and their terms and conditions, stipulating the range of conduct and behaviour suitable to express an intention to create legal relations. In order to protect subscribers and limit their exposure, the rules of the Decree specify which behaviours and representations may be deemed to be an implicit acceptance of being legally bound, and clarify the system of implied contracts and contract modifications (especially among fixed-term subscriber contracts). In the context of protection against hidden modifications, the NMHH significantly reduced the possibility of unilateral contract amendments for fixed-term contracts, given that under a fixed-term contract not only the subscriber but also the service provider commits itself for a pre-agreed period.

Contract cancellation

In the case of contracts for mobile phone, mobile internet, satellite and terrestrial digital TV services, the subscriber is entitled to have a 14-day trial period. If the service does not work, the consumer is entitled to cancel the contract and pay only for the traffic actually used. The Decree offers the option of the cancellation of mobile and wireless services if the quality of the service does not comply with the stipulations of the contract, i.e. the subscriber is unable to use the service. In respect of the subscriber’s return of the service provider’s devices and equipment upon cancellation, subscribers can now cancel their subscriber contracts without the obligation to pay any penalty or any other unwarranted extra charges. It is an important novelty that, before contract conclusion, the service provider must inform the subscriber of the minimum amount of costs to be charged to the subscriber during the entire term of fixed-term subscriber contracts, so that the subscriber can make an informed decision about concluding the contract, being aware of all predictable costs.

Clear invoicing, itemised invoice attachment, settlement obligation

In order to ensure transparent and clear invoicing, the NMHH requires telephone service providers to show, in an attachment to the invoice, the amounts payable on premium rate calls, remote voting, SMS, MMS and received calls, broken down by individual charges. Itemised call logs are provided free of charge to individual subscribers once a month; the provider is required to specify the application criteria in the General Contract Conditions. Itemised call logs may be requested on an ad-hoc basis, for a fixed term or until withdrawn. Under the new regulation, in case of pre-paid top-ups and pre-paid services the service provider is subject to a settlement obligation upon contract cancellation without additional top-up; thus the subscriber may request the provider to reimburse the unused portion of his balance.

Business subscribers

The NMHH drafted the legislation in consideration of the fact that only major business subscribers have an option to negotiate the terms of the contract, while all other business subscribers should receive increased legal protection. Due to the large number of small and medium-sized enterprises, it was indispensable to specifically define micro- and small-sized enterprises within the group of business subscribers. In case of contracts concluded with business subscribers the possibility of any divergence from the general rules is subject to the size of the business subscriber in terms of staff number and revenues. In the case of smaller business subscribers the parties may only diverge from the provisions specifically listed in the Decree, typically with the parties mutual consent. At the same time, divergence is more broadly allowed for larger business subscribers with a major professional and economic background.