MVM Net Zrt., having been found in violation of its Phase One roll-out obligations and network deployment, set out in the contract on frequency use in the 450 MHz made on 30 April 2014, as it had agreed to guarantee prescribed transmission rates along single-digit roads and nine large towns starting early this year. Protracted network deployment is causing delays in ensuring government services and meeting group communication demands, which in turn impedes development of state and municipal public services as well as the launch and wide-scale distribution of certain public services.

Failure to fulfil said commitment has led to the application of legal consequences set forth in the Electronic Communications Act and the administrative contract, taking heed of the principles of equal treatment, progressiveness and proportionality, which translates into a fine of HUF 12 million. Furthermore, MVM Net Zrt. has also been mandated by the NMHH to ensure transmission capacities within the municipal boundaries of Budapest, Nyíregyháza, Szekszárd, Tatabánya, Győr, Szeged and Székesfehérvár, along route 4 in the Albertirsa and Szolnok areas, along motorway M6 in the Dunaújváros area, along motorway M1 in the Tatabánya and Győr areas, along motorway M7 in the Székesfehérvár and Fonyód areas, along motorway M5 in the Kiskunfélegyháza and Szeged areas, and along motorway M3 in the Budapest and Gyöngyös areas. As an additional obligation, the company has until 31 December to ensure service availability along all single-digit roads nationwide.

When determining the fee amount, the NMHH considered that, instead of the CDMA technology specified in its bid, MVM Net Zrt. intends to deploy LTE services, a shift that is permitted under the provisions of the administrative contract. The projected LTE network represents a more advanced technology and will provide for a broader range of state-of-the-art services.
The first-instance decision is not binding; appeals may be filed with the President of the Authority, thereby postponing payment of the fine.

About the Supervisory Procedure

A contract between the NMHH and MVM Net Zrt. was made on 30 April 2014, under which the provider was granted a license for using frequency blocks in the 450 MHz band. The provider undertook an obligation to deploy and operate a radio communications network in said band, and to comply with additional contractual rules. In possession of the frequency license the provider is entitled to operate a network primarily intended to support government services, and may also serve commercial electronic communications needs. This will facilitate the development of digital public services in Hungary.

In its contract, the provider agreed to deploy its network in three phases, respectively within 8, 15 and 20 months of the contract date, and to submit written reports to the NMHH in 45 upon the completion of each phase. MVM NET Zrt. has eight months to implement the required data transmission capacity alongside single-digit roads and in nine large towns across Hungary, and 20 months to provide 95 percent coverage nationwide.

After the completion of Phase One, the provider’s report was submitted by the 10 February deadline. The general administrative procedure was closed with a resolution dated 5 May and was based on information made available by the provider, in which it acknowledged its delay and non-performance of Phase One obligations concerning network coverage and base station deployment.