NMHH: Invitel and UPC fined HUF 80 million and HUF 10 million, respectively, for engaging in behaviour injurious to consumer interests

Published: 3 August 2015


Hungary’s National Media and Infocommunications Authority (NMHH) has, under its oversight remit, imposed a HUF 80 million fine on Invitel Zrt (Invitel) for its infringement of regulations governing electronic communications. Specifically, for unlawfully making unilateral amendments to individual subscription agreements. As well, the Authority has meted out a HUF 10 million fine on UPC Hungary Kft. (UPC) for its failure, for over a year, to amend its unlawful Terms of Service (TOS). This despite the Authority’s prior binding ruling to this effect, an infraction seriously detrimental to all its subscribers’ interests. Promulgated by the NMHH President and effective 1 August 2015, a new decree governing subscription agreements will, going forward, place service provider and consumer on unequivocally equal footing vis-à-vis subscription agreement-related issues.

It will be known that the Authority oversees compliance with regulations governing electronic communications, with TOS provisions, and monitors implementation of NMHH decisions. The Authority weighs multiple criteria in determining the type of applicable sanction and the magnitude of fine imposed. For instance, it will consider the gravity of the issue, the size of the subscriber group affected, frequency of violation, seriousness of harm to consumer interest caused by the infringement, as well as the magnitude of financial gain attained therewith. Subscriber and service provider are usually on a hugely unequal footing in terms of representing their interests. In consequence, the Authority regards protection and collective assertion of subscriber interest a top-priority responsibility. The same holds true for ongoing oversight of service providers to make certain that as per statutory provision they only amend their subscription agreements unilaterally in exceptionally justified situations.

Why Invitel was fined HUF 80 million

The NMHH has, under its general authority oversight remit, investigated lawfulness of Invitel’s unilateral amendment of its TOS, effective 1 January 2015, to determine whether it was in compliance with provisions of applicable statutory provisions. Regulations governing electronic communications unequivocally stipulate that service providers may only unilaterally amend subscription agreements – including individual subscription agreements – in a manner detrimental to subscribers provided such a move is justified by occurrence of substantive change in circumstances unforeseeable at the time the subscription agreement was entered into.

Invitel unilaterally amended its TOS, effective 1 January 2015, citing as justification inauguration of new security requirements for invoicing as per the Act on Electronic Communications (Eht.), “high-impact” (HI) changes in media service provider fees, and substantive, unforeseeable changes in circumstances.

Invitel’s fee increase affected several hundred thousand subscribers and hit across the board, affecting  all three of its basic services, its fixed-term and indefinite term agreements, as well as both monthly flat fee and usage-based fees. Unilateral amendment of its TOS agreement violated consumer interests, however. Specifically, because service providers may only amend subscription agreements unilaterally in precisely defined cases. Under effective statutory provisions agreements may only exclusively be amended by parties’ mutual will. Unilateral amendment is lawful only in exceptional cases such as, for instance, when the magnitude, intensity, rapidity of occurring changes precludes bilateral amendment of agreements in the ordinary course of business, or the design of a new fee package structure in line with changed circumstances. In the absence of such exceptional situations service provider may only amend its service agreement bilaterally, in consensus with the subscriber.

About the fine

In response to Invitel’s unlawful behaviour the Authority imposed sanctions on the service provider as per the Act on Electronic Communications, including a HUF 80 million fine. It also imposed a HUF 250,000 fine on Invitel executive officers for repeated infringements of regulations governing electronic communications.

Since 2011 the NMHH has found Invitel repeatedly making unlawful unilateral amendments to its subscription agreements. The Authority imposed several fines on the service provider for these violations, also warning it to strictly comply with the law as per the Act on Electronic Communications in considering unilateral amendments to subscription agreements.

The first instance decision is not yet legally binding, Invitel may file an appeal with the Authority President.

Why UPC was fined HUF 10 million

On 11 March 2013 the NMHH conducted official inspection of compliance of UPC’s effective TOS with statutory provisions governing electronic communications. The inspection found that service provider was likely in non-compliance, triggering proceedings under the NMHH authority oversight remit, commencing 26 September 2013 and concluding with a condemnatory decision. The ruling went against UPC because its TOS governing cable programming, internet access, leased line, and fixed line telephone services were in violation of applicable statutory provisions. The Authority mandated that service provider amend its TOC and most recently imposed a HUF 1.1 million fine on the company. Commencing 29 June 2015, the NMHH reviewed, again under its general authority oversight remit, UPC’s compliance with provisions of the prior Authority decision, whether it had brought its TOS in compliance with applicable statutory provisions.

UPC’s TOS applicable to cable programming, internet access, and fixed line telephone service provision failed to specify business hours for service provider’s helpline, and the condition specified in relation to the deadline for troubleshooting still failed to comply with statutory provisions. As regards the full monthly fee charged for restricted access due to extreme internet use as per the TOS is unlawful since the service provider may only exclusively charge a fee proportionate to the service rendered during limited service.

It was only subsequently to institution of proceedings, only after it became aware of the inspection that UPC removed its unlawful TOS provisions, its one-year delay in compliance having a seriously detrimental impact on the interests of all its subscribers.

About the fine

In light of service provider’s unlawful conduct, the Authority applied the sanctions as per the Act on Electronic communications, with due regard to the principle of gradualness and proportionality, and imposed a HUF 10 million fine on the company for repeated infringement of applicable electronic communications statutory provisions.

The first instance decision is not yet legally binding, the service provider may file an appeal with the Authority President.

As of 1 August structure of TOS will become more transparent, mandatory application as of 1 September

In response to demands of a changed telecommunications and social environment the NMHH has upgraded fundamental telecommunications protections. Effective as of 1 August 2015 and mandatory as of 1 September, a new NMHH decree on the detailed regulation of electronic communications subscription agreements provides effective protection for consumers, also adding more muscle to guaranteed of subscriber protections. TOS structure will likewise be amended to boost clarity and transparency: in future subscribers will find it easier to compare different service providers’ contractual terms, as well as navigate their own provider’s TOS with greater ease.