Infocommunications Authority found system-level errors in Telekom’s penalty management again

Published: 19 December 2019

Magyar Telekom had performed one out of two penalty payment obligations investigated in a way that constitutes an infringement against subscribers, as was established by the National Media and Infocommunications Authority (NMHH) in its decision of 25 November 2019. NMHH imposed a total of HUF 138 million in fines, and obliged the service provider to pay the due penalties to the parties concerned. The decision is final. The average duration of Telekom’s delays justifying the imposition of a penalty increased by one third over five years, while the number of subscribers affected by an infringement in connection with penalties has decreased.

In accordance with its annual supervisory plan, NMHH reviewed more than half a million cases from the period of six months between 1 August 2018 and 31 January 2019 at Magyar Telekom Nyrt., identifying nearly 2,200 cases of infringement in the process. The Authority examined whether the service provider has properly indicated, in connection with its fixed‑network services, the processes of service establishment, relocation, transfer and restriction termination, and the related penalty conditions in its Retail General Terms and Conditions (GTC), as required by the relevant legislation, and if all these have been duly executed in practice. The examination extended to circumstances of overdue deadlines, penalty calculations and payments, from the method of calculation to client information and respecting the corresponding deadlines.

The ensuing general administrative supervisory procedure, concluded on 25 November 2019, revealed that system-level errors exist in Telekom’s penalty management processes. The service provider committed infringement in 54.8% of its penalty management cases; in some of them the penalty amount was established erroneously, while in others, late performance occurred, or the information about penalty was either not provided, or provided in delay or not with the required content to the clients.

The investigation also showed that Telekom committed infringement, although on a much smaller scale, by meeting service establishment, transfer and relocation requests in delay, or terminating service restriction or providing information on whether a particular establishment or transfer request can be met after the specified deadline. Furthermore, the Retail General Terms and Conditions (GTC) of the service provider contained provisions on the commencement and relocation of the service that go against the law.

NMHH imposed a fine of HUF 136 million on the service provider and a further HUF 2 million on its Executive Officer, and—among others—obliged the service provider to review its problematic processes, pay the penalty corrections of appropriate amount for the erroneously calculated penalties, or credit them, to the subscribers, amend its GTC, and draw up an action plan for reviewing its penalty payment procedure and submit quarterly reports about its implementation to NMHH.

What justified such a high amount of fine?

Upon imposing the fine, NMHH considered an aggravating circumstance that several similar infringements had been committed by the service provider over the years, which had been sanctioned by NMHH in the past five years with a total amount of more than HUF 200 million in fines, and made a direct profit by paying smaller penalties or by overdue performance.

The average duration of Telekom’s delays justifying the imposition of a penalty increased by almost five days in five years (in comparison to the average duration of delays established by NMHH in its 2014 procedure), and in more than half of its penalty management procedures, Telekom did adhere to the law. Therefore, in the time that has passed since the administrative procedure conducted in 2014, no considerable improvement has taken place in Telekom’s penalty management, in spite of the sanctions imposed, and the action plan developed by the service provider as obliged by NMIA back then. However, the Authority treated as an extenuating circumstance that the number of subscribers whose interests had been violated has decreased since the 2014 procedure and that, in the sample investigated, the share of cases that incurred penalty payment obligations for the service provider has also decreased.

The decision is final, and Telekom lodged no appeals.

When and how is the penalty due?

  • The penalty is due to the subscriber if the deadline applicable for the service provider’s procedure in question is missed by the service provider, or in case of troubleshooting, its notification obligation is not fulfilled or fulfilled in delay. Such procedures of the service provider are: transfer of subscriber contracts on electronic communication services, service establishment, relocation, termination of service restriction and troubleshooting.
  • The penalty does not have to be requested specifically; the service provider is obliged to pay it automatically.
  • The penalty amount must be established by the calculation determined in the relevant legislation. The amount of the penalty depends on the breach of contract by the service provider, the number of overdue days and the fee applicable to the procedure in question, such as entry, reconnection, transfer or relocation fees and the monthly subscription fee.
  • The service provider is obliged to pay the penalty within 30 days from the termination of the breach of contract by payment to the account or crediting it to the balance, duly informing the subscriber of the settlement.