Tender procedures for the provision of electronic communications services

Decree on auctions and tenders

The rules of competitive tendering procedures are set out in Decree No. 4/2011 (X. 6.) of the NMHH on the rules of auctions or competitive procedures for obtaining an entitlement to frequency use.

The Decree lays down the procedure for obtaining radio frequency use entitlements through a competitive procedure (auction or tender). The NMHH initiates competitive procedures ex officio. The detailed rules for each procedure, adapted to the frequency band that is the subject of the procedure, its usability, and the market conditions of the given period, are set out in the tender documentation.

Basic concepts

The Decree defines essential concepts, such as:

Main rules of the competitive procedure

• The procedure can be an auction or a tender. Both are regulatory proceedings initiated ex officio and conducted by the NMHH.
• The tender documentation must contain a detailed description of the reasons for launching a competitive tendering procedure, the objectives to be achieved through the procedure, an overview of the market situation, the basic rules governing the procedure (such as conditions of application, procedural deadlines), the spectrum stock that may be acquired, the conditions of use, the rules relating to secondary trading, the rules on participation and bidding, securities, fees, conditions for granting renewals and provisions on the possibility of renewal and non-renewal, and, where justified, commitments and obligations related to spectrum use (e.g. coverage, service quality, technical conditions related to the service).
• Pursuant to Act C of 2003 on Electronic Communications (Electronic Communications Act), the draft tender documentation is made available for public consultation by the NMHH. After finalising the documents, they are published by means of an announcement, thus launching the procedure in question, for which an application deadline of at least 20 days is provided.
• The announcement and the documentation may later be amended, but registered applicants must be notified at least two days before the amendment takes effect.

Duration, extension, and renewal of entitlements

Frequency use entitlements are of fixed duration. The duration of the rights and entitlements acquired as a result of a competitive tendering procedure under the Electronic Communications Act is 15 years, which may be extended once by up to 5 years, under the conditions specified in a presidential decree.

The radio frequency use entitlement may be extended once without a competitive procedure if:

• the extension ensures efficient and effective use of the radio spectrum;
• it does not jeopardise the attainment of general-interest objectives related to human health, public policy, public security or defence;
• it does not distort market competition; and
• for frequency bands harmonised at the EU level for broadband use, it promotes the nationwide availability of high-quality and high-speed wireless broadband services to a wide range of citizens, or the coverage of major transport routes, including trans-European transport networks, or facilitates the rapid development of new wireless technologies and applications.

A request for the renewal of the radio frequency use entitlement can be submitted to the Office of the NMHH (the Office) no earlier than 30 months and no later than 28 months before the expiry of the entitlement. The rules for the renewal procedure are set out in NMHH Decree No. 7/2012 (I. 26.).

If the possibility of renewal was not excluded at the time the radio frequency use entitlement was obtained in a competitive procedure, such right may be acquired without a competitive procedure for a maximum period of 15 years at the Office’s discretion, and may be renewed once for a maximum period of 5 years.

A request for the renewal of the entitlement may be submitted to the Office by the holder 5 years before the expiry of the entitlement at the earliest, and 28 months before the expiry of the entitlement at the latest. The Authority may also initiate the procedure ex officio. The rules of the renewal procedure are set out in NMHH Decree No 7/2012 (I. 26.).

Current and past competitive procedures

Over recent decades, the NMHH has made radio frequency use entitlements available for several frequency bands through auctions or tenders. A key challenge for spectrum management is to respond appropriately to the growth in spectrum demand arising from a wide range of existing and new applications. One of the main drivers of the growth in spectrum demand is broadband data transmission, in particular mobile radio telephony. However, it is important to recognise that many other wireless solutions also require access to more spectrum. Despite the divergences among the forecasts, it seems clear that demand for mobile data is growing significantly, and will continue to do so in the future.

In order for us to respond appropriately to this demand, a number of solutions present themselves. Above all, mobile networks must increase the capacity of radio access and, consequently, of uplinks and other network elements, often in synergy with the development of fixed access networks.

Supported by the right investments, the capacity of mobile networks can be increased in a variety of ways, from upgrading existing networks — including the introduction of newer, more efficient technologies and phasing out obsolete ones — to acquiring additional spectrum resources.

If it can reasonably be assumed that the demand for spectrum will exceed supply, then, in the absence of any opposing public policy interest or objective to the contrary, the most efficient allocation mechanism is a competitive procedure. In the case of a competitive procedure, we can assume that it will deliver an outcome that yields returns on investment for those acquiring the entitlements, while they meet the pre-defined obligations in line with public policy objectives, such as broadband coverage targets.

Public hearings on market needs assessment