Press Releases

Budapest, April 29, 2002

As from July 1, 2002, Matáv will withdraw their flat-rate packages, i.e. the MINDENKINEK tariff package and the HUF 150 discount, offered under unchanged conditions for more than two years. Such flat-rate packages served their purpose and contributed to Matáv’s target of spreading Internet use countrywide. In future, Matáv can provide a more effective support to the Internet community by offering solutions to Internet providers enabling them to develop packages suiting the demands of their customers.

Years ago, Matáv set the target of supporting the development of an Internet society and spreading Internet use in Hungary. The HUF 150 discount introduced in 1999 and the MINDENKINEK tariff package launched in 2000 revolutionized the domestic use of the Internet; today, almost half of Hungarian households with a PC use the Internet. Obviously, the target is to have this number further increase, however, it cannot be achieved by such flat-rate packages offered by Matáv.

The MINDENKINEK package and the HUF 150 discount do not meet the requirements of a liberalized market, either from regulatory, or from business aspects. Since Matáv’s flat-rate packages were introduced, the number of Web surfers and the time spent on surfing on the Internet have significantly increased. The telecommunications market has been liberalized, communication regulations have changed, furthermore, broadband data transmission methods, such as ADSL and CATV, have spread.

As from January 1, 2002, the communication statutes also ruling on the Internet service stipulate that telephone charges payable for use of the Internet shall be shared between Matáv and the Internet providers. Under the relevant regulation, compulsory revenue sharing does not apply either to the MINDENKINEK package, or to the HUF 150 discount. Even so, Matáv shares the revenue from the HUF 150 discount with the Internet providers. However, due to the minute-based settlement underlying revenue sharing, revenue from the MINDENKINEK package cannot be shared; in addition, in the case of the HUF 150 discount, the “counter stops” at HUF 150. By removing such flat-rate packages, Matáv lets the Internet providers earn a higher share of the revenue.

Flat-rate packages do not cause lost revenue to Internet providers alone. Matáv has provided MINDENKINEK package and the HUF 150 discount at constant prices for several years, causing the loss of several hundreds of million HUF on a yearly basis. Previous to the liberalization of the telecommunications market, Matáv had not altered such packages, in order to motivate the use of Internet service in Hungary. However, by July 1, when the MINDENKINEK package and the HUF 150 discount will be withdrawn, the domestic telecommunications market will have been liberalized for six months; the regulatory environment will have been established and over 100 Internet providers will be operating. In such a market environment, no profit-oriented venture can be expected to provide any of its services far below the market prices.

Due to the reasons outlined above, Matáv decided to withdraw their flat-rate packages as from July 1, 2002 (following April 29, no subscription to MINDENKINEK package will be accepted).

Matáv offers several solutions to all Internet users (not merely to the restricted subscriber base to the MINDENKINEK package). As from January 1, 2002, the telephone charges for Internet calls (otherwise of discount rate) have decreased by 19% (peak) and by 14% (off-peak). For those spending much time surfing on the Web and requiring a high quality, Matáv suggests to use ADSL providing a broadband and unrestricted access or CATV also serving for Internet purpose. As from 1 July, Matáv offers an interim ADSL substitute to those who were subscribers to the MINDENKINEK package and, due to technical reasons, cannot use ADSL service for the time being; until ADSL service is introduced, the telephone charge for using the Internet up to 60 hours/month will be a fixed amount of HUF 7,500 (gross price). Those benefiting so far from the HUF 150 discount while making long telephone calls are offered favorable conditions by Matáv’s CSEVEGŐ tariff package (following the 5th minute of the call, 20% discount; following the 10th minute of the call, 30% discount).

Matáv has set the future target that, instead of offering solutions directly to the Internet users, Internet providers will be offered solutions letting the Internet providers develop service packages best fitting user habits.