A new era: the development of telecommunications in Hungary

Abstract

After the transition to a market economy, a new period of transition opened up in Hungarian telecommunications. A program of developmental "catch-up" began in earnest with the aim of building a digital network and increasing national telephone density. The financial resources came from bank loans and from the privatization of the Hungarian Telecommunication Company. The former telecommunication monopoly was abolished and new actors, based on concession rights, appeared in the market. The immediate result was a sudden improvement in telephone penetration: telephone density doubled between 1991 and 1995, from 10.9 to 21.2; three companies began operating a mobile telephone system. Against these attractive developments there also arose many problems: out-of-date and inappropriate regulations; the changing role of the state in this new "strategy" sector; the risk that development requirements would hinder the activity of local telephone companies; varying technologies which created issues of compatibility and interfacing; and an unexpected traffic decrease because of the high tariffs.