Trouble in Cyberspace

Hungarian net users mobilise to protest the abuse of economic power in the Hungarian digital communications market

"Beyond words" is the official slogan used by the Hungarian telecom giant MATAV. For many Internet users in this tiny Central European country, the phrase is apt. Most find it hard to express their indignation at the company; the best they can come up with are obscenities. Yet for those using the Internet at home, latest moves by MATAV are more than a little obscene.

Axelero, the Internet Service Provider (ISP) subsidiary of MATAV, declared at the end of April that they would stop their "reduced price" services as of July 1st. These services consist of the "For Everyone" tariff package, a flat-rate ISP subscription introduced in 2000, and the off-peak discount introduced in 1999 which enabled users a maximum telephone connection charge to any ISP of only 0.60 EUR at any time between 6 PM and 6 AM the next day.

Given that both Axelero (as the ISP) and MATAV (as the telecom operator) are responsible for a major portion of Internet subscribers in Hungary -- about 40,000 users -- this move is seen by many as one which would exclude a large number of Hungarians from using the Internet. For many Hungarians, the flat-rate ISP package was far from cheap given Hungarian wages; hence, a rise in prices would now make Internet access unaffordable for many.

Naturally, MATAV sees the situation differently. They assert that their pricing schemes, introduced two years ago, was never meant for the long term. Indeed, the whole purpose behind them was to introduce and spread Internet use throughout the country. To this extent, the pricing schemes served their purpose, and the company now feels that further growth in the subscriber base can't be achieved by flat-rate packages as offered by MATAV. Moreover, the telecom giant maintains that it's flat-rate package doesn't meet "the requirements of a liberalized market", either from a regulatory or business standpoint. What is more, these schemes, especially the off-peak discount, has also meant a loss of revenue for the company.

Yet most see MATAV's moves as nothing more than the abuse of their dominant position in the on-line communications market. They point out that the telecom giant's argument for abandoning the pricing schemes, i.e., that they have served their purpose, is fallacious. True, when MATAV introduced its flat-rate system Hungary had one of the lowest Internet penetration rates in Europe. However, since then not much has changed. While there are more users now than before, the country still lags behind, burdened by access costs rated as among one of the highest in the world (and certainly in Europe) thanks to high telephone costs.

According to a Europemedia report earlier this year, the number of Hungarians with home Internet access reached 500,000 in 2001 (representing only about 5% of the total population), up 70 percent on the previous year. Still, this means only half of all Hungarian households with a computer use the Internet from home.1

The confrontation between users and MATAV is nothing new. It was thanks to activists such as Andras Nyiro from Internetto that MATAV first introduced the off-peak discount. And last year, when there was a similar situation as MATAV tried to cancel its special rate services, the threat of a mass demonstration was enough for MATAV to hold back from implementing its drastic plan. This time, however, many are not sure that a simple threat will be enough. Indeed, fears have spread throughout the on-line community that MATAV will carry out its plan this time round.

The problem is further compounded by the fact that there is no real representation for Internet users. The Kozhely Egyesulet (the "Commons Association"), which was established in 1996 to work for Internet access for everyone, never really got off the ground and slowly faded from view. Likewise, the Center for Culture and Communication (C3), a foundation set up and funded by George Soros in 1997 to promote Internet use, has become more or less impotent. Their program for free dialup access for NGOs and NGO activists ended in 1999, and although their freemail program (which provides free web-based e-mail and pop3 access for 10 minutes, with only the phone cost to be paid) is still running, it has been given over to MATAV. Hence, many are now skeptical as to how long this source of free access will last.

Aside from this, there are other groups committed to user rights, but most them are fragmented and weak. The Hungarian Internet and Computer Users' Private Society (MIME) is almost invisible while the Hungarian Linux Users' Association (LME), although a fast growing and active group, are more preoccupied with open source and Linux rather than issues relating to Internet access.

Still, a large number of users are preparing boycotts. A demonstration in Budapest in front of MATAV headquarters is being planned (over a thousand are expected to turn up, with 435 already committing themselves on-line) and an on-line petition has been signed by more than 10,000 people since the end of April. This petition is not directed only at MATAV but also Vivendi, asking them to provide basic access at no more than 10,000 HUF (40 EUR), an amount which constitutes 25% of the monthly minimum wage. Vivendi appropriated the remaining 20% of Hungary's newly "liberalised" telecommunications market, which means that Hungary's telecom monopoly has, in effect. become a duopoly.

Although the confrontation between users and MATAV will unlikely make it to the political arena, the newly elected socialist government has nevertheless been quick to take advantage of the situation to score some feeble points. It generally expressed its dislike of MATAV's decision, saying this step would set back the development of the Hungarian information society. This is ironic, coming from the same government which in the mid-1990s nearly destroyed the so-called "information society" when it attempted to privatise the Hungarian backbone.

For users protesting against the new pricing policy of MATAV, it will be undoubtedly a difficult road ahead. Still, they seem determined not to give up. Activists have been trying to gain support for their cause from outside the country with publicity campaigns calling attention to the plight of Hungarian users. Their message is simple: MATAV's new pricing policy will have consequences which ultimately reach far beyond Hungary and mere business relations; for this reason, the telecom giant has a strong responsibility at the social level as well.