Periodic newsletter with industry specific legal content and interviews dedicated to general counsels and heads of legal

1. ISSUE 1 VOLUME 1 MAY, 2011
On The GC Grapevine
Issue 1: Technology Media Telecommunications
Letter from the editor s
Welcome to the first The Grapevine Pick will
edition of a publication that
has been in the minds of
offer all our subscribers the
opportunity to recommend
In this edition:
many for some time. A who should be interviewed
concept brought about by for the next edition. The LETTER FROM THE
popular demand from column will present the EDITORS……………………. 1
leading lawyers yearning for sector- nominated GCs and details will be
specific information from their peers and offered on the voting system. The GC
a forum where they can contribute some selected by popular vote will be
know-how themselves. Over the past included in the following edition.
year, we have often received requests
from the in-house sector for a publication (My) Word On The Grapevine will
 DR. MIKLOS ORBÁN,
to share their experiences, triumphs, offer readers the opportunity to make HEAD OF REGULATORY AND
their voices heard directly. Feedback, GOVERNMENT AFFAIRS, CEE
best practices and challenges, all within & RUSSIA/ CIS, BT…. ..... ... 2
the General Counsel‟s world in Hungary. replies, comments and additional
information that our readers wish to
Thus, as part of our commitment to share with the rest of the community can
listening to the market, we proudly be submitted to our editorial team and
launch our exclusive newsletter “On The published.  THE GRAPEVINE PICK ... … 4
GC Grapevine” dedicated to You, the The
General Counsel. “On the GC We will offer more details into all of the
grapevine
Grapevine” will come to you 5 times a above in this first edition but we are
pick
year spanning sectors such as TMT, always happy to hear from our readers
Energy, Pharmaceuticals, Banking & so, please, feel free to write to us at
Finance and so on. In the midst of the GCG@hudson.com or join the dedicated
excitement around the creation of “On group here for more details.  DR. MARIA DARDAI,
GENERAL COUNSEL UPC .. ... 4
the GC Grapevine” we hope to reach For us, this has been a phenomenal few
new milestones of information sharing weeks: conducting the interviews,
paired with in-depth interviews with designing the lay out, and gathering all
General Counsels who are paving the the information provided by you, the
road of Hungary‟s in-house market. readers. We strive to make “On The GC
At the same time, we wish this to be a Grapevine” the most sought-after legal
 FILM INDUSTRY TO TAKE A
truly interactive newsletter. We have specific publication in Hungary. Thank HIT DUE TO TAX LAW ...... ... 6
asked top tier firms to contribute to this you for all the quality contributions and
newsletter with news as well as legal we look forward to bringing you further
analysis, and we will continue to do so. issues this year. Enjoy the read!
We wish to take this even further and, Orsolya Endrefi
we would like to invite all our readers to Associate Director - Emerging Europe
make their voices heard via either one of and Latin America  “ NET
NEUTRALITY” IN
Hudson Legal HUNGARY ...................... …7
our three interactive columns:
Radu Cotarcea
The Private Practice Strip will offer Marketing Manager - Emerging Europe
firms the chance to make brief announce- and Latin America
ments. Hudson Legal

2. ISSUE 1 VOLUME 1 MAY, 2011
On The GC Grapevine
Morley Allen & Overy Iroda
The Pr ivate Practice Str ip
dr. Miklós Orbán, Head of Regulatory and Gover nment
Allen & Overy advises on
Affair s, CEE & Russia/CIS, BT BorsodChem acquisition
requires so many skills such as clients that I worked at the time got Allen & Overy consulted in the
understanding people from into a lot of trouble. People in the restructuring and subsequent
different backgrounds, get your late 90s believed that everything acquisition of Hungarian chemicals
ideas across a huge and complex will be done on the internet, company BorsodChem by the
organization, managing people and Tesco‟s and bookstores will disap- Chinese Wanhua Industrial Group
projects, setting your priorities in pear, and the whole world would (Wanhua). The transaction, which
line with the company‟s goals. It‟s become one big Facebook. It didn‟t was valued at EUR 1.2 billion,
involved Hungarian, English and
like licking your elbow: seems turn out that way and this hurt a lot
Hong Kong corporate, banking and
easy, but it is in fact very hard. of businesses betting on this idea.
restructuring advice provided by
HL: How did you become The second was around 2003-2005, Allen & Overy. The transaction took
involved in the TMT sector? when the big players started from June 2009 to January 2011 and
created the world's third largest
It started right after law school understanding that being mobile isocyanate manufacturer
when I joined Allen & Overy. It was going to be the next big thing.
HL: Many PP lawyers tend to was the days of the Internet boom Everything started being focused on
think that in-house lawyers – sorry, bubble. At the time I saw being small, mobile, wireless and so
it as an opportunity. On day one I on. Kajtár Takács Hegymegi-
drop their pens at 5pm and
saw that the office was full of real Barakonyi Baker & Mckenzie
call it a day. In reality, the
GC’s life is certainly not like a estate, corporate and finance The third was the evolution from Baker Mckenzie advises Bank
experts, but there was no Internet the web to web 2.0. With the move of China in acquisition of
Hawaiian vacation..
lawyer. I knew I could become away from dial-up and other slow BorsodChem
People are vain, especially “yet another” corporate or finance connections, pretty much anything
lawyers. People at PP like to lawyer and in 20-30 years could now be done online. We advised Bank of China on the
become a partner, or I focus on Conference calls, part of the „skype EUR 1 billion financing of the
believe that the world would stop
TMT, which was a relatively acquisition of BorsodChem Zrt by
without their “very important Wanhua, which also involved the
contributions”, and no-one works, refinancing of the existing senior debt
“Good schools can even teach you how to argue or write a good
except for them. Okay, I must brief, but no-one can teach you how to become a good manager” of BorsodChem Zrt. This deal was
admit: we, in-house guys, tend to the first of its kind in Hungary and
see ourselves the same way young practice, and become a revolution‟ for example, the first time that such a significant
sometimes. But jokes aside, this is „guru‟ in a matter of years. amount of Chinese capital had been
revolutionized businesses with the
invested into a Central Eastern
a typical misconception lawyers at At the same time, I chose a internet no longer being something European country.
PP have about the in-house life. regulated industry because I unreliable but something that can be
Being a GC or a legal director is no knew this would be an industry exploited to great effect.
walk in the park. It is at least as where decisions heavily depend
Now, we can see a stronger focus Horváth & Partners DLA
stressful and challenging as PP. on the lawyer. If you work as the Piper
GC of Nike, a lot of the decisions on internet protection and data
HL: The GC position has can be made without you and privacy. I actually expect a DLA Piper in Hungary advising
many facets to it. What aspect you might not even be on the considerable focus in the near future CIG Pannonia Life Insurance
do you now find the most board. In a regulated industry on VPNs, highly secured networks Plc. on landmark IPO
challenging? however, a GC‟s input truly and even, perhaps closed/private
matters. DLA Piper acted as exclusive legal
The manager. Reason: you are not networks, operating completely
adviser to CIG Pannonia Insurance
prepared for this role. When you HL: Since you mentioned separate from the internet. This (CIG), an independent Hungarian life
go to law school, you learn many that you joined the industry issue has two sides to it. Firstly, insurance company on its landmark
things: rules, laws, cases, jurispru- at its relative young stage, internet security is becoming a IPO on the Budapest Stock
dence etc. Good schools can even you got the chance to grow growing concern for big companies Exchange, "The Budapest Stock
teach you how to argue or write a as a lawyer along with it. and I will be interested to follow Exchange Transaction of 2010". The
good brief, but no-one can teach What would you say were IPO is generally considered as a
how companies lobby for stronger
you how to become a good manag- the landmarks of this devel- landmark transaction on the
er at a Fortune 500 company. One regulations and enforcement to Hungarian capital market as it is the
opment? offer such protection. The flipside is
thing you learn in day one is that in first insurance company IPO on the
such businesses there is no such The internet bubble was of to what purpose and how will these Budapest Stock Exchange since the
thing as a purely legal issue. It course a big one, with a lot of the companies use the data they hold on collapse of the socialist regime at the
end of the 1980s.
PAGE 2

3. ISSUE 1 VOLUME 1 MAY, 2011
On The GC Grapevine
clients. me if I spend too much time with payers in the country. As a new
“The trick is to my computer. If you are a geek, entrant, it is much harder for us to
HL: When you talk about the pursue regulators to enforce rules
understand that rules TMT sector as an industry,
then you feel the same way with
on these strong companies. At the
people.
don‟t change as fast what really gets your blood same time, enforcement itself is
flowing….what has kept you HL: As your responsibility more difficult here due to a lack of
as technology. In in this industry for over 6 spans 24 countries, what mar- capacity since in Hungary or
years? ket is most challenging? Romania there are only a few
reality what you need dozen people working on
The constant fast-paced changes Definitely Russia. If you grow up enforcement in the field. I would
to do is adapt new are one of the biggest aspects. At in Hungary, you can easily say that, for a new entrant,
developments to the the same time, the truly understand how business is done in enforcement will always represent
international side of my role keeps Czech or Poland, and even if you a major difficulty in this industry.
existing regulations.” me engaged. Most international are surprised by many things, you HL: What do you look for
law firms are international only in can get along in the Balkan. But when you chose a law firm to
names. Most operate under a form Russia is like another planet. And work with?
of a quasi-franchise form with before you say it: I do not only
First and foremost, I want to see if
perhaps a foreigner as a managing think of corruption here. Russia is
they understand our company:
partner. My role on the other hand peculiar from every perspective. what we do, our goals and what
involves a meeting with a They do not care about how things drives us. Then telecoms experi-
Hungarian decision-maker in the are done elsewhere. Strange from ence. And I mean “real” experi-
morning, a conference call with a someone in CEE, London, Brus- ence: I don‟t think that knowing a
“Another aspect to Russian counterpart, a few issues sels or New York is no reference few buzzwords, like MVNO or
consider is that the coming in from the US when they point in any discussion in Moscow. triple-play, would qualify as tele-
wake up at 3 PM my time. coms experience. Same with track
HL: How would you say your
„black letter law‟ is HL: The TMT sector as we role in regulatory is different
records: acting for a telecoms
operator in HR matters is hardly a
pretty much the well know is fast paced, ever here in the CEE region to telecoms experience in our world.
changing with new what a counterpart does in And these were real examples. But
same across the EU innovation reaching us every Western Europe? What differ- I want to be fair with my
entiates the industries be- colleagues at PP: many lawyers
in telecoms.The day. What are the direct
tween regions? now work very hard on under-
implications of this for a GC?
main difference lies I think one differentiating factor is standing their clients‟ needs, and
The trick is to understand that that these countries are smaller. In the quality of bids are getting
in enforcement.” rules don‟t change as fast as the UK or US there is always at better and better every year.
technology. In reality what you least one regulatory expert in HL: What would be the num-
need to do is adapt new develop- anything whereas, in the CEE, this ber one advice for any lawyer
ments to the existing regulations. does not always happen. On one considering going in-house?
Also, because of the ever-growing hand, this means that I can bring
my experts to make their life Don‟t forget what you‟ve learned,
complexity of the technologies we
easier. On the other, trying to deal but forget how you worked so far.
use and the legal implications they Working in-house is not like a law
with government regulatory com-
give rise to, I find myself having to firm within a company. No, you
plex issues is sometimes difficult
spend a considerable amount of because it can happen that they do are part of a company: you work
“And I mean “real” time actually explaining to regula- not understand the issue itself, not with them, smile and cry with
tors what we do and the precise them. Forget about disclaimers,
experience: I don‟t nature of the services we offer.
to mention the importance of it.
“cover your back” paragraphs and
Another aspect to consider is that
think that knowing HL: Have you ever contem- the „black letter law‟ is pretty
long memos in legal language. You
can also forget about PP privileges,
a few buzzwords, like plated going for a technical much the same across the EU in
telecoms. The main difference lies
like spacious offices, PAs and
degree? trainees. It is a different environ-
MVNO or triple- in enforcement. For example, in ment which requires a different
No, never. I am amused by new the CEE, going against the local attitude and work style. Best if you
play, would qualify technologies and love the techy incumbent is much more difficult stop considering yourself as a law-
side of law and business, but than in the west. The reason for yer: you are a director, manager
as telecoms would not become a tech guy. I this is that most of these firms here or advisor with legal background.
represent some of the largest tax
experience.“ am a people-person; it depresses
PAGE 3

4. ISSUE 1 VOLUME 1 MAY, 2011
On The GC Grapevine
The Pr ivate Practice Str ip
The Grapevine Pic k DLA Piper in Hungary advising
The Each edition we will invite our will cover pharmaceuticals. In the GLL on portfolio financing
Grapevine readers to recommend a GC that next issue, we will announce the DLA Piper advising a syndicate of
they would enjoy learning more pharmaceutical nominees and invite banks, led by Deutsche
Pick about. While we have chosen the our readers to vote for the GC to be Pfandbriefbank AG in relation to the
GCs for the second issue (Energy), interviewed as the Grapevine Pick. Hungarian aspects of the refinancing
of a CEE real estate portfolio
we would like to extend this To nominate someone, please write
consisting of a total number of 17
invitation for our third edition which to us at GCG@hudson.com. office buildings in Poland, Czech
Republic, Hungary and Romania.
Our advice included the pursuit of a
dr. Mar ia Dardai, General Counsel, UPC corporate and real estate limited due
diligence and the bankability review
of the material lease agreements.
Lastly, it pays to have a lot of We are facing a completely new law
patience. In my department, for in the Hungarian context, especially
example, there are a couple of as a result of the European require-
Gide Loyrette Nouel -
small issues, but who handles them ments, which will affect every small
feels as the most important. I aspect of the operations. Add to D’Ornano Iroda
would sometimes find myself that the constant new technology Lego project at Nyíregyháza
pondering on a big M&A developments and you have a very
transaction and they would be in dynamic and exciting industry. The Danish toy maker LEGO has
front of me talking about an issue On the other hand, this constant begun investigating the possibility of
involving about 50.000 HUF. The evolution poses its challenges. In developing a new production site in
owner of this issue is so keen to my line of work, nothing is obvious Nyíregyháza. Gide Loyrette Nouel
explain all the details of the issue as everything I learn one second is acts as general legal adviser to the
even in situations where a good questioned in the next and I find LEGO Group in Hungary. Beside
lawyer, and I like to believe I am myself constantly asking whether various projects related matters,
one, can figure out the outcome what I am trying to implement is general corporate, dispute
from the first he/she hears of still valid and/or relevant. We do resolution, litigation and
it. I do understand however that try to be proactive in this sense and
HL: What would be the top employment law related counselling,
I need to be patient as this always make sure that we follow
characteristics a person needs GLN is proud to have been
is very important for them. what is happening in the regulating
to have to be a good GC? instructed on this landmark
bodies to be able to adapt as swiftly
transaction in Eastern-Hungary.
I think it depends on the size of the as possible.
HL: How do you communi-
department. For a relatively large cate effectively with non-
team, management skills are legal colleagues?
crucial. The ever dense minefield of data Andrékó Kinstellar
Well, most of my peers are privacy and copyrights issues
managers who expect me to tailor is also one aspect that I am sure will Kinstellar advised Türk
Being able to think off your complex legal issues in a simple, impact my work more and more. Telekomünikasyon A.S.
feet is also important. For executive brief manner. They Lastly, convergence needs to be
example, in a managerial meeting, The largest telecoms acquisition of
quite simply don‟t care for more taken into account. The IT sector, 2010 Kinstellar advised Türk
I need to give answers almost on and would hate if I tried to run media sector and telecommunica-
the spot on whether or not a Telekomünikasyon A.Ş. (in Hungary,
them through all the articles tions and their specific regulations; Romania, Czech Republic, Slovakia
certain risk is worth taking. involved from the law. It is of all need to be considered as a whole and Serbia) on the EUR 221 million
course difficult in cases when a as the technologies involved become acquisition of the wholesale business
It is also important to be able to very complex issue needs to be more and more integrated. Add of Invitel (including the purchase of
move away from a purely presented, but I believe this is one to this the business/marketing Invitel Kft.) to get access to 27
legal perspective. Most managers of the first things you learn to do considerations and you end up with thousand km of optical fiber network
just don‟t want to receive answers when you start working as an an equation with a lot of variables. in 16 countries in Central and
along the lines of “based on the in-house lawyer. Southeast Europe. The deal
law, these are the following represents the largest acquisition of
HL: What do you see as the HL: What about the EU Regu- wholesale telecoms facility in 2010 in
risks: a), b), c) etc.”. They main trends influencing your lations? Europe, and by far the largest TMT
prefer business minded and work? deal of 2010 in Hungary (closed in
company-focused answers. October 2010).
PAGE 4

5. ISSUE 1 VOLUME 1 MAY, 2011
On The GC Grapevine
The telecom industry is a heavily especially because we have a
The Pr ivate Practice Str ip
“this constant regulated industry. All regulations strong in-house department. We
Kinstellar advise on FN Cable
evolution poses its must be in line with the EU law. do have preferred law firms but on
aquisition
The new regulatory framework for a case by case basis I might need a
challenges. In my line our industry was accepted in specific private practice firm. In The second largest telecoms
December, 2009. Hungary is now making my choice I only really acquisition of 2010 Kinstellar advised
of work, nothing is facing to the implementation phas- care about the expertise. I don‟t FN Cable Holdings B.V. (in
obvious as everything es of this NRF. look at the international brand Hungary) on the EUR 46 million
especially since by now I know the disposal of its Hungarian subsidiaries
Therefore by now, EU trends are
I learn one second is felt on a daily basis and it is clear
market and have a good sense of (active under the FiberNet brand in
who is strong in what practice the provision of cable television,
questioned in the that we can no longer purely think
about Hungary but look at the EU
areas. internet and telephonic services) to
Magyar Telecom B.V. (an affiliate of
next” regulators even before the norms Invitel). The deal represents the
start being applied here. We are second largest TMT deal of 2010 in
lucky because we have excellent HL: What would you recom-
Hungary (closed in February 2011).
colleagues all over Europe within mend to any PP not to do
LGI Group. We can always seek when making a proposal to a
out advice from them when we GC?
Réczicza White & Case
have some problem. Honestly, when I see ten pages of a
Overall, I feel the EU legislations legal review, I don‟t even feel like Falcon Group’s €574 million
have had a positive influence on reading it. My advice is keep it auction sale of Èeské
the industry. So far they have been accurate and to the point. I do not Radiokomunikace, a.s.
stable requirements and we almost need to see extracts from the text
of the law. My peers expect me to In the second-largest exit of 2010 in
always feel that they are something
give them a legal analysis this way, the CEE region, we advised Falcon
desirable to investigate and adopt.
and I‟d hope a law firm would do Group, a consortium of investors
the same for me. 75% controlled by funds managed or
advised by Mid Europa Partners,
HL: How do you stay up to
in its auction sale of 100% of Èeské
date – since you mention the
fast pace? HL: What advice would you Radiokomunikace, a.s. (“CRa”) to
“Honestly, when I see give to any PP lawyer consid- three funds managed by Macquarie
I actually have excellent colleagues ering going in-house? for total consideration of
ten pages of a legal and we regularly have a sit-down
First of all understand that you are approximately €574 million.
review, I don‟t even feel where I am briefed on the most
part of a team. This does not only
recent developments and trends
like reading it. My on technical and business side. I mean a team of lawyers but also of
learn a lot from them. I don‟t marketing, engineering, and hu-
advice is keep it man resources professionals. If you
think I could be nearly as effective Invitel Holdings A/S’
accurate and to the in my job without a good team. enjoy sitting by yourself in front of
acquisition of FiberNet Zrt. and
a computer and working a legal
point. I do not need to asset sale to UPC
analysis you are better off in
HL: What do you usually look private practice. If you want to In one of the most complex
see extracts from the for when choosing what move in-house you need to under- transactions undertaken by our
text of the law.“ private practice firm to work stand that your internal clients will Budapest office, we represented
with? be people who, unlike you, do not Invitel Holdings A/S, the holding
have a legal background and you company for one of Hungary‟s
Considering our relatively large
need to adjust your professional leading telecommunications service
team, my general approach is
message accordingly. This is the providers, in the bolt-on acquisition
not to outsource unless we are
real job of a successful in-house of Hungarian cable company
looking at a very large deal,
counsel. FiberNet Zrt., and Invitel‟s
especially for an M&A transaction.
simultaneous sale of 35% of
FiberNet‟s assets to UPC. We also
HL: And if you make the advised on all competition, debt
decision to take that step and restructuring, regulatory and tax
outsource? matters.
I always discuss using any external
sources with my superiors,
PAGE 5

6. ISSUE 1 VOLUME 1 MAY, 2011
On The GC Grapevine
The Pr ivate Practice Str ip
Film Industry To Take A Hit Due To Tax Law Faludi Wolf Theiss
by dr. Mónika Hor v áth - DLA Piper
UniCredit Bank – Waberer’s
Hungarian Film Tax Relief What are the common finance, advised by Faludi Wolf
System contractual structures? Theiss
The Hungarian tax relief system Foreign productions can qualify Faludi Wolf Theiss advised a bank
was introduced by the Motion their productions for tax relief if consortium consisting of five banks,
Pictures Act in 2004. In 2008, as a contracting through any of the including UniCredit Bank acting as an
result of a revision by the EU, following structures: arranger, agent and lender and
certa in cha ng es (s uch a s Volksbank, Citibank, ING Bank and
application of a cultural test) have 1) Work for hire structure K&H Bank acting as lenders, in
been introduced whereby the main relation to the EUR 46,000,000
Hungarian producer provides financing of the operation of
concept remained unchanged.
services under a Production Waberer‟s Holding, the market-
With the help of the tax benefit Services Agreement. leading logistics service provider in
system, the refunds (supports) Hungary and Central and Eastern
2) Co-production Europe.
available are 20% of the film
production costs incurred in The parties shall enter into of a film industry governor to take
Hungary and partly outside of a bipartite or multipartite over the managing and controlling
Hungary. co-production agreement with the functions of the MMKA together
participation of a Hungarian with the right to share direct state
The source for the refunds is the
Recent trends producer. Hungary has entered into funds. Mr. Andrew Vajna has
profit before taxation of Hungarian
film co-production treaties with been appointed as film industry
enterprises, which intend to France, Germany, Italy, Canada and
Since 2004 the Hungarian film governor in January 2011.
reduce their corporate tax
industry sector has developed partly to the European Convention According to the latest news the
payable. Experience of the last
materially: New modern studios on Cinematographic Co- MMKA will be terminated
years has proved that a sufficient
have been built and opened (Stern Production. Even if there is no without legal successor and
amount of private resources can be
in 2006, Korda in 2007, Astra in investigation of the financial
2008 and Raleigh studio in 2010). “Some of the film sponsors might turn to sport support instead management shall be commenced.
which might also decrease the funds available for film support”
Several Hungarian production Future tendencies
companies, mostly independent
mobilized in order to support co-production treaty with the Crisis taxes introduced in 2010 in
but some belonging to major
film productions through the tax country of origin of the foreign
studios, offer high level film the energy, telecommunication,
benefit system. producer the co-production
production services. Hungarian financial and retail sectors have
structure can qualify for Hungarian limited the profit of potential big
film laboratories provide labora- Why could a company be tax rebate. taxpayers and thus the potential
tory services on international interested in investing in the film
standards. industry? Such company may 3) Sale of copyright structure funds available for film support.
reduce its (1) corporate tax base A new system of sport support in a
The source of this development is The Hungarian producer produces
and (2) corporate tax payable by
the indirect state subsidy available the film or certain scenes of it and structure very similar to that of the
the amount of the support,
for film production. In the last 3 assigns or licenses it for the foreign film tax relief is under
thereby achieving significant tax development. According to the
years the total amount of indirect producer.
savings. initial idea 5 team sports football,
film subsidy paid out has been in
the range of HUF 45-48 billion. Foreign producers can benefit Changes on the level of basketball, handball, water polo
I.e. the total cost of production from the indirect state subsidy if controlling bodies and ice hockey will be entitled to
s p e n t th r o u g h H u n g a ri a n producing films with the indirect state subsidy. The
production entities were about Until recently the Hungarian Film proposed law is currently under
involvement of Hungarian
HUF 180-190 billion in each of the Fund (MMKA) was the body to investigation by the EU and
production companies. The tax
last 3 years. Interestingly the decide upon direct state subsidies subject to certain changes
rebate has attracted major
participation of Hungarian only for film productions (only for expected to receive green light
foreign producers including
film productions in the total cost Hungarian productions with no early summer.
Hollywood studios (e.g. Warner
of production has decreased from foreign participation) and manage
Bros recently shot "The Rite" in Some of the film sponsors might
42,7% to 16,2% during this state owned film assets. Due to
Hungary with Sir Anthony turn to sport support instead
period, which means that foreign huge amount of losses accrued in
Hopkins, Universal Studios is
interest has developed and keeps the last couple of years the Gov- which might also decrease the
actually shooting "47 Ronin"
the film industry busy. ernment has created a new position funds available for film support.
with Keanu Reeves).
PAGE 6

7. ISSUE 1 VOLUME 1 MAY, 2011
On The GC Grapevine
“Net Neutrality” in Hungary
by dr. Titusz Puskár - Simándi Bird & Bird
The attitude of the European quality requirements the ISPs have must be interpreted together in
Commission to comply with. The purpose of service quality related issues. The
these provisions is to ensure the USD has already been implement-
On the 30th of June, 2010 the
protection of the end-users/ ed, while the implementation of
Commission launched a public
consumers. Generally, the ISPs Directive 2009/136 is currently in
consultation on the key questions
have to publish the minimum prog res s , a nd s h oul d be
arising from the issue (such as
service quality they guarantee. implemented in a couple of weeks.
internet traffic management prac-
tices, prioritising one kind of Directive 2009/136 amending the Annex 1 of the Decree provides
internet traffic over another, USD inserted new provisions into detailed rules on the obligations
transparency, quality of service the USD affecting the abovemen- relating to service quality. Among
and competition matters). On the tioned Articles as well. The general obligations, which are
9th of November, 2010 the amended provisions, inter alia, applicable to all electronic
Commission published its report oblige the Member States to communications services, special
on the results of this public ensure that national regulatory rules apply to Internet service.
consultation. It revealed that there According to the Decree, ISPs
“It revealed that is a near consensus on the “there is nothing to have to specify the minimum up-
importance of net neutrality and download speed (kbit/s),
there is a near among the stakeholders, who prevent ISPs from which they undertake to provide
consensus on the expect additional guidance in the prioritizing traffic as long to their customers in 80 % of the
near future from the legislative cases. Complying with these
importance of net bodies of the EU. As a result of as the published minimum obligations is to be verified, from
these steps, on the 19th of April, bandwidth figures[..] are time to time, by the National
neutrality” 2011 the Commission, the Media and Communications
European Parliament and the complied with” Authority. The ISPs are obliged to
Council published a communica- publish these thresholds in their
tion on “The open Internet and net authorities have the power to General Terms and Conditions and
The debates over net neutrality
neutrality in Europe”. Although determine minimum service separately on their website. From
have started years ago in the
the Communication does not quality requirements for undertak- the perspective of net neutrality it
United States but the issue has
include any binding rules (it ings providing public communica- means that ISPs are obliged to
gained more traction recently as
summarises only the previous tions services, however, these determine the minimum
one of the hot topics of the global
findings of the Commission), the requirements must previously be guaranteed upload and download
telecommunications sector.
name of the “authors” shows that examined by the Commission. The bandwidth in relation to all
General introduction the EU takes this issue seriously. implementation deadline for the subscription packages and tiers,
Member States is the 25th of May, but there is no minimum
Although there is no specific Net neutrality in the EU
2011. bandwidth provided by law.
definition, the term “net neutrali-
Although net neutrality is neither Therefore, according to the cur-
ty” (which is also known as Net neutrality in Hungary
regulated nor required expressly rent regulation there is nothing to
“internet neutrality” or “network
by any EU legislative act, certain In Hungary the legislation regard- prevent ISPs from prioritising
neutrality”) covers the idea of
elements thereof (as transparency ing electronic communication traffic as long as the published
creating a neutral or “equal”
and minimum service quality) may services including ISPs is quite minimum bandwidth figures –
internet. Specifically, internet
be found in the amended Universal complex as Act C of 2003 on determined and undertaken by the
traffics cannot be influenced or
Service Directive (Directive No. Electronic Communications and ISP itself – are complied with. The
prioritised by either governments
2002/22 of the European Government Decree no. implementation of Directive
or Internet Service Providers
Parliament and of the Council, 229/2008 on the obligations 2009/136 will most probably
(“ISPs”) with the goal of protecting
“USD”). regarding the quality of the slightly change the current status,
consumer interests.
el ectronic comm unications however, traffic prioritising will
Article 21 of the USD determines
services in connection with likely still remain possible.
the transparency, while Article 22
consumer protection (“Decree”)
of the USD determines the service
The information herein does not constitute legal advice or opinion. Hudson Legal will not be held
responsible for any liability arising from the use of any information provided in this publication. PAGE 7

8. We would like to thank those who contributed to this newsletter:
 dr. Miklós Orbán
 dr. Maria Dardai
 dr. Mónika Horváth
 dr. Titusz Puskár
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