Internet in a transition economy: Hungary case study
This case study report reviews the developments of the telecommunications sector in Hungary. Developments were remarkable during the 1990s, placing Hungary among the countries of central and eastern Europe with the highest number of telephone lines per 100 inhabitants. The reasons behind this industry growth lay in the early commencement of the market liberalisation process, in the establishment of a tariff strategy attracting investments and in the clear separation of the regulatory functions from the operative ones. This case study outlines these development stages starting from 1989. The industry structure and its main features are also described.
The second part of the study reviews the Internet market. The introduction of the Internet in the country was mainly fostered by the academic sector. Since 1996 the cumulative growth rate was 50% per year, reaching 715,000 users by 2000, equivalent to a user rate of 7.1% (penetration). However, although above the average for central and eastern Europe, such growth is considered to be below expectations. Among the reasons for this slow adoption are the high cost of Internet access, the insufficient attention paid to enterprises and residential users and the dominance of the academic sector. The study describes the market features, up to 2000, in terms of Internet service providers, content development, tariffs, interaction of the Internet with the media industry, initiatives to bring the Internet to rural areas (through the so called ‘Telecottages’), dissemination of public access points, alternative access such as the Asymmetric Digital Subscriber Line (ADSL) and mobile Internet.
Finally, the study describes the level of incorporation of information and communication technologies in government, education, health and eBusiness activities, and provides a series of recommendations to support mass penetration of the Internet.
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The study provides a lot of information on the Hungarian telecommunications market, often on a comparable basis with other central and eastern European countries, and provides a good understanding of past developments that may partially explain present dynamics.