Local Fixed Telecommunication Network Services

Hong Kong's businesses and consumers rely heavily on voice telephonic
services. Hong Kong had 4.7 million telephones served by more than 3.6
million exchange lines at the end of 1997. The telephone density was 72
telephones or 55 exchange lines per 100 population - the highest in Asia
and one of the highest in the world.

Many data communication services are available in Hong Kong. By the
end of 1997, there were more than 340 000 dedicated facsimile lines. The
growth rate in 1997 was 1.0 per cent per month.

After deregulation of the Fixed Telecommunication Network Service
(FTNS) market in July 1995, the three new FTNS operators - Hutchison
Communications Limited, New T & T Hong Kong Limited and New
World Telephone Limited - have begun to roll out their networks and
gradually introduce new services such as integrated services digital
network services to compete with the dominant operator, the Hong Kong
Telephone Company Limited (HKTC).

HKTC's local telephone charges are regulated by a price-capping
mechanism which limits any annual increase to four per cent below the
prevailing rate of inflation. This will be reviewed in 1998; there is no price
control on the new operators.

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