The government's telecommunications policies, implemented by the Telecommunications Authority (TA), are pro-competition and pro-consumer. Supported by the Office of the Telecommunications Authority (OFTA), the TA oversees the regulation of the telecommunications industry in Hong Kong and administers the ordinances governing the establishment and operation of telecommunications services.

          Important developments in Hong Kong's telecommunications sector in 1998 included Hong Kong Telecom International Limited (HKTI)'s early surrender of its exclusive licence for certain external telecommunication services and circuits, consolidation of mobile operators and the licensing of International Simple Resale (ISR) of voice services for operation from January 1, 1999.

Hong Kong's businesses and consumers rely heavily on telecommunications services. Hong Kong had 4.8 million telephones served by more than 3.7 million exchange lines at the end of 1998. The telephone density was 71 telephones or 54 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 1998, there were more than 359 779 dedicated facsimile lines.

          Since deregulation of the Fixed Telecommunication Network Services (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 rolled out their networks and introduced many new services for both residential and business customers to compete with the dominant operator, a group of companies under Hong Kong Telecommunications Limited (HKT).

Following an agreement made between the government and HKT, HKTI surrendered the exclusive licence in March 1998, eight years ahead of its expiry in 2006. As a result, HKTI's franchise on the provision of certain external circuits and services, including external public telephone services and television connections; domestic and external telex and telegram services; external private leased circuits; and shore-to-ship and ground-to-air communications from Hong Kong, will come to an end. External services-based competition will begin on January 1, 1999, and external facilities-based competition on January 1, 2000.

The provision of public mobile telephone services, including personal communications services (PCS), has been highly competitive. During the year, Hong Kong Telecom CSL Limited acquired Pacific Link Communications Limited and SmarTone Telecommunications Holdings Limited acquired P Plus Communications Limited. This consolidation left three major operators of both cellular and PCS services and three new PCS operators which are rapidly developing their networks and improving their capability to compete. By the end of 1998, these companies operated 11 digital systems serving a total of 2 858 100 customers. This represents a penetration of about 42 per cent and an annual growth of 37 per cent.

          In August 1998, the TA announced the implementation of mobile number portability from March 1, 1999. This will remove a remaining barrier to fully effective competition in the mobile phone market.

With the increasing popularity of mobile phones, the number of paging customers has been decreasing. By the end of 1998, there were 29 licensees providing public radio paging service to 571 800 customers, down from 31 licensees and 1 million paging customers a year before.

By the end of 1998, the number of licensed PNETS operators increased to 343, of which 74 were International Value Added Network Service operators, 133 were Internet Service Providers (ISPs), 23 were Virtual Private Network (VPN) service providers and 22 were International Simple Resale (ISR) of facsimile and data service providers.

The Self-Provided External Telecommunication System (SPETS) licence enables a company or an organisation to establish its own external circuits for internal communications. By the end of 1998, 67 SPETS licences had been issued.

Two Hong Kong companies have been granted licences under the Telecommunication Ordinance and the Outer Space Ordinance to operate and provide satellite communication services. APT Satellite Company Limited and Asia Satellite Telecommunications Company Limited (AsiaSat) operate three satellites each.

          AsiaSat plans to launch a new satellite, AsiaSat 3S, in the first quarter of 1999 to replace AsiaSat 3 which was launched in December 1997 but failed to reach the planned orbit.

          An exemption order was made in September 1998 to facilitate the free circulation of terminal equipment of Global Mobile Personal Communication by Satellite (GMPCS). A person using GMPCS service can enter Hong Kong and continue to use the service without applying for a licence.

          In his Policy Address in October 1998, the Chief Executive announced that Hong Kong would develop a world class teleport at Chung Hom Kok to provide the best possible global satellite communication links.

Hong Kong has continued to participate in the activities of international and regional telecommunications organisations as a member of China's delegation, or on its own under the name 'Hong Kong, China'. During 1998, Hong Kong was represented in conferences and meetings convened by the International Telecommunication Union, the Asia-Pacific Telecommunity, the Pacific Telecommunications Council, the International Mobile Satellite Organisation, and the International Telecommunications Satellite Organisation. As 'Hong Kong, China' it participated in the Telecommunications Working Group of the Asia-Pacific Economic Co-operation forum (APEC), and the Third APEC Ministerial Meeting on the Telecommunications and Information Industry held in Singapore in June 1998. Hong Kong also took part in various conferences, seminars and exhibitions convened by the private sector in the telecommunications industry.

          In addition, Hong Kong hosted the fourth APEC Telecommunications Mutual Recognition Arrangement Task Force Meeting in January 1998 for the promotion and facilitation of international trade in telecommunications equipment. Hong Kong is a party to the Mutual Recognition Arrangement which was signed at the APEC Ministerial Meeting held in June 1998.

Telecommunications is a constantly changing business. Current information and the full texts of Policy Statements and TA directions and statements can be found on the ITBB and OFTA home pages (http://www.info.gov.hk/itbb/ and http://www.ofta.gov.hk/ respectively).