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The Government's telecommunications policy aims to facilitate the development
of the telecommunications industry and enhance Hong Kong's position as
a regional telecommunications hub.
Supported by the Office of the Telecommunications
Authority (OFTA), the Telecommunications Authority (TA) oversees the regulation
of the telecommunications industry in Hong Kong and administers the ordinances
governing the establishment and operation of telecommunications services.
Since 2000, the Government has opened to competition
all sectors of the telecommunications market — local and external,
services-based and facilities-based.
To provide a comprehensive and clear legislative framework
for the regulation of merger and acquisition activities in the telecommunications
market, the Telecommunications (Amendment) Ordinance 2003 was enacted
in July. The ordinance would promote fair and effective competition in
the market and facilitate informed decision-making by businesses on mergers
and acquisitions. The Government was consulting the industry on the relevant
guidelines before bringing the ordinance into force.
Businesses and consumers in Hong Kong enjoy an excellent telecommunications
infrastructure. In 2003, the telephone density was 56 exchange lines per
100 population — one of the highest in the world. Also serving Hong
Kong's needs in data communications were more than 491 195 dedicated facsimile
lines.
The local fixed network market was fully liberalised
as from January 2003. Under the full liberalisation policy, there is no
pre-set limit on the number of licences to be issued, nor on timing for
submission of applications for licences. By year-end, there were altogether
14 local fixed telecommunications network services (FTNS) operators. They
included nine local wireline-based FTNS operators, two local wireless-based
FTNS operators, one cable television operator which provides telecommunications
services over its hybrid fibre coaxial network and two FTNS operators
for distribution of domestic free TV programme services.
In 2003, the Government started a review of the policy
and regulatory regime for Type II interconnection. Type II interconnection
refers to interconnection between two fixed telecommunications networks
at the customer access network level. It enables operators without a customer
access network to also provide services to customers through the networks
of other operators. The review aimed to examine whether the arrangement
remained appropriate and sufficiently updated in encouraging investment
in the telecommunications network and facilitating effective competition
in the current market conditions. In particular, it is the Government's
aim to have a competitive, advanced and high bandwidth telecommunications
infrastructure that is capable of supporting demanding, new and innovative
services to meet future needs and challenges, thereby furthering the goal
of developing Hong Kong into a leading digital city. The first consultation
was conducted in May to August. In December, the Government initiated
a second-round consultation with a view to promulgating an updated policy
in 2004.
By year-end, virtually all households and commercial buildings were covered
by the broadband network. The number of broadband accounts increased significantly
during the year to 1 230 607 or 18 broadband accounts per 100 inhabitants,
representing an annual increase of 24 per cent. In addition, 52 per cent
of households had broadband Internet access. The number of registered
customer accounts with dial-up access was 1 084 368, or 16 dial-up access
accounts per 100 inhabitants. Internet Service Providers (ISPs) numbered
201 at year-end.
According to a report issued by the International
Telecommunication Union (ITU) in September, Hong Kong ranks second in
the world in terms of broadband penetration. On the ITU's Digital Access
Index published in November, Hong Kong ranks No. 1 in the world in terms
of affordability of Internet access.
The market for public mobile phone services is highly competitive in
Hong Kong. At year-end, six firms were operating a total of 11 digital
systems, serving a customer base of over 7.2 million. This represented
an annual growth rate of 16 per cent. The penetration rate of public mobile
phone services was about 106 per cent, one of the highest in the world.
In October 2001, the Government issued four 3G licences
under an innovative royalty scheme. The Government also spearheaded the
introduction of an open network access requirement whereby 3G network
operators are required to make available 30 per cent of their network
capacity for interconnection to, or access by, non-affiliated Mobile Virtual
Network Operators and/or content providers on a non-discriminatory basis.
This would facilitate the development of innovative applications and services
through effective competition. (3G services began in January 2004).
The existing licences for second generation mobile
services would expire in 2005 and 2006. To facilitate long-term investment
and business planning by industry participants, as well as planning for
any necessary transitional or migration arrangements, the Government consulted
the industry on future licensing arrangements in August to October. It
planned to embark on a second round of consultation in early 2004.
Competition in the external telecommunications services
market was introduced from January 1, 1999. Competition in the market
has led to a significant drop in International Direct Dialling (IDD) call
rates. Consumer savings in the four years from 1999 to 2002 amounted to
an estimated $25.5 billion.
Competition in the external facilities market was
introduced from January 1, 2000. Operators who bring in new submarine
or overland cables, or use non-cable based means of transmission (primarily
satellite) to provide external telecommunications facilities-based service
may apply for a licence. At year-end, there were 18 licensees providing
cable-based external telecommunications facilities and four providing
non-cable based external telecommunications facilities.
Two Hong Kong companies, APT Satellite Company Limited and Asia Satellite
Telecommunications Company Limited (AsiaSat), hold licences under the
Telecommunications Ordinance and the Outer Space Ordinance to operate
and provide satellite communication services. At year-end, the two satellite
companies were operating a total of six satellites.
Hong Kong continued to participate in the activities of international
and regional telecommunications organisations. As a member of China's
delegation, Hong Kong was represented in conferences and meetings convened
by the ITU. Hong Kong participated in its own right in the meetings of
the Asia-Pacific Telecommunity and the Telecommunications and Information
Working Group of the Asia-Pacific Economic Cooperation (APEC). Hong Kong
also took part in the initiative to implement the APEC Mutual Recognition
Arrangement for Conformity Assessment of Telecommunications Equipment.
The work of the OFTA in the regulation of the development
and operation of the telecommunications industry of Hong Kong is well
recognised at the international level. The OFTA was named the 'Best Asian
Regulator' of 2003 by a leading telecommunications journal in Asia, for
the fifth time since 1998. |
