Contents of module
- Part One: Introduction to Interconnection
- Interconnection index
- eLearning main Index
Hong Kong and Interconnect
Finally, just as no two networks are the same, so no two economies served by networks are the same.
This is a case study of Hong Kong, where there are no domestic long-distance routes, only international routes and local calls which are paid for through an installation charge, a flat rate monthly subscription rental with no local call charging, and monthly charges for a variety of optional value added services.
Hong Kong is a small open economy. After mainland China’s Open Door policy in 1978 Hong Kong’s manufacturing base migrated quite quickly across the border to take advantage of lower land and labour costs, so Hong Kong is now highly dependent upon the competitive nature of its local services and the excellence of its infrastructure to attract foreign capital and foreign companies to use Hong Kong as their telecommunications base and regional hub.
Hong Kong decided to open the domestic fixed wireline telecommunications market in 1995 when the monopoly of PCCW/HKT Ltd over domestic fixed wireline network services expired.
Four fixed telecommunications network services (FTNS) licences were issued, one each to Hongkong Telecom (now renamed as PCCW/HKT Ltd, Hutchison Telecom (now renamed as Hutchison Global Crossing Limited), New T&T and New World Telephone.
This was followed by a decision of the regulator, the Telecommunications Authority, who is also Director General of the Office of the Telecommunications Authority (OFTA), to deem callback legal, and this in turn led rapidly to a highly competitive international IDD market.
In 1996 the TA also issued six Public Mobile Radio Services (PMRS) licences for the provision of Personal Communications Services Networks (PCSNs) operating at the 1,800 MHz band in addition to the existing five Public Mobile Radiotelephone Services (PMRS) licences issued to mobile cellular operators which operate at the 800/900 MHz bands, so eleven networks operate in Hong Kong, making it one of the most fiercely contested mobile markets in the world.
In 1998 Hongkong Telecom International reached an agreement with the government to trade in its exclusive international gateway facilities (IGF) licence, which was not due to expire until 2006, for a compensation of HK$6.7 billion. As a result, Hong Kong liberalized its external telecommunication services (ETS) in 1 January 1999.
At the end of October 2000, there were over 170 companies which have been issued with ETS licences to provide international simple voice resale services, callback services, etc.
On 1 January 2000, Hong Kong further liberalized its external facilities-based telecommunications services. Since then, IGFs and external facilities-based licences have been issued to all four local wireline based FTNS licenscees, and to a number of companies providing satellite services and companies landing international submarine cables in Hong Kong.
Other companies have been issued with External Telecommunications Service (ETS) licences to provide international simple voice resale, which has been legal since January 1999. Hong Kong therefore has a very open and highly competitive telecommunications market:
- there are four local wireline-based FTNS licences, and the market is to be opened further after 2003.
- besides multiple international gateway facilities, there are many companies providing international voice services.
- five local fixed wireless-based FTNS licences have also been issued and an FTNS licence has been issued to the existing cable TV operator for the provision of local FTNS services including broadband services.
- there are eleven mobile telephone networks;
- the regulator intends to issue four third generation mobile licences during 2001; and
- there are no restrictions on the number of Internet service providers.
This competitive structure, and Hong Kong’s high density population packed into a forest of high-rise buildings, poses a number of unique problems, such as how to manage the deployment of cell sites for good reception and coverage for mobile phones and how to avoid the continual diging-up of streets by fixed wireline operators.
On the other hand it also offers unique advantages:
- Local loops are shorter and network construction costs are therefore generally lower, although land prices and the cost of cell sites are often very high, and network build out can be faster than in larger geographies.
- Competition accelerates investment by new entrants, especially where
they see a new technology, such as broadband access, as giving them a
possible edge.
Light handed regulation aids this process because operators do not normally have to seek legislative or regulatory approval for the introduction of new services or new pricing schemes.
Nevertheless, their licence conditions do contain clauses to prevent anti-competitive behaviour, and the regulator imposes additional requirements upon an operator deemed to be dominant, which applies to PCCW/HKT Ltd in the domestic voice market. - Interconnection was an early consideration of the regulator in Hong Kong in light of the pro-competition policies of the 1990s.
The following areas of interconnection all had to be dealt with:
Domestic
- Fixed – to- fixed
- Mobile – to – fixed
- Fixed – to – mobile
- Mobile – to – mobile
- Value-added services (VAS) provider including Internet service provider
– fixed (transit) to value-added network
- Payphones
- Mobile – (MTR) tunnel operators
- Mobile/Fixed – to - cable
International
- Fixed – to – IGF, and IGF - to - fixed
- IGF – to – mobile, and mobile - to - IGF
In all these cases the regulator has a variety of powers. They derive from the legislation, the Telecommunications Ordinance, (See the Department of Justice website for all Hong Kong legislation) and they are set out in policy statements issued by the Information Technology and Broadcasting Bureau as well as OFTA itself, they are discussed in Consultation papers, and they are implemented through Determinations and Directions.
Part Two of this module discusses interconnection policy in Hong Kong.