Wednesday 8 February 2012

Contents of module

Statements and Negotiations

In fact, only confidential pre-provisioning agreements between the negotiating parties had been reached.

A number of thorny problems remained, including the recurrent cost of interconnection, customer line identification for billing purposes, resale arrangements, IDD interconnect and revenue sharing arrangements, certain numbering problems including international access codes and the portability of numbers between networks, and certainly not least the points of interconnection, especially regarding the issue of customer access.

In his Statement the TA makes it plain that the four fixed telecommunications network service (FTNS) licence holders share a special status which separates them from other general service providers, such as resellers of services such as facsimile or callback operators, and therefore in their carrier-to-carrier relations the published tariffs they charge customers

should not be the charges normally applied among operators. Indeed it has been stated in the TA’s draft interconnection guidelines that when the TA is called upon to resolve a dispute between operators he will make cost-based arrangements specifically based upon relevant costs, including the cost of capital. (Statement, 28 March 1995)

So the first Statement also includes a statement of the charging principles the TA will apply if commercial agreement cannot be reached. On the question of caller line identification (CLI), the Statement is also emphatic. It is worth quoting in full.

CLI is integral to the efficient operation of modern telecommunications networks as this type of signalling information allows the introduction of the advanced telephone services to Hong Kong. HKTC has CLI capabilities already fitted to the majority of its existing exchange lines. CLI is also critical to the supply of competitive telecommunications services delivered on competing networks. It enables traffic management and route selection, information management, the management of policy, emergency and nuisance calls, and most importantly from a new FTNS operator’s perspective, customer billing (when provided with the customer billing name and address). (Statement, 28 March 1995)

The TA goes on to point out that the FTNS licence conditions actually require the operators to share this information to achieve ‘prompt and efficient interconnection’ so licences are used in Hong Kong to back up the regulator whose powers originate in the legislation. In fact, in 2000 telecommunications legislation was consolidated in a new Telecommunications Ordinance and for the first time clauses to prevent anti-competitive behaviour, which were previously confined to the licences, were included in the wording of the legislation.

Also included in the Statement are paragraphs relating to:

  • the obligation on FTNS to provide services to resellers on a non-discriminatory basis,
  • the allocation of numbers (010 – 014) to the four FTNS operators to access the international gateway of Hong Kong Telecom International (now renamed as Cable & Wireless HKT International Limited (CWHKTI)),
  • the implementation of FTNS number portability, and the arrangements under which HKTI will route incoming calls directly to ported numbers once HKTI’s intelligent network is completed, and in the interim will route calls to the FTNS of the assigned number who will have responsibility to forward the call to the appropriate FTNS if the number has been ported,
  • the cost recovery principle between FTNS for forwarded calls to ported numbers to be negotiated between the carriers themselves, except the local dominant fixed carrier charges to be subject to TA approval due to its dominant position in the market, and
  • facility sharing arrangements for direct access to customers, such as shared ducts and conduits and space in equipment rooms in customers’ premises, and revenue sharing arrangements for indirect access to customers which require interconnection.

It quickly became apparent this last distinction between direct and indirect customer access, and the arrangements for both facility sharing and revenue sharing, were a source of considerable debate and conflicting commercial interests within the industry in Hong Kong.

Two areas in particular proved controversial. First, the nature and scale of the delivery fee for calls requiring indirect connection to the international gateway. This was important because income from IDD calls was the paramount source of revenue for all FTNSs.

Second, interconnection between FTNSs at the customer’s side of the main distribution frame in the local loop. Outside Hong Kong this is widely known as local loop unbundling whereby the interconnecting network engages ‘seizes’ the subscriber’s line for the entire period for which the subscriber chooses that network.

Incumbents universally dislike local loop unbundling because they see it as losing control of the network to a new entrant and, maybe even more important, losing the customer’s billing information.

The debate reached its climax in 2000 when the consolidated Telecommunications Ordinance unambiguously established the power of the regulator to determine local loop unbundling, which had come to be known locally as Type II2 interconnection. Type I1 interconnection was the name given to interconnection at the core network level or on the exchange side of the main distribution frame.

Part Three examines the details of type I and Type II interconnection in Hong Kong.