HK Watchdog:"No Commitment" Broadband Licenses Not Unfair
November 26, 2001
Dow Jones Newswires
HONG KONG -- The head of the Hong Kong telecommunications regulator said Monday he doesn't consider it unfair that potential new broadband license holders will be allowed to operate in the market without specific investment commitments.
"This will be a totally liberalized environment so the requirements will be different (to what the incumbents have to adhere to)," he said.
His comments came amid criticism from some of Hong Kong's existing 10 license holders, about the lack of requirements for potential new market players. The existing operators, apart from the former fixed-line monopoly Pacific Century CyberWorks (PCW), have all been required to meet certain rollout and investment commitments and some of them are now struggling to deliver on those promises.
Earlier Monday, a company source told Dow Jones Newswires that Henderson Cyber Ltd. (H.HCY) will close down its wireless broadband operations due to intensifying competition in a shrinking market.
The company declined to comment on the issue Monday, but last month said it may pull out of the broadband market if the government issues more licenses without requiring new operators to make a minimum investment commitment.
The government and the Office for the Telecommunications Authority are planning to fully liberalize the Hong Kong broadband market from January 2003, by granting new licenses with no investment or rollout requirements attached. A six-week consultation process on the issue is due to end Tuesday.
Speaking with reporters after attending a telecom conference, OFTA's Director General Anthony Wong said he sees no problem with allowing potential new license holders to operate in the market without similar commitments to those made by the current players.
"Those requirements were not set by the government, they were proposals from the companies themselves," Wong said, indicating that the companies shouldn't have committed to more than they were able to meet. He added that some form of commitment was necessary at that time because the government was only granting a limited amount of licenses that had to be distributed among a number of applicants based on the merits of each application.
"The performance bonds were used to have their commitments set in stone so that we could defend why we gave them a license and not the others," he said.
Under the current proposal to open up the market there is no need for such fixed requirements on investments or rollout schedules since the government has an unlimited amount of licenses to give out, he said.
OFTA is, however, prepared to be lenient if the incumbent operators are failing on their earlier commitments, he said.
"If they have any real difficulties rolling out their networks we will be prepared to consider (extending the deadline)," he said.
He noted that OFTA has already granted a 12-month extension to HK Broadband Ltd. with regard to the number of buildings it has to connect to its network as well as its total capital spending. HK Broadband is 85%-owned by City Telecom (H.K.) Ltd. (H.CTY).
Wong declined to comment specifically on the reports that Henderson Cyber is looking to exit the market altogether.
-By Anette Jonsson, Dow Jones Newswires; 852-2802-7002; anette.jonsson@dowjones.com
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