HK Watchdog Invites Bids For New Fixed-Line Licenses
January 11, 2002
Dow Jones Newswires
HONG KONG -- Hong Kong's telecommunications regulator will go ahead with full liberalization of the local fixed-line telecom market from Jan. 1, 2003, and is now ready to invite applications for more fixed-line licenses.
Director General of the Office of the Telecommunications Authority Anthony Wong said in a statement that opening up the market to more operators is the best way to promote the development of the local telecom market and to protect the interest of both consumers and businesses.
Under the new policy there will be no preset limit on the number of licenses that can be issued and no deadline for applications, Wong said.
However, he stressed that no licenses will be issued to operators who intend to primarily rely on the infrastructure of other operators for interconnection to provide their services.
Licenses will be issued only to operators who "establish and maintain telecommunications networks" of their own, Wong said.
Hong Kong currently has 10 fixed-line operators, of which four provide traditional voice services. The remaining six operators use their licenses to provide broadband-based Internet access.
Applicants for new fixed-line licenses won't be required to make any commitments on their roll-out timetable, coverage or their capital expenditure, the regulator said.
"In a fully open market with no preset limit on the number of licenses to be issued, the network roll-out and the level of investment by an operator should be decided by the market," Wong said.
However, Wong said the regulator agrees with some of the responses to an earlier consultation paper on the issue that a level playing field must be ensured between the new operators and the existing ones - some of which have performance commitments beyond January 2003.
Thus, "we agree to waive all performance commitments of existing FTNS (fixed telecommunications network services) licensees that will be due on or after Jan. 1, 2003," Wong said.
This will be applicable to the five broadband network operators who where allocated FTNS licenses in early 2000.
In the fully liberalized market, the 22 external FTNS license holders which operate cable- or satellite-based network facilities to provide international telephone services in Hong Kong will be allowed to provide their own backhaul circuits to connect the landing points of their external facilities with their external gateways.
However, if they want to connect their network to Hong Kong customers or supply backhaul capacity to other operators, they will have to apply for a fixed-carrier license, the regulator said. In that case they will be subject to the same license criteria as the new fixed-line applicants, including the provision of public telecom services both at the wholesale and retail level.
"A competitive market will best facilitate the decisions of the external FTNS operators on the 'build' or 'buy' option," Wong said.
Wong also noted that Hong Kong has benefitted substantially from the liberalization of the fixed-line market so far. Customers saved a combined HK$9.4 billion on the charges for international direct dial services in 1999 and 2000 as a result of liberalization, he said.
Also, the number of broadband subscribers increased sharply to 543,000 in October 2001 from 51,000 in February 2000, and the average monthly rental of broadband services is one of the cheapest in the world at around HK$200, OFTA noted.
While there will be no fixed requirements for possible newcomers to the market, Wong said OFTA will take into account "the benefit of the proposed network to the community" when considering the license applications.
This will include the type of services to be offered, the intended coverage areas, how reasonable the business plan is, and the financial capability of the applicant to finance the rollout plan. "As a safeguard, these key elements...will be incorporated as license conditions," Wong said.
The fact that each new applicant will be required to build a network of its own will also ensure that "only serious players" will be granted a license, Wong said.
Hong Kong began liberalizing its fixed-line market in 1995 when it granted three new licenses. Until then, the former Cable & Wireless, which has since been bought by Pacific Century CyberWorks Ltd. (PCW), had the monopoly on fixed-line services.
The three additional operators, Hutchison Global Crossing Ltd., New World Telephone Ltd. and New T & T Hong Kong Ltd., have only been able to capture a marginal portion of the market, however. According to market watchers PCCW still holds around a 90% share, making further liberalization a key issue for the regulator.
Apart from the five wireless fixed licenses granted to broadband providers in 2000, Hong Kong Cable Television Ltd. was also permitted to offer telecom services over its cable network that same year.
-By Anette Jonsson, Dow Jones Newswires; 852-2802-7002; anette.jonsson@dowjones.com
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