Ruling on PNETS creates turmoil
INTERNET Service Providers (ISPs) which have avoided the Public Non-exclusive Telecommunication Service (PNETS) licence fee face a period of turmoil after a statement last week from Director of Telecommunications Alex Arena.
Internet access, including World-Wide Web access, now has to go through numbers with a '300' prefix and all are subject to the PNETS charge payable to Hongkong Telecom, currently set at nine cents per minute.
The charge will cut into the already fine margins of some ISPs, which offer Web access for as little as $10 per hour. Many ISPs will have to convert lines to adjust to last week's ruling.
Star Internet, for example, has advertised numbers starting with a '2' as the ideal way to access the Web and thousands of customers - mostly first time users - will need to change over.
Star operations director Billy Tam said all the company's lines would be converted to '300' lines after the OFTA statement. He said Star was not concerned about any expense involved: 'We treat it as an investment.' Many ISPs had offered dial-in services on both '300' and '2' numbers and customers tended to pick the cheaper option.
On Saturday, as the PNETS announcement was making its way through the Government Information Service, Star Internet was offering, via its home page, four numbers starting with '2' with 256 lines and only one '300' number with 64 lines.
'For saving your money, you can dial the 2XXX-XXXX lines for the World-Wide Web if you do not need to read E-mail,' Star said.
Mr Arena said ISPs giving access to the World-Wide Web had to pay the PNETS charge as they were offering telecommunications services.
Some ISPs had argued that Web access was not a public telecommunications service or, if it was, it should be exempted from the charge, but Mr Arena said it fitted the category as a service 'provided for use by members of the public for the transmission or reception of messages'.
In providing Web access, an ISP was 'basically operating as a node to convey messages between WWW servers and the ISP's customers. Performing in this mode, ISPs are therefore operating a public telecommunications service', Mr Arena said.
Private networks are not liable to PNETS charges. Mr Arena said an ISP could escape liability for PNETs charges only by demonstrating that it exercised editorial control over the content of its network He said the Telecommunications Authority was reviewing the level of the PNETS charge and the way it was measured.
Another review, examining Hongkong Telecom's price control arrangement, could also have an impact on the PNETS charge but Mr Arena said he had 'no alternative but to apply the existing law as it is written and to ensure that it is applied uniformly across the industry'.
Last week's announcement caps a controversial period during which some ISPs, including Asia On-line, have invested in '300' lines only to see competitors continuing to service customers through '2' services.
Asia On-line had pledged to stop paying PNETS charges if there was no clarification statement from OFTA by last Friday. The statement was released on Saturday.
'We would like to think we got it out faster,' said Michael Dunn, vice-president, marketing for Asia On-line. He said the company objected to the imposition of PNETS charges but was pleased the issue had been cleared up.
OFTA said Hongkong Telecom would deal directly with the ISPs to ensure only '300' numbers were used and it would be required to carry out the change over 'in a quick and fair manner', for those ISPs with insufficient '300' lines.
Mr Arena said Hongkong Telecom was 'permitted' to cut off ISPs which did not pay their bills, but would need to give 14 days notice both to the ISP and to OFTA which would then advertise the pending disconnection, allowing customers time to change to a new operator.
After complaints from some ISPs that Telecom's charging and metering methods for PNETS were unfair and inaccurate, OFTA has scheduled a workshop of ISPs for tomorrow to discuss the matter.
The OFTA statement on PNETS is available at OFTA's home page at the URL http://www.ofta.gov .hk