With monopoly days over, SAR's future depends on who gets new licences
For the Office of the Telecommunications Authority (OFTA), it was a year marked by several landmark events.
In February, the World Trade Organisation Basic Telecommunications Agreement became effective, helping bring the issue of Hong Kong's relative competitive position in telecommunications to the forefront of government policy.
The highlight of the year was the surrender of Hongkong Telecom International's monopoly licence on March 31.
The deal was reached after long negotiations leading to the Framework Agreement between the Government and Hongkong Telecom.
The agreement brought an early end to Telecom's monopoly over IDD traffic in exchange for a controversial $6.7 billion pay-out. Economic benefits were estimated at more than $17 billion, the projected impact of lower-priced competitive services on other sectors of the economy.
How telecoms will shape up in the future will be partly determined by the results of the Government's 1998 Review of Fixed Telecommunications. OFTA is advising the Information Technology and Broadcasting Bureau on the Review, and Director-General of Telecommunications Anthony Wong Sik-kei said he hoped it would be finished by September.
This would allow time for the issue of international simple resale (ISR) voice traffic licences in October. (ISR services involve a provider buying international line capacity and reselling it.) ISR for voice will be offered on January 1, but there are questions over how open the market should be. In its consultative paper, the bureau said its preference was not to limit the number of new ISR licences offered, subject to appropriate interconnection agreements being reached.
Mr Wong said there was a tendency to issue more licences in addition to those held by the existing fixed network operators, but how many had yet to be decided.
'There are two main different views on ISR,' he said. 'One is that the Government should open it up because there is no technical reason why it should not allow more operators to come in.
'There is another school of thought that the Government should not open up the market too quickly because it will affect investments in the market. We have to look at all these arguments,' he said.
'In any case, we do not want anybody to have a head start over anybody else. If you are going to open up the market, everybody has to be able to start at the same time.' As to the argument that the new fixed operators needed protection from new ISR competitors to justify their investment in fixed network facilities, Mr Wong said: 'They have been in the market for three years already. They have built up a customer base and all their network facilities. And the licences they were granted were for local services.' Apart from ISR, the Review is looking into whether to issue fixed network licences in addition to the four currently in force and how to open up international gateway services (just relinquished by Hongkong Telecom International) in 2000.
These gateways - Hong Kong's telecommunications links to the rest of the world - are the submarine cables, satellite links and overland cables to the mainland that need to be made available to service providers other than HKTI.
OFTA recently prosecuted several companies for illegally providing gateway services. One was using microwave transmission into the mainland from the New Territories and another was charged with unauthorised resale of international private leased circuit capacity.
In the mobile sector, OFTA approved the acquisition of Pacific Link by Hongkong Telecom and of P-Plus by SmarTone.
More consolidation seems likely.
Mr Wong said all proposed acquisitions would be judged on their merits but, as a general rule, OFTA would not allow one company to hold more than one licence of a particular type.
