New T&T calls for action against Telecom

PUBLISHED : Monday, 05 October, 1998, 12:00am
UPDATED : Monday, 05 October, 1998, 12:00am

New T&T, the telecommunications arm of Wharf (Holdings), has urged the Government to investigate and punish what it calls Hongkong Telecom's 'anti-competitive behaviour', and to open the residential fixed-line service market up further to other operators.

The calls are contained in New T&T's submission to the Information Technology and Broadcasting Bureau in response to its review of the fixed telecoms market. The deadline for consultation on the review was last Saturday.

New T&T chairman Stephen Ng Tin-hoi yesterday urged the Government to force open 'the last mile' - the final cable connection from a telephone network into customers' homes which is controlled by Hongkong Telecom - to remove the 'single-biggest bottleneck blocking the new operators' market penetration'.

'The lack of competition and the scrapping of the price cap for residential fixed-line services after 2001 will force the public to pay a high price,' Mr Ng said.

New T&T's submission claims the Government is 'sitting on a social time bomb of crisis proportions' when the price cap on Hongkong Telecom's monthly rental for residential fixed lines is lifted.

'Hongkong Telecom will be free to charge whatever price it wishes and most residential customers in Hong Kong . . . will not have any choice when that happens,' it said.

Since the market for local calls was opened up in 1995, New T&T claims the three new operators - itself, Hutchison Whampoa and New World Telephone - have won a market share of less than 2 per cent.

'There are less than 0.5 per cent of Hong Kong households which are customers of a telephone company other than Hongkong Telecom,' New T&T said in the submission. 'This is unlikely to improve much unless something drastic is done immediately.' Mr Ng said that in the United States, the non-dominant telephone companies had collectively achieved less than 3 per cent market share, but there was regulation in the US to prevent prices rising excessively.

Hongkong Telecom has announced its monthly rental for residential fixed lines will rise by more than 30 per cent from $69 to a price cap of $90 on January 1.

The cap will increase to $100 on 1 January, 2000, and rise to $110 on 1 January, 2001. It will be completely lifted after 2001.

New T&T's submission also urges the Government and legislators to empower the Telecommunications Authority to be more proactive in investigating Hongkong Telecom for 'anti-competitive behaviour' and 'abuse of dominance'.

'There is already no shortage of competition in external services and there is reasonable competition in business fixed lines,' the submission said.

'What is urgently lacking is effective competition in residential fixed lines and abuse of dominance is the foremost reason for this problem. That is where the regulator's attention should be focused.' Mr Ng said the other operators had also complained to the Government but investigations had been too slow and the penalties not high enough.

In June, Hongkong Telecom became the first company found guilty of widespread anti-competitive practices and was fined the largest sum allowed under the law - $20,000 for more than 20,000 offences.