Need for competition

PUBLISHED : Saturday, 19 December, 1998, 12:00am
UPDATED : Saturday, 19 December, 1998, 12:00am

Just as price cuts in the mobile phone market are once again showing the benefits of a free market, there are alarming indications the Government may turn its back on allowing more competition among local fixed-line networks.

The three licensed rivals to Hongkong Telecom, all owned by local blue-chip companies, are certainly doing all they can to ensure this. Even property tycoon Li Ka-shing has entered the fray, warning Hutchison Telecom may stop investing and pull out of the market if more competition is allowed.

Having been given a three-year grace period in which no new rivals were allowed, the trio have managed to secure less than two per cent of the local fixed-line market. Now, with Hong Kong required to review the issue under its World Trade Organisation obligations, they are looking for excuses to extend their position.

Their claims to have been impeded by the predatory tactics of Hongkong Telecom do have some substance. But this has already been partly addressed by a recent agreement to cut the cost of network interconnection fees and only shows the need for greater vigilance by government regulators.

It does not justify extending an arrangement that has outlived its usefulness, especially when it is at odds with the worldwide trend towards more competition and the companies concerned have failed to live up to expectations.

But there are signs the Government is planning to do just that. Last week's announcement about liberalising the local television market passed without any indication similar measures are likely for the fixed-line networks. Instead, the Executive Council is reportedly about to discuss extending the ban against new competitors.

If so, that will be bad not just for the phone market but also for Hong Kong's image. By bowing to pressure from local blue chips, the Government will be suggesting once again that big business can get its way at the expense of the consumer.