Two more fixed-line operators oppose policy

Two more fixed-line operators have joined the chorus against the government's mandatory Type II interconnection policy, according to a consultation paper from the Office of the Telecommunications Authority (Ofta).

Hutchison Global Communications (HGC) and City Telecom, along with dominant operator PCCW, are opposed to the policy, while remaining operators Wharf T&T and New World Telecommunications said the interconnection was necessary.

The policy was introduced in 1995, when the government liberalised the telecommunications industry. It required PCCW, as the then monopoly operator Cable & Wireless HKT, to lease its local loop access to rivals in order to facilitate competition when other new entrants were in the initial stages of building their networks.

During its three-month consultation, Ofta received 10 submissions from operators, industry groups and research institutes as to whether it needed to change its Type II interconnection policy in regard to narrowband and broadband services.

The submissions were made public yesterday.

More than half of the submissions suggested that Ofta should consider phasing out the interconnection arrangement.

In particular, HGC, which invested $10 billion establishing the second-largest network in Hong Kong, said the existing policy discouraged new investments.

'If a 1996 entrant, which has not seized the opportunity to invest in its customer access network infrastructure, is allowed to continue to have shared use of other operators' customer access network at a regulated price, there will not be much incentive for it to invest,' HGC said in its 46-page submission.

HGC said Ofta should strive to balance investment incentives with consumers' interests.

New entrant City Telecom said Ofta should allow Type II interconnection in genuine bottleneck situations where operators required access to the facilities to deliver services to end customers.

'Our practical experience [of] network roll-out over the past three years is the best proof that bottleneck difficulty does not arise for other points of interconnection,' City Telecom said.

Hong Kong Telecom Users Group, which represents users' interests, agreed that Type II discouraged further investment, but said the interconnection charge was too high.

However, New World Telecommunications said the interconnection policy helped utilise the existing network and returned the most benefits to the consumer, although there was a significant problem implementing the policy.