Discounters in call-back war to face rival

Hongkong Telecom is to emulate its rivals and offer its own 'call-back' service, in an attempt to slow the erosion of its customer base in the long-distance call market.

The company already offers cheaper rates using call-back to its CSL mobile service customers.

Director of regulatory affairs Keith Bernard said the company hoped to start a fixed-line version of the service soon.

'Call-back is something we do not offer to customers. We want to add it to our range of services,' he said.

International traffic placed through the territory's call-back operators uses computers to reverse the origin of the calls, generally to the United States, utilising cheap bulk line rates offered by US operators.

The international 007, 008 and 009-type services offered by New T&T, Hutchison and New World Telephone, which largely use call-back, also benefit from the system of payments imposed on Hongkong Telecom by the Government.

The company has to pay them $2.23 for every minute of calls they deliver to its international gateway.

This has enabled Hongkong Telecom's rivals to offer large discounts on international routes, undercutting its long-distance costs by more than 50 per cent in some cases.

Hongkong Telecom's share of international traffic has fallen from virtually 100 per cent to less than 80 per cent in a few months.

Mr Bernard said the company was seeking the necessary regulatory approval for the proposal through the Office of the Telecommunications Authority (Ofta). An Ofta spokesman was not available for comment yesterday.

The main reason call-back services have flourished at the expense of Hongkong Telecom is that Ofta would not allow the company to cut its own international rates for traffic that goes through its own gateway in the normal way.

That is because Ofta wants to encourage competition to a particular level in Hong Kong before it gives Hongkong Telecom free rein to cut prices.

The company's move to embrace call-back effectively means that Hongkong Telecom is trying to sidestep that barrier.

Hongkong Telecom's revenue from call-back traffic will be less than for calls placed through its network international gateway.

Mr Bernard said the pricing would be competitive relative to its rivals.

However, the ability to offer discounted rates would give Hongkong Telecom extra bite in the present environment of fierce competition, putting it in a better position to hold on to and attract customers.