THE Government, through the Office of the Telecommunications Authority (OFTA), says it is aiming to strengthen Hong Kong's role as a regional communications hub by introducing competition into the fixed-line market. According to the Director of Telecommunications, Alex Arena, the telecommunications industry is on a government-aided path to 'normalisation,' boosted by moves to liberalise formerly restricted communications sectors around the world. 'Soon it will be accepted as conventional wisdom that telecommunications is not a particularly special industry that somehow needs to be shielded from normal market mechanisms,' he said. 'What has been special about telecommunications is that an elaborate fabric of arguments has been erected to justify special treatment and, thereby, condone monopoly provision. 'As surely as the Berlin Wall has collapsed that fabric of argument is now in tatters. But the legacy of monopoly prevails. Thus the role of government is to clearly establish the policy goals; to create a clear and known regulatory environment; and, having cleared a path, to keep out of the way.' It is early days in the reform process for Hong Kong but Mr Arena believes the ground work has been laid for a competitive fixed-network market. 'The regulatory structure is in place and OFTA is prepared to use its powers to keep the path clear. But I must stress that it is not OFTA's role to take sides,' he said. Global developments could not be ignored in examining the local situation, Mr Arena said. There was a growing awareness around the world that the forces of competition led to faster introduction of new products and services. Hong Kong's position as a focal point in world trade would also have a bearing on its telecommunications development, according to Mr Arena. 'It is no accident that groups like APEC and the EC are putting telecommunications at the top of their agenda.' Another agency, the World Trade Organisation, has telecoms as a priority for a multilateral agreement by April next year. 'To quality Hong Kong operators with efficient and modern services, these initiatives are likely to translate into real opportunities for future expansion outside the territory,' Mr Arena said. He said the 'commoditisation' of traditional telephone company functions would force a rethink over tariff policies. 'With a world awash in nearly infinite capacity at nearly zero incremental cost, what sustains a high per minute tariff?' he asked. As markets are opened up, telecom companies will face opportunities as well as challenges. A recent telecommunications review in The Economist said the competition which resulted from opening previously closed telecom markets to new entrants was 'an odd sort' because so much of it relied on using the incumbent monopoly's existing network. 'The greatest threat to the investment made by new entrants everywhere is that their competition will achieve the very goal that governments hope for: a sharp drop in the tariffs charged by the main operator.'