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The telecommunications industry in Hong Kong is finally starting to show some of the dynamic characteristics common to other areas of business, although the basic service market is still heavily dominated by Hongkong Telecom.

 According to the Consumer Council, Hongkong Telecom has a 99 per cent share of the basic telephone service market and 88 per cent of the market in outgoing international calls.

   People are beginning to speak of Hong Kong as a competitive market compared with the closeted monopoly it was until recently, granted by government decree to Hongkong Telecom.

   Three new players entered the local fixed network telephone market in July 1995: Hutchison Communications, New T & T Hong Kong and New World Telephone.

  With free local calls and low rentals already offered by Hongkong Telephone, the most visible competition so far has been in the international call market.

 All three new entrants have launched international services, based on unique three digit international access codes. Hutchison has 008, New T & T 007 and New World Telephone 009.

     Because Hongkong Telecom has retained its exclusive licence over international access until the year 2006, customer calls from all three new service providers have to pass through the Hongkong Telecom International gateway.

   Another form of competition in the international market comes from Callback operators - where an outgoing call is transformed into an incoming call for billing purposes, taking advantage of anomalies in the international accounting rates nations use to settle telecom bills.

    The Office of the Telecommunications Authority (Ofta) has given the green light to these services, issuing 12 licences since May 1993, including four in 1996 up to the end of March.

   Callback operators have already secured 5 per cent of the market in outgoing calls, according to the Consumer Council. Hong Kong Telecom's 88 per cent of the outgoing call market is also under attack from the three new fixed network operators and mobile operators which together account for about 7 per cent of outgoing international calls.

     Calls between China and Hong Kong have not been growing as fast since the Chinese government launched its austerity drive, but they remain the bulk of international calls between Hong Kong and the outside world.

    There will be more competition in the area of international traffic in future.

     In April, Director-General of Telecommunications Alex Arena outlined Ofta's stance on Hongkong Telecom International's (HKTI) franchise.

     The Government has said it would honour the licence but open up parts of the international market not covered according to its interpretation of the licence.

    Areas of liberalisation include: Simple resale of HKTI's international private leased circuits for fax and data services; Virtual private networks for companies and organisations' internal communications; Video-conferencing services; Mobile satellite services. 'Confirmation that these areas may be liberalised will bring about benefits to consumers in terms of lower prices, better quality and wider choices,' Mr Arena said. However, international simple resale of voice telephone services and video-telephone services connected to the public telephone networks fell within the terms of HKTI's licence and no competition would be allowed, Mr Arena said.

  Steady growth has continued in the telephone services market over the past 12 months. At the end of February this year, there were 1.97 million residential lines in Hong Kong and an estimated 4.25 million telephones in use, according to Ofta. Business lines totalled 1.29 million.

  At the end of last year, the comparative figures were 1.28 million business lines, 1.96 million residential lines and 4.23 million telephones in use.

   The market in basic telephone services is mature in the sense that anyone who wants a telephone capable of making local and international calls already has one.

    The waiting time for a new line is a matter of days and the network is more than adequate to cope with projected growth. All these basic numbers have been rising steadily for the past decade, along with the population and the intensity of economic activity.



Competition slowly creeping into territory's telecommunications industry