Wharf T&T's position is clear in the continuing debate over mandatory Type II interconnection, through which the Office of the Telecommunications Authority (Ofta) requires leading player PCCW to lease part of its network to smaller rivals. Wharf wants to retain access to PCCW's loop, which it uses for about 50 per cent of its lines. However, the message the fixed-line operator carries in its 'Haves-and-Have-nots' advertising campaign seems conveniently opaque. The impression given is that the advertisement has been paid for by a big-hearted benefactor. A Wharf spokesman characterised the campaign as a 'public service' to rectify consumer misunderstandings. The message, basically, is that regulatory change to the Type II regime will result in higher bills and less choice for consumers. But Wharf may find its audience is a bit more sophisticated than that. While the regulatory debate on interconnection can appear overly complicated, it is not as simple as Wharf states. Wharf asks: 'Do you want a choice?' Yes, consumers want choice - not just for voice calls, but for broadband internet, pay-television and new interactive data services as well. And it is the combined bill that matters, rather than that for just voice calls. Ofta needs to update its regulatory framework to provide incentives for such converged offerings. The telecommunications market in Hong Kong and globally has undergone a sea change since regulations were first devised. It has been eight years since Wharf, New World Telecom and Hutchison Whampoa received licences to build fixed-line networks, and the right to interconnect through PCCW's local loop. Hutchison Whampoa chose to build its own network while Wharf and New World relied substantially more on PCCW's. PCCW's strongest argument for a repeal of Type II interconnection is the disincentive it provides for investment in network upgrades. City Telecom and Hutchison are showing that proprietary networks can be built from scratch and provide increasingly effective competition. Hutchison has chosen to build an internet protocol-based network. As the technology continues to improve, this has appeared to be a prescient choice. Once business customers buy an internet phone, some plans reportedly offer unlimited video and IDD calls at $100 a month. That choice may well be extended to residential users through Hutchison's sister firm, Cheung Kong (Holdings). It would be easier to sympathise with Wharf's position if a repeal of interconnection rights left it high and dry. But for the past 10 years it has had its own cable backbone. It still has the commercial choice to offer voice calls. Ultimately, Wharf will have to realise the regulations are about to catch up with change and competition. Voice calls are only likely to become more commoditised. Operators which want to prosper will have to make their backbone infrastructures work harder and offer a bundle of competitively priced and innovative value-added services. No amount of advertising will change that.