Regulator says HK Broadband's piggy-back operation offering cheaper long distance calls over the internet is fair and lawful The telecommunications regulator has not been swayed by PCCW's claims of foul play and has defended the legality of smaller rival City Telecom's (CTI) piggy-back voice over internet protocol (VoIP) phone service. In response to PCCW's complaints about CTI unit Hong Kong Broadband (HKBN)'s VoIP residential phone service, the Office of the Telecommunications Authority (Ofta) said yesterday that such services were 'lawful' and 'fair'. 'After our comprehensive study on [CTI's] IP phone service, we conclude HKBN's IP phone meets all its licence conditions,' said Au Man-ho, the regulator's director-general. To add fuel to the fire, mobile operator SmarTone yesterday launched another form of broadband phone service - one that allows its mobile users to make international calls over the internet, thus avoiding IDD charges - that the regulator also said was legal. 'As a regulator, we're technology neutral. Whether the voice service is offered over traditional circuit-switched technology or new technologies, as long as the provider complies with its licence conditions, we should not stop them,' Mr Au said. The regulator's comments will disappoint PCCW, which has been trying to stop HKBN from offering residential phone services, which allow users to make and receive live voice calls via the internet simply by plugging an adapter into their broadband connection, and in the process save themselves more than half of the traditional fixed-line phone charges levied by PCCW. In a letter sent to the regulator a few weeks ago, PCCW said HKBN's service 'falls outside the scope' of its fixed-line licence and therefore was 'unlawful and must be stopped'. But instead of bowing to PCCW's demands, Ofta is considering relaxing fixed-line licence conditions to accommodate evolving technology. 'Our licensing terms and conditions were drafted a long time ago. That may hinder the development of new technologies. We will review and consult the market on whether some of the existing [fixed-line] licence conditions should be relaxed,' Mr Au said. The regulator will launch a consultation on IP phones in the next couple of weeks. Mr Au defended his agency's decision, saying that since broadband subscribers had paid for their connection they should be allowed to freely access any internet content, services or applications. 'This is just like browsing an internet website. People pay for the broadband connection to browse internet websites; some content might need to be paid for and some is free,' he said. 'There is no question of a subscriber or the VoIP service provider 'free-riding' on the broadband ISP, [although there could be a] lack of service in this form of VoIP service.' Mr Au urged operators to be more forward looking by leveraging on IP-based technology to derive more innovative services. 'IP phone is not just a challenge but also offers a great deal of business opportunities. It's a global trend for operators to move to IP-based technology. IP networks can offer telephone services that conventional circuit-switched networks cannot,' he said. SmarTone's new service, OwnNET, promises international calls over the company's broadband network at a fixed monthly tariff. Customers can form personal networks with overseas fixed-line users, who each must buy a broadband connector costing about $600 to connect to the internet. Service charges range from $148 for 1,000 minutes to $328 for 4,500 minutes. On top of the monthly tariff, SmarTone users also pay a connection fee of $98 per month. Meanwhile, Wharf T&T is testing VoIP services and is preparing for a launch at the end of the year.