The government aims to issue new licences for internet telephony services by the end of the year but not before it has held a second round of consultations with players in the industry. Director-general of telecommunications Au Man-ho yesterday said the Office of the Telecommunications Authority (Ofta) would consult the industry next month on the future licensing conditions and fee structure for 'service-based operators' - those who do not own a telecommunications network. Concluding the first round of consultations launched in October last year, Ofta said the existing nine licensed fixed-line carriers could offer voice over internet protocol (VoIP) services without the need for new licences. Fixed-line operators such as Hong Kong Broadband Network, Wharf T&T and New World Telecom have provided VoIP services since last year. However, it is proposed that service-based operators and fixed-line carriers will be licensed under a two-tier system. Class one VoIP providers will have to offer voice services that are equal to conventional telephone services - in other words, they must include services such as 999 emergency calls and a back-up electricity power supply. VoIP providers that do not offer conventional telephone services will be regulated less stringently, but they must declare themselves class two providers on all marketing material. 'Fixed-line operators currently offering VoIP services but which do not cover all the features offered by conventional land lines need to review carefully which class of service they belong to,' Mr Au said. While the new licensing framework is intended to encourage more 'service-based' operators to compete with fixed-network carriers, analysts doubt whether it will create a level playing field for them to make a profit. This is because Ofta also proposes that serviced-based companies pay a fee to fixed-network operators acting as hosts to route the voice traffic to and from the conventional telephone network for them. 'Under this commercial arrangement, the host fixed-line carrier can guarantee quality service provided by the serviced-based operators,' Mr Au said. However, analysts are sceptical because the fees will cut into the profit margins of serviced-based players, while conventional fixed-line voice services are already cheap. Raymond Mok Wai-man, Wharf T&T's vice-president of finance and business administration, also said that the new licensing framework would encourage more fixed-network carriers to offer 'triple-play' - the bundling of VoIP, pay-television and broadband internet for a lower price than if purchased separately. Service-based operators cannot offer 'triple-play' as they do not have their own networks.