Slow to act: Hong Kong government is the real laggard when it comes to improving broadband speeds for all

Robert Clark says given Hong Kong's resources and compact size, the government must pledge, as others have done, to ensure fast broadband access for all - starting with an overhaul of the dismal service in rural areas

PUBLISHED : Saturday, 24 October, 2015, 9:30am
UPDATED : Monday, 26 October, 2015, 9:08am

Hong Kong rightly enjoys a reputation as one of the most wired cities in the world, ranking at or near the top in many digital categories. Internet users enjoy peak download speeds of 94.8 megabits per second (Mbps), behind only Singapore (108.3 Mbps), according to the Akamai global survey, while the city's addiction to smartphones is fed by the availability of four mobile broadband networks. Just under a third of the city's 16.9 million mobile service subscribers are 4G users.

READ MORE: Lack of broadband regulation is 'threat to Hong Kong's status as a world city'

These numbers are testament to the healthy competitive environment created by the government and the regulator Ofca, as well as our affinity for gadgets and the always-on lifestyle.

But after 20 years, the industry rules are showing signs of wear. There are gaps in the network infrastructure, in the competitive environment and in consumer outcomes that can no longer be ignored.

Dealing with market failure is one reason why we have an industry regulator

This is most evident in the roll-out of next-generation broadband networks. It is an issue that many governments are grappling with. The scale and cost have led to some governments investing heavily in these networks. It is to Hong Kong's credit that we have gone most of the journey under the power of competition.

Today, the city's leading telecommunications operator, PCCW, reports that 87 per cent of buildings are fibre-ready, capable of supporting 100 Mbps, while 82 per cent of homes are fibre-ready.

But that leaves a gap of 13 per cent of buildings without fibre. At the same time, some 13 per cent of households have a choice of just one broadband provider, according to Ofca figures.

That is to say, in an industry driven by competition, nearly one in every eight Hong Kong households is subject to a de facto monopoly. Of course, the vast majority of these households are in rural areas, where the population is less and the network construction costs are much higher. But as there is no competition, the incumbent provider has little incentive to invest further. This is where our transition to next-generation broadband stalls.

The most salient example is the outlying islands, all of which are serviced by just one network, PCCW's. A survey by the Islands Broadband Concern Group in May found that the average download speed in Lamma, Cheung Chau, Peng Chau and South Lantau was 4.6 Mbps - one-20th of the city-wide average. Unfortunately, faced with this yawning digital divide, the government and Ofca too often use the light-handed regulation as an excuse not to take action.

READ MORE: Hong Kong's 'digital divide' forcing many to turn their back on laidback Lamma

The fact is, it is not economic for PCCW rivals such as Hutchison Global Communications and Hong Kong Broadband Network to build fibre access networks in those locations. It is absurd for government officials to claim that it is a "commercial decision" by those telecoms operators to not enter the market.

This is in contrast to other leading economies, where regulators acknowledge it is their role to supplement the workings of the market.

As the Post reported recently, the US Federal Communications Commission has set a minimum standard of 25 Mbps download. The Australian "National Broadband Network" project has committed to a 25 Mbps minimum for all households. Early this month, it launched a A$1.8 billion (HK$10 billion) satellite to provide high-speed broadband access to 400,000 remote households. When it starts service in mid-2016, people in the Simpson Desert will enjoy as much as 12 times the connection speed of those on Lamma Island.

Hong Kong doesn't need to launch a satellite. But the US and Australian examples demonstrate something that Hong Kong does need, which is political will.

The competition-based policy, which has worked well in most of Hong Kong, has failed in these outlying areas, and where competition has failed, it is up to the telecoms industry regulator to step in. Dealing with market failure is one reason why we have an industry regulator.

The telecommunications industry has a well-tried solution, namely a universal service obligation, where the industry as a whole bears the cost of providing uneconomic services. That ensures the dominant carrier does not bear the whole cost.

Hong Kong already has such an agreement for fixed-line voice service and payphones, with the telecoms operators sharing the cost roughly according to their market share.

The other part is to set a minimum broadband standard as the US has done. But let's be ambitious: if the US thinks 25 Mbps is achievable across a continental land mass, a 50 Mbps minimum should be a worthy target across our compact SAR.

Instead of seeing this as a burden, we should regard such targets as a means of achieving multiple objectives: demonstrating our commitment to universal broadband access, supporting the city's goal of becoming an innovation hub, and developing the rural and island areas.

This is not a difficult or costly problem to solve. It is, however, hugely symbolic. A wealthy society comfortable with a digital divide is clearly one at ease with inequality of all kinds.

Robert Clark is a Hong Kong-based technology journalist and analyst. He recently founded the Islands Broadband Concern Group to advocate for better broadband services for rural Hong Kong