RESTRICTED
GENERAL AGREEMENT S/NGBT/W/3/Add.16
21October 1994
ONTRADE INSERVICES
(94-2143)
Negotiating Group onBasic Telecommunications Original: English
COMMUNICATION FROM HONG KONG
Response toQuestionnaire onBasic Telecommunications
Theattached communication iscirculated attherequest ofHong Kong toMembers ofthe
Negotiating Group onBasic Telecommunications.
_______________S/NGBT/W/3/Add.16
Page2
PartI
Definition andMarket Structure
Definition
1. What areconsidered tobebasic telecommunications under yourregulatory regime? Howare
theydefined? How doesyourregulatory regime define thatwhich isnotconsidered basic
telecommunications?
Atpresent, thereisnodefinition forbasic telecommunications inourtelecommunication law.
Inpractice basictelecommunications arecommonly understood tomean public carrier networks
(i.e., public telecommunications transport services) orservices which involve real-time and
direct transmission oftelecommunications messages (e.g., voice telephony, telex, telegram,
etc.)fromsenders toreceivers. Anyservices overandabove these arenotconsidered asbasic
telecommunications.
2. Does yourregulatory regime distinguish between networks (facilities) andservices indefining
basic telecommunications? Ifso,howisthisdistinction made?
No.
3. Arethereanynetworks orservices which would beconsidered tobebasictelecommunications
within thescope oftheGATS definition which would notbesoconsidered byyournational
definition? Ifso,whatarethey?
No.
Market structure
4. Listanybasic telecommunications sub-sectors orcategories which arereserved tobesupplied
bymonopoly orexclusive supplier(s).
(a) Atpresent, thesupply oflocalpublic telephonic communications inHong Kong isunder
anexclusive franchise which covers onlybasic telephony bywire. Thisexclusive
franchise willexpire on30June1995. TheGovernment hasannounced itsintention
tolicense three newfixed network service operators.
(b) Thelocaltelexandtelegram services areoffered exclusively byHong Kong Telecom
International Limited until30September 2006.
(c) Anexclusive licence wasalsogranted toChubb Electronics (Hong Kong) Limited to
provide afirealarm transmission system forrelaying firealarm signals. Thefranchise
doesnothave anexpiry datebutitcanbeterminated bytheGovernment orthe
Company bygiving theother party notlessthanthree years’notice.
(d) Asregards international sideexternal circuits andservices areoperated under the
exclusive licence granted toHong Kong Telecom International Limited (HKTI) which
willexpire on30September 2006. Theexclusive services include circuits forexternal
public telecommunications services, telex andtelegram services, external public
telephone services, external leased circuits fortelephone, telegraph, dataandfacsimile,
coast stations andcoast earth stations ofthemaritime mobile andmaritime mobile-S/NGBT/W/3/Add.16
Page3
satellite services, aeronautical stations oftheaeronautical mobile andmobile-satellite
services andinternational telecommunications transit services. Theexclusivity also
includes transmission andreception oftelevision/sound programmes andprovision of
private circuits toandfromHong Kong. However thesetwotypes ofexclusive services
maybemodified bytheGovernment.
(e) Alicence wasgranted toWharf Cable Limited foroperating atelecommunications
network forsupplying cable television services. Theexclusivity willexpire inJune
1996.
5. Doesyourregime designate oneoralimited number ofmonopoly/exclusive suppliers tosupply
anybasic telecommunications nationally, onageographical basis, orforparticular market
segments? How isit(orthey) constituted (e.g. government ministry oragency, wholly
government owned corporate entity, company partly owned bythegovernment, privately
owned)?
Theexclusive services granted cover theentire areaoftheterritory. They arealsogranted
forparticular market segments (asgiven inanswer toquestion 4).Allexclusive operators
areprivately owned companies. Government hasnoshareholding inanyofthese companies.
6. Isforeign equity participation orownership ofmonopoly orexclusive suppliers permitted?
Ifso,whatisthemaximum percentage share allowed andwhatisthecurrent levelofidentifiable
foreign participation?
There isnolimitation onforeign equity participation orownership oftheexclusive suppliers.
7. Ifyourregime isgenerally characterised asnotpermitting competition, please indicate
(a) ifcertain activities orcategories ofwhatcould beconsidered basictelecommunications
arenotreserved tothemonopoly, e.g.facsimile, telex, datatransmission, mobile,
satellite services;
(b) arethereanyothermeans through which foreign suppliers ofbasictelecommunications
are/or mayparticipate inthesupply ofbasic telecommunications, e.g.sub-contract
orbuild-operate transfer arrangements withthemonopoly suppliers.
(a) Public telecommunications services which areoutside thescope ofexisting franchise
canbeprovided onacompetitive basis, subject tocertain technical constraints and
availability ofradio spectrum. These include public radio paging service, public radio
community repeater service, cellular phone andmobile dataservices.
(b) Foreign suppliers mayapply toprovide competitive services mentioned inanswer to
(a)above. They mayalsoconsider toinvest inthose companies which havelistings
inlocalandoverseas stock exchanges.
8. Please listandbriefly describe anyintergovernmental agreements, bilateral orotherwise that
yourgovernment hasentered intorelating tothesupply ofbasic telecommunications networks
andservices.
Nil.S/NGBT/W/3/Add.16
Page4
PartII
Competition
Forthesub-sector andcategory headings insections AandB,thefivequestions listed below
should beaddressed foreachsub-sector andcategory thatyoudescribe. Recognising thatsubsectors
andcategories mayoverlap, please keepinmind thatitistheintroduction ofcompetition andtheway
ithasbeenintroduced thatshould determine howtoselect which sub-sectors andcategories covered
inyourresponses.
(i) Overview. What arethemain government policies andregulations regarding the
competitioninthissubsectororcategory?Canforeignsuppliersparticipateinthesupply
ofbasic telecommunications inthissubsector orcategory?
Following acomprehensive review ofpolicy in1992, theGovernment announced its
decision tointroduce competition tothelocalnetwork. Subsequent totheinvitation
ofapplications forlocalnetwork licences inOctober 1992, theGovernment announced
itsintention tolicense threenewoperators toprovide localfixed services except those
operated under exclusive licences. Thenew licences shall cover sub-sectors
‘a’,’b’,’c’,’f’,&‘g’.Sub-sectors ‘d’&‘e’willstillbeoperated under anexclusive
licence.
Telecommunications services which areoutside thescope oftheexisting franchises,
including public mobile radio-telephone services, public mobile dataservices, public
radio paging services, public community repeater services, maybeoperated byservice
suppliers onacompetitive basis. Thepolicy oftheGovernment istopromote fair
competition ofsupply ofthese services.
Asforinternational side,sub-sectors ‘a’-voice telephone services, ‘d‘-telexservices,
‘e’-telegraph services, and‘g’-private leased circuit services insection A,will
continue tobeoperated under theexclusive licence granted toHong Kong Telecom
International untilthelicence expires in2006. Asregards subsectors ‘b’-packet-
switched datatransmission services, ‘c’-circuit-switched datatransmission services,
‘f’-facsimile services and‘o’-others suchasvideo services, satellite services, the
Government isworking toestablish aclear delineation ofHong Kong
Telecommunications International ’sexclusive rights toremove anyremaining areas
ofdoubts andprovide investment certainty forboththatcompany andcompetitive
services providers.
There isnorestriction onforeign participation inthesupply inanysub-sector.
(ii) Modes ofsupply. Inyourview, howdotheGATS modes ofsupply (cross border,
consumption abroad, commercial presence, andpresence ofnatural persons) apply
tothissubsector orcategory? What kinds ofrequirements, conditions, orlimitations
areapplied inthissubsector orcategory which relate toeachmode ofsupply?
Thefourmodes ofsupply areconsidered generally applicable totheservices listed.
Theconditions/limitations attached tothemodes should bescheduled inaccordance
withArticles XVIandXVII ofGATS.
Note: Responses onmodes ofsupply should notnecessarily belimited tomeasures
which might relate tomarket access ornational treatments asdefined bytheGATS.S/NGBT/W/3/Add.16
Page5
Information provided mayhelpadvance discussion onhowthemodes ofsupply,
particularly cross border andconsumption abroad, relate tobasictelecommunications.
(iii) Market access. What kindoflimitations onmarket access areapplied? (i.e.Arethere
anyquantitative limitations on,oreconomic needs testsapplied to,thenumber of
suppliers? Arethere anylimits onthetotalvalue oftransactions, totalnumber of
operations, quantity ofoutput, orthetotalnumber ofpersons thatmaysupply basic
telecommunications orbeemployed byasupplier? Arethere anyrestrictions or
requirement regarding typeoflegalentity thatmaysupply basic telecommunications?
Arethere anylimits onforeign ownership orequity participation?)
Forlocal fixed network services, theGovernment hasplanned toissue three more
licences initially. Indeciding thenumber oflicences, theGovernment hastaken
consideration ofmarket, technical andenvironmental constraints. Itisunlikely that
additional licences willbeissued before 1995, when theposition willbereviewed.
Forother competitive services including those described insubsector ‘o’,there isno
limitation onthenumber oflicences except when there areconstraints duetoa
competing orlimited supply ofradio spectrum orother technical factors.
There isnolimitonforeign ownership orequity participation. However, inorder to
promote faircompetition thelawallows theGovernment toimpose limits oncross-
ownership inanyparticular sector ofservices.
(iv) Nationaltreatment.Whatkindoflimitationsonnationaltreatmentareinplaceextending
toforeign suppliers treatment lessfavourable thanthatfordomestic suppliers? (E.g.
Arepreferences given todomestic suppliers orrestrictions orobligations imposed on
foreign suppliers withrespect toanyprocedures orregulations, including licensing?
Arethere anylimitations onthenationality orresidency ofmanagers, directors, or
board members? Arethereanyrestrictions onforeign ownership oflandorfacilities?)
Foreign suppliers aretreated equally asdomestic suppliers except asgiven below:
Atpresent under theTelephone Ordinance, directors oftheHong Kong Telephone
Company arerequired tobebona fideresidents inHong Kong. There arealso
"nationality" requirements formanagement andadministrative staffoftheHong Kong
Telecom International. Bothmeasures arebeing reviewed.
(v) Licensing. Iflicensing isrequired inthissub-sector orcategory, briefly describe the
procedures concerned andexplain themain requirements, criteria andfeesapplied.
What aresome oftheprincipal terms andconditions onlicensees, oncealicence is
obtained?
Licencesarerequiredforoperatinganypublictelecommunicationsservices.Forservices
which willonlybeprovided byalimited number ofsuppliers, thenormal practice is
fortheGovernment toissue aGazette Notice toinvite interested parties tosubmit
applications byaclosing date.Generally, asetofguidelines willbeissued tofacilitate
interested parties toprepare theirapplications. Theapplications submitted inresponse
totheGazette Notice willbeevaluated andlicences willbegranted totheapplicants
which theGovernment considers most suitable.S/NGBT/W/3/Add.16
Page6
Inassessing theproposals forfixed network services licences, thefollowing basic criteria are
firstconsidered:
a. Financial soundness andcommitment toinvestment inthenetwork andservices;
b. technical soundness andasatisfactory grade ofservice;
c. proven managerial andtechnical expertise; and
d. aclearly workable anddefined corporate structure which minimises “deadlocks ”and
contains sensible dispute resolution procedures.
Thelicence feesaredetermined torecover theadministrative costsinvolved inregulating the
services.
Themain terms andconditions ofthelicence include:
a. Compliance oftheLaws ofHong Kong andinternational conventions;
b. Control ofinterference andobstructions;
c. Provision ofservices within theagreed scope;
d. Preparation ofacustomer chater;
e. Compliance withthenumbering plan;
f. Prohibition ofanti-competitive practices;
g. Requirement tointerconnect withother telecommunications networks;
h. Restriction oncross-ownership;
I. Requirement topublish tariffs andconditions ofservices;
j. Requirement fornon-discriminatory treatment ofcustomers;
h. Requirement topaylicence fees;and
k. Prohibition oftransfer ofcontrol oflicence without approval oftheGovernment.
Note: Licensing isintended tobeunderstood inabroad sense, toinclude processes suchas
approval, authorization, registration orcertification, asapplicable.
A. Sub-sectors
Foranysub-sectorinwhichcompetitionispermittedinyourregime(i.e.,whicharenotreserved
tomonopoly orexclusive suppliers) answer questions (i)through (v)above, asapplicable.
Thefollowing listofsub-sectors isconsidered illustrative andshould besupplemented with
anyother sub-sectors orsub-activities which youmaywishtodescribe.
a. Voice telephone servicesS/NGBT/W/3/Add.16
Page7
b. Packet-switched datatransmission services
c. Circuit switched datatransmission services
d. Telex services
e. Telegraph services
f. Facsimile services
g. Private leased circuit services, and
o. Other
Thefollowing aresome additional examples ofbasictelecommunications networks orservices
notexplicitly listed in(a)-(g)and(o),above, forwhich responses mayberelevant; voice/non-
voice services using domestic/international private leased circuits; cable-TV-related voice
telephone networks andservices; domestic/international satellite services andsatellite
links/capacity; analogue/digital cellular mobile networks andservices; PCSnetworks and
services; paging services, mobile dataservices; fixed line/wireless local access; local/long
distance linelinks; local/long distance switching; international switching andotherinternational
gateway facilities. Whereas some ofthese might beconsidered tofallunder (o),above, some
might alsobeconsidered tobeactivities falling within sub-sectors (a)-(g).
B. Categories
Foreachofthecategories thatfollow inwhich competition ispermitted, answer questions (i)
through (v)above, asapplicable, aswellasthespecific questions listed under agiven category.
Local/long distance/International
1. How arelocalanddomestic longdistance distinguished ordefined?
There isnodistinction between localanddomestic longdistance inHong Kong.
2. Arethere anyregulatory orother distinctions between domestic (local andlongdistance) and
international networks andservices andbetween thesuppliers ofbasic telecommunications in
these market segments? Ifso,whatarethey?
InHong Kong, wehaveadopted aregulatory boundary lineof“local”and“external ”.“Local ”
refers tobothendsofaservice arewithin Hong Kong, while “external ”refers toeither end
ofaservice isoutside Hong Kong. Theregulatory treatment ofthese suppliers aregiven in
answers toquestions inA.Sub-sectors.
Wire-based (Please refertoanswers toquestions inA.Sub-sectors.)
Radio-based (Please refertoanswers toquestions inA.Sub-sectors.)
Note: Please address alltypes ofrelevant radio-based telecommunications including satellite
links, access tosatellite capacity, VSAT, mobile cellular communications, paging, mobile data
services andother radio communication systems. Recognising thatwire-based or"fixed"S/NGBT/W/3/Add.16
Page8
networks canberadio based inpart, responses under thiscategory should relate toany
requirements specifically related toradio-based elements ofnetworks orservices.
Resale basis
3. Doyourregulations permit international resale ofprivate leased circuit capacity ifconnected
tothepublic network. Ifso,atoneend?atbothends? Under whatconditions? Isresale of
switched voice capacity permitted?
Theprovision ofexternal private circuits andexternal dedicated andleased circuits arethe
subject ofalicence issued toHong Kong Telecom International. TheTelecommunications
Authority isworking toestablish acleardelineation ofHKTI 'sexclusive rights toremove any
remaining areas ofdoubt andprovide investment certainty forthatcompany andcompetitive
service providers.
4. Isresale ofprivate leased circuit excess capacity permitted? Ifso,under what conditions?
Maybasic telecommunications beresold tomake them available tothirdparties? Forwhich
basic telecommunications isthispermitted?
Resale oflocalprivate leased circuit excess capacity ispermitted. Theambit ofpermissible
international resale isunder review.
Facilities-based
5. Maybasic telecommunications suppliers (foreign anddomestic) construct andoperate their
ownnetworks orinvest inconsortia toconstruct andoperate suchfacilities? Ifnot,what
organisations arepermitted toconstruct andoperate basic telecommunications network
infrastructures?
Basic telecommunications suppliers mayconstruct andoperate theirownnetworks ifappropriate
telecommunication licences havebeengranted bytheGovernment.
Public/non-public supply
6. Does yourregime make distinctions between suppliers ofpublic switched andnon-public basic
telecommunications? Ifso,how?
Different types oftelecommunications licences areissued topublic telecommunications and
non-public telecommunications services suppliers. Public service suppliers mayenjoy certain
rights suchasrights tolaycable inpublic areas, rights tointerconnect totheinternational
gateway andshare IDDrevenue, rights tooffer services tothegeneral public etc.
7. What basic telecommunications doyourregulations require, explicitly orineffect, tobemade
available tothepublic generally?
Voice telephony, facsimile, telex, telegram, leased circuits andcircuit/packet switched data
network services.
8. What basictelecommunications doyourregulations permit tobesupplied onanon-public basis
(i.e.notrequired tobemade available tothepublic generally)?S/NGBT/W/3/Add.16
Page9
Private mobile radio telephony anddataservices, private radio paging services, wireless local
datanetworks, etc.
9. What obligations orresponsibilities areincurred bystatus asapublic basic
telecommunications supplier andunder whatconditions? E.g.,What kinds of"common
carrier" likeobligations areimposed (e.g.withregard touniversal service), andon
whom?
Allpublic basic telecommunications suppliers areobliged toprovide reasonable services to
anycustomer. They needtocomply withtechnical standards andspecifications setoutbythe
Government.Theywillberequiredtointerconnecttheirnetworkswithotheroperators’networks
andalsotopublish theircharges. They maybeallowed tousepublic landandseabed forlaying
theircables. Onlythedominant orexclusive supplier isrequired toprovide anuniversal service.
10. What, ifany, restrictions arethere onorganising andoffering aprivate network bya
telecommunications supplier?
Telecommunications suppliers willnotbeallowed tooperate aprivate network which may
infringe therights oftheexclusive licences. They maynotenjoy other rights suchascable
laying rights, direct connection tointernational gateways, etc.
11. Istheoperation ofpublic pay-phones reserved tomonopoly orexclusive suppliers?
Thegovernment isreviewing theregulations fortheoperation ofpublic pay-phones.S/NGBT/W/3/Add.16
Page10
PartIII
Regulatory issues
Inrespondingtothequestionsinthissection,participantsareaskedtoprovidespecificreferences
tothesource orstatus ofthemeasures concerned (e.g., where possible, acitation ofthelaw,regulation,
rule,guideline, decision ordecree).
Relationship between regulatory andoperational functions
1. Doanybasictelecommunications suppliers become involved, directly orindirectly, inmaking
regulatorypolicy?enforcementofregulations?informulatingstandardsorenforcingstandards?
Government hasnoshareholding inanybasic telecommunications suppliers. However inthe
process offormulating major telecommunication andregulatory policies, theGovernment would
consult thetelecommunications industry andseektheviews ofinterested parties. Tofurther
strengthen theconsultative arrangement, fouradvisory committees have been established
specialising indifferent areasincluding numbering, consumer protection, spectrum management
andtechnical standards.
2. Isyourregulatory authority (orauthorities) alsoresponsible forformulating standards? for
enforcing standards?
TheOffice oftheTelecommunications Authority isresponsible forformulating andenforcing
standards.
3. Howmany levels ofgovernment (e.g., national, regional, state, local) haveresponsibility for
regulation affecting basic telecommunications? Please identify anddescribe relevant levels
ofgovernment authority. Arethere anyprocedures enabling suppliers toresolve questions
ordisputes theymayhaveortoappeal adecision withtheregulatory bodyconcerned? Ifso,
please describe.
The Secretary forEconomic Services isresponsible forpolicy making while the
Telecommunications Authority istheregulatory authority. Major licences forbasic
telecommunicationswillhavedisputesettlementorarbitrationprocedures.Questionsordisputes
maybesettled according tothose arrangements. Suppliers mayalsoappeal totheExecutive
Council ortheSupreme Court.
Frequency allotment orassignment
4. What aretheprocedures, requirements andcriteria applied fortheallotment orassignment
ofradio frequencies?
Assignmentsofradiofrequenciesareusuallymadethroughlicensingproceduresforestablishment
ofradio systems. Forservices where adequate frequencies areavailable, assignments aremade
onafirstcome firstserved basis provided thattheneedtousespectrum isjustified. When
onlylimited spectrum isavailable foraparticular service, invitations forapplication oflicence
areissued andspectrum willbeallocated tothesuccessful applicants together withthelicences.
TheGovernment isconsidering toadopt amarket approach ontheallocation ofradiofrequencies
toensure thatthepublic receives anadequate return onitsutilisation.S/NGBT/W/3/Add.16
Page11
Before aparticular frequency assignment ismade, anelectromagnetic compatibility analysis
isconducted toavoid interference. Ifnecessary, co-ordination withneighbouring territories
iscarried outbefore making theassignments.
5. Doforeign telecommunications suppliers receive national treatment under these procedures
andcriteria?
Foreign telecommunications suppliers receive thesame treatment asdomestic suppliers under
these procedures andcriteria.
Numbering andidentification codes
6. What aretheprocedures, requirements, andcriteria usedtoassign numbering andidentification
codes?
Anewnumbering planhasjustbeenadopted forHong Kong andthedateforthenumbering
change willbe1.1.1995. Details regarding assignment ofnumbering andidentification codes
arebeing worked outbytheGovernment inconsultation withthetelecommunications industry
through theNumbering Advisory Committee. Inprinciple therewillbetwolevels forhandling
oftelecommunications number andcode: (i)Distribution ofnumber andcodeprefix bythe
Government onablock-by-block basis. (ii)Assignment ofindividual numbers byoperators
totheircustomers.
7. Doforeign telecommunications suppliers receive national treatment under these procedures
andcriteria?
Foreign telecommunications suppliers receive thesame treatment asdomestic suppliers under
these procedures andcriteria.
Standards, typeapproval andequipment attachment
8. What types ofmandatory standards areinplace?
Various standards forlineandradio-communications equipment arecurrently inforce. These
include network connection references forcustomer premises equipment, integrated digital
access, public radio telephone andpaging equipment, andcordless telephone apparatus.
9. When astandard isunder review oranewstandard isbeing developed byyourstandards
authority, isthere anopportunity forpublic review andcomment prior toitsadoption? May
foreigners participate inthisprocess? Maytheprivate sector participate inthedevelopment
ofstandards? Ifso,how?
AStandard Advisory Committee hasbeen established togiveadvice ontheadoption and
maintenance oftelecommunications standards. Membership oftheCommittee consists of
representatives oftelecommunications users, manufacturers andservice providers. Foreign
andprivate sectors mayparticipate through theirrespective representatives.
10. What equipment issubject totypeapproval? Isself-certification allowed? Hasyourgovernment
concluded mutual recognition agreements fortelecommunications equipment certification?
Aretheyrequired forforeign produced equipment?S/NGBT/W/3/Add.16
Page12
Type approval orconformity testing isrequired forlocalorforeign produced:-
(a) radiocommunication equipment; and
(b) multi-line andtelexequipment connected tothepublic telecommunications network.
(Note: Type approval isnotrequired forsingle lineequipment.)
Testing ofcertain equipment parameters, e.g., common air-interface insecond generation
cordless telephones where fewtechnically competent laboratories exist, isbased onthe
manufacturer ’sself-declaration ofconformity. Thepossibility ofextending thistoother market
segments isbeing considered.
TheGovernmenthasnotconcludedanymutualrecognitionagreementswithotheradministrations
fortelecommunications equipment certification.
11. Howistheability toattach terminal equipment tothenetwork regulated? What restrictions,
arethere onterminal equipment thatmaybeattached tothenetwork?
Single-line customer equipment maybeattached tothepublic network without theneedfor
testing. Multi-line andtelexequipment willneedtobetested before connection canbemade.
Inallcases apublic network supplier maydisconnect anyterminal equipment ifharm iscaused
bythatequipment tothenetwork ortothemaintenance staffofthesupplier.
12. Maybasictelecommunicationssuppliersconnectedtothepublicnetworkusetheirownswitches?
Yes.Basic telecommunications suppliers connected tothepublic network mayusetheirown
switches.
13. Does thegovernment require network based suppliers topermit theattachment ofcustomer-
supplied terminal equipment?
Yes.Governmentrequiresnetworkbasedsupplierstopermittheattachmentofcustomer-supplied
terminal equipment.
Interconnection
14. Ingeneral, howisinterconnection regulated inyourregime? What aretheregulations applied?
Under theexisting law,theGovernment hasthepower todetermine theterms ofinterconnection
ifthenetwork suppliers failtoreach agreement within reasonable time. TheGovernment is
currently refining thelawtoprovide foramore rounded scheme ofadministration ofthe
interconnection oftelecommunications networks. Thisincludes:
a. Toprovide network suppliers withthestatutory rights tointerconnect theirnetworks
withother networks;
b. Togivetheregulator power todirect interconnection where oneormoreparties choose
nottoconnect;
c. Toprovide thatinterconnection arrangements shallbesuchastoenable customers to
beabletoaccess therange ofservices offered byanynetworks orservices;S/NGBT/W/3/Add.16
Page13
e. Interconnection arrangement tooccur onacomparably technically efficient basis, and
should betransparent tocustomers;
f. Suppliers tocompete witheachother onanequal basis;
g. Suppliers tobefairly compensated fortheprovision offacilities andservices toother
licensees;
h. Suppliers tohavetherighttonegotiate oninterconnection; and
i. Theregulator tohavetherighttodetermine andtovarytheterms andconditions of
aninterconnection agreement.
15. Doyourregulations require network-based suppliers toprovide interconnection forother basic
telecommunications network orservices suppliers? Ifso,please describe?
Yes.Local fixed networks andtheexternal network ofHKTI arerequired, ifdirected bythe
Government, tointerconnect withother telecommunications networks.
16. Isinterconnection between leased circuits andpublic datanetworks permitted?
Yes.Interconnection between leased circuits andpublic datanetworks ispermitted.
17. What aretherulesandregulations regarding thepricing ofinterconnection? Areinterconnection
charges setinrelation toanyprinciples( e.g.cost-oriented)? Isthere arequirement tosubmit
interconnection charges toaregulatory body forapproval? Arethese charges inthepublic
domain?Arethesameinterconnectionchargesappliedtoallsuppliersrequestinginterconnection
oraretheynegotiated onacase-by-case basis? What requirements orobligations exist to
publish, make publicly available, ortosupply detail ofinterconnection agreements toregulatory
authorities?
Government intends toallow interconnection charges toberesolved bysuppliers though
commercial negotiation. Under theproposed licensing conditions, thesuppliers arerequired
toensure thatinterconnection isdone promptly, efficiently andatcharges which arebased
onreasonable andrelevant costsincurred. Ifnegotiation breaks down, Government willhave
power todetermine theterms andconditions ofinterconnection. Under therevised law,the
Government willhavetherighttoobtain interconnection agreements from thesuppliers and
tovarytheterms andconditions oftheagreements. Thecharges arenormally notpublished
iftheyarenegotiated andagreed bytherespective network suppliers. ButtheGovernment
may, inthepublic interest, require these charges tobepublished.
Competitive safeguards
18. Whatkindsofsafeguardsdoesyourregimehaveagainstanti-competitivepracticesofmonopolies
ordominant suppliers insituations where theymaycompete withother firms tosupply certain
basic telecommunications inthedomestic market? intheinternational market?
Government istaking actions torevise thelawtoprohibit network suppliers toengage inany
anti-competitive conduct inanymarket fortheprovision ofservices orapparatus.
19. Doyourregulations distinguish between dominant andnon-dominant suppliers? Ifso,what
arethedetails andhoware"dominant" and"non-dominant" defined? ArethereanysafeguardsS/NGBT/W/3/Add.16
Page14
concerning suppliers whohavemonopoly ordominant control ofaccess tocertain market or
network segments?
Government isrevising thelawtodefine ‘dominant ’.
20. Isthereanindustry-wideantitrustpolicyand/oranytelecommunications-specificantitrustpolicy?
What aretherules andregulations regarding mergers andacquisitions?
There isnoindustry-wide antitrust law.Butthelawallows Government toimpose limits on
cross-ownership foraparticular sector ofservices. Inthecaseoflocalfixedtelecommunications
Hong Kong Telephone andanyofitsholding orsubsidiary companies arenotpermitted to
acquire more than15%ofanyother localfixed networks.
21. Arethere anysafeguards concerning basic telecommunication suppliers alsoengaged inthe
manufacturing oftelecommunications equipment? Ifso,please describe thecontent andworking
ofthese safeguards.
TheGovernment intends toamend thelawtoprohibit thepractice of“tying”or“linking ”a
product orservice ofasupplier withanother service orproduct.
Pricing-related measures
22. What istheroleofthegovernment oranyrelated agency withregard toestablishing prices
(e.g.tariffs, access charges, accounting rates) orpricing policy? E.g., doesthegovernment
setprices oraccounting rates, directly orindirectly (e.g.pricecapsorrateofreturn controls),
ordobasic telecommunications suppliers determine these themselves? What requirements or
obligations doesthegovernment setregarding prices charges bymonopoly/dominant suppliers?
orother suppliers?
Atpresent, thetariffs ofthemonopoly suppliers areapproved bytheGovernment. Aprice
capformula isnowadopted forlocal services offered byHong Kong Telephone under the
Telephone Ordinance. Under thecompetitive environment infuture, inorder toprevent a
dominant supplier fromusing itsmarket power toinhibit competition, theGovernment istaking
stepstomake provisions inthelawtoregulate thetariffs, accounting practices, anti-competitive
practices, market structure andinterconnection arrangement. Allsuppliers willberequired
topublish tariffs. Thedominant suppliers willbesubject toregulation byaformofpricecontrol.
Atpresent accounting ratesoninternational services arenegotiated byHong Kong Telecom
International withtheircounterparts inother countries.
23. Doesthegovernment require tariffapproval ornotification and,ifso,whataretheprocedures?
What requirements regarding cost-accounting areputinplace toensure transparency?
Atpresent monopoly suppliers arerequired tosubmit theirtariff revisions toGovernment for
approval. They arealsorequired topublish theirtariff onceapproval isobtained.
Underthefuturecompetitiveenvironment,allfixednetworksupplierswillberequiredtopublish
theirtariffs fortheservices operated under theirlicence. Publication willbeeffected bysending
acopytotheTelecommunications Authority, byplacing acopyinapublicly accessible part
ofitsprincipal business place, andbysending acopytoanyperson whorequests it.Monopoly
ordominant suppliers will continue toberequired topublish their tariffs inthe
Government Gazette.The Government willalsoimpose accounting practices requiring suppliersS/NGBT/W/3/Add.16
Page15
tosubmit accounts toshow therelevant costs of,andrevenue generated byeachservice.
Transparent accounting isalsorequired toensure compliance withanyprice control regime
andtoensure thatanyrevenue accruing toother suppliers isproperly dispersed.
24. Towhatextent istheprinciple ofnon-discrimination applied inpricing policy? E.g., isatariff
package suchasavolume discount targeted foraspecific group allowed and,ifsowhatare
theterms andconditions applied? Areaccounting ratesapplied onanon-discriminatory basis
between countries? Ifaccounting ratesapplied indifferent agreements arenotthesame, what
arethecriteria usedtoarrive atdifferent accounting rates? Aresome ofthesecriteria required
ordefined bythegovernment?
Anyconductwhichhasthepurposeoreffectofpreventingorsubstantiallyrestrictingcompetition
willbeprohibited, e.g.,collusive price fixing agreement, exclusive arrangement, bundling
ofservices. Adominant supplier willnotbeallowed toabuse itsmarket position byengaging
inprice discrimination.
Theexclusive supplier, Hong Kong Telecom International Limited, isatpresent responsible
forthenegotiation ofaccounting rates. TheGovernment hasalready expressed itswillingness
toassist inaccounting ratenegotiation where thesupplier believes thatthiswould improve
itsnegotiation position. TheGovernment considers thattheaccounting ratesshould bebrought
much closer inlinewithcosts.
25. Doanybasic telecommunications suppliers getinvolved insetting industry-wide tariffs?
No.
26. Onwhat basis areprices( e.g.tariffs, access charges, accounting rates) determined? What
concepts areapplied regarding costs? Isthereageneral principle applied regarding allocation
ofcosts? Iscost-oriented pricing ofbasic telecommunications used orrequired bythe
government Ifnot,dobasic telecommunications supplies usecost-oriented pricing?
Atpresent, tariffs forlocal basic services provided bytheexisting exclusive supplier are
regulated under asystem ofincentive priceregulation. Theexisting pricecapcovering abasket
ofservices isCPI-4withsub-caps settorestrict increases insocially important services.
Government intends toreview thesystem inmid-1996 tobring prices closer inlinewithcost.
27. Arethere anyrules specific tothepricing ofanewservice?
Anynewservice anditscharge ofthedominant orexclusive supplier willneedtheapproval
oftheGovernment before itsintroduction.
Rights ofwayfortheconstruction ofinfrastructure
28. Arebasic telecommunications services suppliers permitted tobuild theirowninfrastructure
orfacilities? Ifso,whataretheprocedures andcriteria forauthorization tobuild infrastructure
orfacilities? What aretheprocedures, criteria, limitations orqualifications applied withrespect
tothegranting ofortheavailability ofrights ofwayfortheconstruction ofinfrastructure or
facilities?
Basic telecommunications services suppliers arepermitted tobuild theirowninfrastructure
andfacilities. Fixed network services suppliers arealsoallowed tousepublic landandseabed
forplacing theirtelecommunications lines. Before suchactivities canbecarried out,theyneedS/NGBT/W/3/Add.16
Page16
toapply torelevant Government departments toseekapprovals fortheproposed installations.
They arerequired todemonstrate thattheycantakereasonable steps toavoid causing
inconvenience ordamage toothers. They arealsorequired tomake goodanydamage caused
tothelandlord.
29. Isnational treatment extended toforeign basic telecommunications suppliers under these
procedures andcriteria?
Yes.
Newtelecommunications services
30. Please describe anygeneral regulatory processes orprocedures thatapply todealing withthe
introduction of"new" telecommunications services. Priortoanyrelevant regulatory procedure
having beencompleted, isitnotpossible forsuchnewservices tobesupplied?
Before theintroduction ofanewtelecommunications service, anapplication should besubmitted
totheTelecommunications Authority forconsideration. Prior toanyrelevant regulatory
procedures havebeencompleted, suchnewservices maynotbesupplied.
31. When anewservice becomes possible oravailable, whodetermines thestatus ofthenewservice
(whether itisbasic orvalue-added) andunder whatprocedure andtimeframe?
Thestatus ofnewservices isdetermined bytheTelecommunications Authority.
(a) Forafixed network supplier whowishes tointroduce anewservice which isnot
contained initspublished tariffs andcondition ofservice, heshould notify the
Telecommunications Authority ofsuchaproposal. TheTelecommunications Authority
willtrytoconsider theproposal andgiveawritten notice within 15dayswhether he
requires more timetocomplete hisreview. IftheTelecommunications Authority has
notnotified thesupplier within 45daysthathedoesnotpropose togivehisapproval,
theservice willbedeemed tobeapproved.
(b) Forservice where alicence hasnotbeen granted, theapplicant should apply to
Telecommunications Authority foranappropriate licence tooperate thesystem. For
public non-exclusive service without using radiofrequencies, e.g.,value-added services,
itnormallytakesabout14daysforprocessing.Forpublicnon-exclusiveservicerequiring
useofradio frequencies, itnormally takes 42daysduetotheneedforperforming
electromagnetic compatibility analysis andco-ordination withadjacent territories.