Following is a question by the Hon Martin Liao and a reply by the Acting Secretary for Commerce and Economic Development, Mr Godfrey Leung, in the Legislative Council today (November 16):

Question:

     In March 2011, the Government granted digital audio broadcasting (DAB) licences separately to three commercial organisations to provide DAB services in Hong Kong for a period of 12 years. However, the past 13 months saw those licensees applying to surrender their licences one after another, with some of them indicating that with the absence of policies implemented by the Government to complement the development of DAB services, they applied to surrender their licenses as they saw no prospect in the market. Two of the applications for surrendering the licenses have been approved, and should approval be given to the remaining application later on, Hong Kong will be left with the Radio Television Hong Kong (RTHK), which is a government department, to provide DAB services. On the other hand, the authorities are undertaking a review on DAB services. In this connection, will the Government inform this Council whether:

(1) the aforesaid review covers issues in relation to the adequacy of the support provided for the licensees through government policies, the prospect, market positioning and sustainability of DAB services, as well as their alternatives; if so, of the details; if not, the reasons for that;

(2) it has assessed if the public resources (including funding for RTHK) allocated for DAB services are value-for-money; whether there are any plans to reduce the funding for RTHK in this respect; and

(3) the authorities, in considering domestic free television programme service licence applications, will take into account the factor that an affiliated organisation of the applicant has surrendered a DAB licence; if they will, of the justifications; if not, the reasons for that?

Reply:

President,

     In February 2010, the Government promulgated the development framework for the provision of digital audio broadcasting (DAB) services in Hong Kong (DAB Framework) and invited applications for sound broadcasting licences to provide DAB services (DAB licences). As explained in the Legislative Council (LegCo) Brief tabled by the Government at that time, the Government introduced the DAB Framework in response to a growing trend of development of DAB services overseas and the interest of the local market in such services. In fact, the development of DAB services in Hong Kong was already gaining momentum before 2010. A number of broadcasters in Hong Kong had conducted technical trials since the late 1990s. In 2009, the then Wave Media Limited (subsequently renamed as Digital Broadcasting Corporation Hong Kong Limited (DBC)) also applied for carrying out trial transmissions of DAB. Against the above background and in accordance with the established market-led policy, the Government considered that it was then an appropriate juncture to introduce DAB services in Hong Kong.

     The DAB Framework sets out the Government's policy and the implementation plan for DAB services in Hong Kong. The key points of the DAB Framework include –

(a) there is no plan for switching off analogue AM/FM sound broadcasting services;

(b) the Government will adopt a technology-neutral approach, and it will be for the broadcasters to decide on the technical standards to be adopted; and

(c) sharing of existing hilltop broadcasting sites and relevant facilities is necessary and will be subject to commercial agreement among the relevant operators.

     Four applications of DAB licences were then received by the Government, and one of which was later withdrawn by the applicant. In March 2011, the Chief Executive (CE) in Council granted DAB licences to three commercial operators, namely DBC, Metro Broadcast Corporation Limited (Metro) and Phoenix U Radio Limited (Phoenix U). Channels were at the same time allocated to DBC, Metro and Phoenix U, with the remaining spectrum capacity assigned to Radio Television Hong Kong (RTHK). The DAB operators formally launched their services by phases starting from 2012.
   
     The Government has been supporting the development of DAB services. Since the grant of the DAB licences, the Government has taken forward a series of supporting measures, including constructing DAB re-broadcasting systems in 11 Government tunnels to enhance signal coverage, assisting DAB operators in increasing the transmission power of DAB transmitting stations, liaising with car manufacturers and importers to invite them to pre-install or provide the option of retro-fitting DAB radios in imported vehicles, inviting the Transport Department to arrange for an exemption from the relevant regulations on the installation of in-car DAB radios equipped with visual display units, and launching waves of publicity campaign.

     In September 2015, August 2016 and September 2016, Phoenix U, DBC and Metro applied for the surrender of their DAB licences respectively. Subsequently, the CE in Council approved the termination of the DAB licences of Phoenix U, DBC and Metro with effect from November 7, 2015, October 15, 2016 and November 12, 2016 respectively.

     Against the above background, we are conducting a review on the way forward of DAB services in Hong Kong.

     My consolidated reply to the three parts of the question is as follows –

(1) and (2) As explained to Members of the LegCo Panel on Information Technology and Broadcasting in January 2016, we commenced a review on the development of DAB services in Hong Kong after the cessation of such services by Phoenix U last year, including how to promote the sustainable development of DAB services. While the review was in progress, the remaining two DAB operators also submitted applications for the surrender of their DAB licences. In view of this, we have to adjust the direction of the review, in particular comprehensively reviewing the future market prospects of DAB services in Hong Kong. On the other hand, given that RTHK has become the sole operator providing DAB services in Hong Kong after the approval of termination of the DAB licences of the three commercial operators by the CE in Council, the review would also cover the social benefits and values that the DAB services could bring under such circumstances.

     The review will examine issues such as the market outlook and positioning, sustainability, resources provided by the Government and the way forward of DAB services. It will also make reference to overseas experience. We will study the issues with an open mind and with prudence, and will endeavour to complete the review as soon as possible.

(3) Under the Broadcasting Ordinance (BO), the Communications Authority (CA) shall make recommendations to the CE in Council on applications for domestic free television programme service (free TV) licences. In accordance with the BO and the established procedures and criteria, the CA will consider the following factors in assessing each free TV licence application –

(a) compliance with the statutory requirements under the BO;

(b) the assessment criteria set out in the Guidance Note issued by the CA for applications for free TV licences, including the applicant's financial soundness and commitment to investment; proven managerial and technical expertise; the variety, quantity and quality of programmes; technical soundness and quality of service; quality control and compliance mechanism; the speed of service roll-out; the benefit to the local broadcasting industry and the economy as a whole;

(c) views received during the public consultation exercise;

(d) likelihood of the applicant's compliance with the proposed licence conditions to be imposed; and

(e) the potential impact of a new free TV licensee on the local television market.

     Under the BO, the CE in Council will, after considering recommendations made by the CA on a free TV licence application, decide whether such a licence should be granted to the applicant.

Ends/Wednesday, November 16, 2016
Issued at HKT 13:58

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