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The Office of the Telecommunications Authority (OFTA) issued today (July 14) a consultation paper to solicit views from the public and the industry on its proposal of updating the regulatory approach to pave the way for sustained market developments.
A spokesman for OFTA said, "With dynamic market and technology advancement, the distinctions between fixed and mobile networks and services are becoming increasingly blurred. The phenomenon is often referred to as Fixed-Mobile Convergence (FMC) in the telecommunications industry.
"While the extent and pace of FMC should be market driven, our role is to ensure that the regulatory environment in Hong Kong is conducive to the emergence of innovative technologies and services," the spokesman said.
OFTA has commissioned a consultancy study on the possible regulatory changes in the light of FMC prospects. Having reviewed the consultancy report, OFTA has identified a number of existing differential regulatory treatments to the fixed and mobile network operators that may require changes. The existing "Mobile-Party's-Network Pays" interconnection settlement arrangement between fixed and mobile network operators, in particular, is an essential one to be reviewed.
"The status quo is the result of regulatory intervention put in place in the early 1980s when mobile services were introduced to the telecommunications market as a luxury product. Its continuation is not conducive to competition today, and will be a problem as FMC comes along. Rather, the operators should have the liberty to reach commercial agreements among themselves," the spokesman continued.
Currently, the interconnection payment by the mobile network operators to the fixed network operators amounts to some HK$600 million per annum. As the factors underpinning the existing asymmetric arrangement have already changed, OFTA proposes to withdraw the regulatory intervention.
"We propose to phase out existing regulatory preference for "Mobile Party's Network Pays" in two years. The transitional period aims to allow operators time to adjust their business plans," the spokesman supplemented.
In addition, the consultation paper solicits views on the merits of issuing guidelines on how the Telecommunications Authority (TA) would exercise TA's power, should TA be called upon to make a determination on interconnection settlement arrangement under the Telecommunications Ordinance.
OFTA further invites views on the settlement options to be included in the guidelines. One of the options is the "Bill and Keep" model, as recommended by the Consultant, whereby the operators may settle bilateral interconnecting traffic without payment. It stands out from a number of models because it entails low implementation and recurrent cost to the industry. It also significantly streamlines the regulatory intervention process if necessary. In fact, the "Bill and Keep" model is presently adopted between mobile network operators through commercial negotiations.
"Consumer welfare will continue to improve in an advanced and competitive telecommunications market in Hong Kong, featuring reasonable prices, high-quality services and plentiful choices. In the longer term, both the operators and the consumers will benefit from sustained industry development, driven by innovation in the convergent era," the spokesman reiterated.
OFTA publishes the public consultation paper together with the consultancy report today. The consultation paper also seek views on a few key issues relating to local access charge, licensing regime, number portability and numbering plan. Interested parties are invited to submit comments on the consultation paper on or before October 13, 2006. The papers can be downloaded from OFTA's website at www.ofta.gov.hk.
Ends/Friday, July 14, 2006
Issued at HKT 19:08
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