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Press Release issued by the Commerce, Industry and Technology
Bureau (CITB)
on 16 December 2003 -
Government Issues Second Consultation
Paper on Type II Interconnection
The Government today (December 16) issued the second consultation
paper on the Type II interconnection policy for local fixed telecommunications
network services (FTNS) and proposed to change the Type II interconnection
arrangement in the light of the current market conditions.
Type II interconnection refers to interconnection between two
fixed telecommunications networks at customer access network
level. It was introduced in 1995 when the fixed telecommunications
market was liberalised to enable operators who were mostly new
market entrants without customer access network to provide services
to customers through the network of other operators. The aim
then was to promote competition in the telecommunications market
and enable consumers to have a wider choice of operators.
At present, the networks of fixed operators who are competitors
of PCCW have or will soon have a coverage of 45 per cent of the
residential units in Hong Kong. In addition, competing operators
now have a market share of 24.8 per cent in the voice market,
among which 10.7 per cent are served via Type II interconnection
at telephone exchange and 14.1 per cent are served by self-built
customers access network.
"Noting the significant progress of competing operators in
rolling out their networks and the current state of competition
in the market, we see a need to introduce changes to the existing
Type II interconnection arrangement in order to better meet Government's
policy objectives in telecommunications," the Deputy Secretary
for Commerce, Industry and Technology (Communications and Technology),
Mrs Marion Lai said.
The objectives of the Type II interconnection policy are to
facilitate effective competition in the telecommunications market
and enhance consumer choice; to encourage efficient investment
in telecommunications network, and to promote the telecommunications
industry in Hong Kong.
"In particular, we aim at having a competitive, advanced and
high bandwidth telecommunications infrastructure that is capable
of supporting demanding, new and innovative services to meet
future needs and challenges, thereby furthering our goal of developing
Hong Kong into a leading digital city," Mrs Lai said.
The Government proposes that the Type II interconnection to
copper-based customers access network at telephone exchanges
should be withdrawn in buildings connected by at least two self-built
consumer access networks offering both narrowband and broadband
services to the occupiers within the building.
"The obligation should be maintained in areas that justify
the continuation of the regulatory measure of Type II interconnection
obligation. In other areas, the obligation should be withdrawn," Mrs
Lai said.
"This proposal can best meet Government's policy objectives,
because consumers will continue to enjoy a choice of service
providers either through self-built customer access network,
or through Type II interconnection.
"Furthermore, operators will be encouraged to roll out their
self-built customer access networks to buildings whether in respect
of which Type II interconnection obligation has been withdrawn
or not. This is a pro-consumer and pro-investment proposal," Mrs
Lai continued.
Mrs Lai pointed out that included in the second consultation
paper was a proposed set of orderly and co-ordinated transitional
arrangements for implementing the withdrawal of Type II interconnection
obligation. The aim was to reduce disruption to consumers who
would be allowed to continue their existing subscription for
a sufficiently long period, or until they voluntarily terminate
the service. The transitional arrangements would also allow operators
sufficient time to adjust their business strategy and roll out
new customer access network if required.
Regarding the fibre-based customer access network, the second
consultation paper proposes that Type II interconnection should
not be extended to these network so as to encourage investment
in the roll-out of competitive fibre-based telecommunications
infrastructure to provide innovative, high capacity, and high
speed telecommunications services.
The second consultation paper also suggests that in view of
the physical and economic constraints for operators to install
in-building telecommunications system, Type II interconnection
at individual building level should be maintained.
The second consultation paper is issued after having analysed
the submissions to the first consultation paper issued in May
2003. A total of 11 submissions were received after the three-month
consultation.
The second consultation paper and an executive summary can
be downloaded from the websites of the Communications and Technology
Branch, Commerce, Industry and Technology Bureau (http://www.info.gov.hk/citb/ctb) and Office of the Telecommunications Authority (OFTA) (http://www.ofta.gov.hk).
Submissions should be sent to the OFTA on or before February
24, 2004.
Ends/Tuesday, December 16, 2003
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