Press Release
OFTA Publishes List of Buildings Connected by at least Two Self-built Customer Access Networks

The Office of the Telecommunications Authority (OFTA) today (24 September 2004) published the list of the buildings that are connected by at least two self-built customer access networks of local fixed telecommunications network services (FTNS) operators. Mandatory Type II interconnection will be withdrawn in these buildings subject to transitional arrangements starting to run from today.

The building list shows that 4,521 residential buildings and 1,517 non-residential buildings are accessed by at least two self-built customer access networks. In addition to PCCW-HKT Telephone Limited (PCCW-HKT), the buildings are accessed by the self-built customer access networks of telecommunications licensees, namely Hutchison Global Communications Limited (HGC), New World Telecommunications Limited (NWT) and Hong Kong Broadband Network Limited (HKBN).

"HGC, NWT and HKBN have together achieved a household coverage of 60%. We are pleased to see that the fixed network operators have been actively rolling out their self-built customer access networks to provide choices and services to the end customers. Their achievement has exceeded our previous assessment based on the information then on hand," a spokesperson of OFTA said.

Out of this 60% of coverage, over 34% of the households now have a choice of at least three customer access networks, and some 26% have a choice of two customer access networks.

The building list enables operators and the general public to identify the buildings in which Type II interconnection will be withdrawn after a two-year transitional period and a one-year "grandfather" period. For the buildings that are covered in the list, operators can continue to acquire new customers in the buildings through Type II interconnection until 23 September 2006 (two-year transitional period). Thereafter, the operators cannot acquire new customers but may maintain the existing lines using Type II interconnection at regulated terms and conditions (including charges) until 23 September 2007 (one-year "grandfather" period). From 24 September 2007, interconnection terms, including charges, will be subject to commercial negotiation between the operators concerned.

The buildings contained in the list were reported by HGC, NWT and HKBN to the Telecommunications Authority (TA) pursuant to their obligation under the FTNS licence. Wharf T&T Limited (WT&T) was also requested to make identical reporting to the TA but refused to comply with the request. After giving due opportunity to WT&T to make representations and considering WT&T's representations, the TA today issued a direction to WT&T requiring it to provide the information in two weeks.

"The TA is determined to ensure that the withdrawal of Type II interconnection on a building-by-building basis is implemented effectively. The TA will enforce the direction issued to WT&T to ensure that the building list published by OFTA also incorporates the buildings that are connected by WT&T's self-built network and should be subject to withdrawal of Type II interconnection. The TA will amend the list after receiving and verifying the information relating to the buildings connected by WT&T's self-built customer access network," the spokesperson explained.

The building list and the TA direction issued to WT&T can be downloaded from OFTA's website at: www.ofta.gov.hk.

Background

Type II interconnection is interconnection of the network of a fixed telecommunications operator to the network of another fixed telecommunications operator at the customer access level, which runs from local telephone exchanges of the network to customers' premises.

The Government announced on 6 July 2004 that Type II interconnection at telephone exchange level will be withdrawn to promote investment and consumer choice in high bandwidth customer access networks. The withdrawal will be fully implemented across the territory by 30 June 2008, except for buildings meeting the "essential facilities" criterion. In the run-up to this date, the withdrawal will be implemented in an orderly manner on a building-by-building basis and will apply to buildings already connected to at least two self-built customer access networks.

Type II interconnection in buildings that are connected to at least two self-built customer access networks will be withdrawn subject to a two-year transitional period and a one-year "grandfather" period thereafter to protect the interests of consumers.

To implement the withdrawal of Type II interconnection on a building-by-building basis, the TA issued an implementation statement on 19 July 2004 and requested HGC, WT&T, NWT and HKBN to report the buildings to which their own self-built customer access networks have been connected, with a view to publishing a consolidated building list for the public's information. Buildings that fall within the consolidated list will be subject to withdrawal of Type II interconnection on a building-by-building basis. The building list will be updated on a half-yearly basis to cover buildings that are newly connected by alternative self-built customer access networks.

Concerning a direction issued under section 36B of the Telecommunications Ordinance, failure to comply with the TA's direction on the first occasion may subject the licensee concerned to a financial penalty of up to HK$200,000. If the licensee still refuses to comply, further directions may be issued. The financial penalty for failure to comply with further directions is up to HK$500,000 for the second occasion, and up to HK$1,000,000 for subsequent occasions. If the TA considers that these financial penalties are not adequate, he may apply to the Court to impose a financial penalty of up to 10% of the turnover of licensee concerned during the period of breach or HK$10,000,000, whichever is the higher.

24 September 2004
Office of the Telecommunications Authority