Press Release
OFTA Lifts Prior Approval Requirement on PCCW-HKT Prices
The Office of the Telecommunications Authority (OFTA)
has today (13 January 2005) announced the lifting of the prior approval
requirement on PCCW-HKT Telephone Limited's (PCCW-HKT) prices via the issue
of a new fixed carrier (FC) licence.
Under the new FC licence, PCCW-HKT does not have to get
its prices approved by the Telecommunications Authority (TA), including
moves to offer discounts and other benefits in response to price competition.
The TA is confident that the new regulatory approach will secure competition
in fixed telephony services.
"When Hong Kong's telecommunications markets were deregulated
ten years ago, it was necessary to impose more stringent price regulation
on PCCW-HKT because the company was then in a much stronger market position
to thwart the development of competition before the new fixed line network
entrants could establish a foothold," an OFTA's spokesperson explained.
"Since 1995 however, fixed telephony competition has become
more firmly established, not only from the new fixed line operators but
potentially from other sources, such as mobile phone services and new Internet
Protocol (IP) phone services which have been launched commercially. The
prior approval requirement has therefore become disproportionate in the
current market situation. It is a fundamental principle that the level of
regulation should be adjusted to be commensurate with the effectiveness
of market competition. We consulted the industry and concluded that the
best way is to implement the change via issuing a new licence to PCCW-HKT," the
spokesperson continued.
In response to a consultation paper issued on 8 October
2004 in relation to the subject, the industry in general concurred that
the market has moved on since 1995, the level of regulation should stay
proportionate, and ex post regulation reflects the international
best practice. They also recognized that replacing PCCW-HKT's licence instead
of declaring PCCW-HKT non-dominant allows regulatory measures to be imposed
on a proportionate rather than an ‘all-or-nothing' basis. Some respondents
raised useful comments on the implementation details which have been duly
considered by the TA. In particular, the TA has decided to maintain ex
ante regulation on the existing interconnection tariffs of PCCW-HKT
so as not to disturb the status quo with respect to interconnection
arrangements.
"Some respondents raised concerns over the effectiveness
of ex post regulation against potential anti-competitive conducts,
particularly in relation to bundling and price discrimination. In fact,
sanction of anti-competitive conduct has long been in place under the Telecommunications
Ordinance, and the criteria do not change after the implementation of ex
post regulation. OFTA will continue to devote resources to detecting
and acting against anti-competitive conduct in a timely manner," the OFTA
spokesperson continued.
"Under the new FC licence, the TA's access to information
for investigation purposes has been enhanced. In addition, PCCW-HKT must
notify its actual prices to the TA one day in advance, and the TA can publish
those prices, if it is in the public interest," said the OFTA spokesperson.
The new FC licence for PCCW-HKT will be effective as soon
as the company accepts the new FC licence in exchange for its existing FTNS
licence. The two applications made by PCCW-HKT for declaration of non-dominance
in business and residential direct exchange line services will become redundant
upon the surrender of the company's existing FTNS licence. Other FTNS/FC
licensees will also be able to exchange their existing licences for the
new FC licence with similar conditions as applicable.
"Market deregulation should be proportionate and timely.
We believe that our decision today will be conducive to further development
on the telecommunications industry led by market forces, and will benefit
consumers," the spokesperson emphasized.
Office of the Telecommunications Authority
13 January 2005 |
