Press Release

Telecommunications Authority Concludes Consultation on Deregulation for Fixed-Mobile Convergence

The Telecommunications Authority ("TA") today (27 April 2007) announced his conclusions in the consultation on "Deregulation for Fixed-Mobile Convergence".

"With a dynamic market and technological developments, the distinction between fixed and mobile networks and services is becoming increasingly blurred. Under the market-driven approach which has been adopted by the Hong Kong Government for the telecommunications industry, Fixed Mobile Convergence ("FMC") or the extent or pace of it in Hong Kong should be properly determined by the market. The role of the TA is to ensure that the regulatory environment is conducive to the development of new technologies, products and services. Operators should be able to respond promptly to consumer demand for FMC or technological advances promoting FMC without unnecessary regulatory constraints" the spokesperson of the Office of the Telecommunications Authority ("OFTA") said.

"One of the conclusions of the review is that there should be withdrawal of the current regulatory guidance which assumes an approach of "Mobile Party's Network Pays" ("MPNP"). There will be a two-year transitional period to enable concerned operators to adapt to this change. The effect of this deregulation will be that the level of interconnection charge and payment arrangements will be a matter of commercial negotiations among the operators. However, the TA retains his statutory powers to make a determination on interconnection terms under section 36A of the Telecommunications Ordinance if agreement cannot be reached," the spokesperson elaborated.

Under the existing MPNP interconnection charging arrangement which resulted from regulatory guidance introduced in the 1980's, mobile network operators are required to pay interconnection charges in both directions to the fixed network operators. In other words, regardless of whether a mobile user calls a fixed user or vice versa, the interconnection charge is always borne by the mobile operator.

"The current local access charge ("LAC") arrangement for interconnection between external service providers and fixed/mobile network operators will be maintained. The TA will monitor whether the removal of the regulatory guidance on fixed-mobile interconnection charge ("FMIC") is likely to have the effect of making the origination or termination of external calls more competitive before considering whether to propose any further de-regulatory measures in relation to LAC," continued the spokesperson.

The TA also reviewed the feasibility of introducing Fixed Mobile Number Portability ("FMNP"). However, he concluded that a market survey should first be conducted to assess the consumer demand for FMNP before making any further proposal on its introduction in Hong Kong.

The TA will also recommend to the Secretary for Commerce, Industry and Technology the introduction of a Unified Carrier Licence ("UCL") which can authorize the provision of fixed and mobile services under the same licence.

Background

The TA initiated a review of FMC related regulatory issues by publishing a consultation paper on 21 September 2005. The principal focus of that paper was to solicit public views on the proposed introduction of the Unified Carrier Licence.

OFTA subsequently engaged a consultant to identify and study the regulatory changes that may be warranted in the light of FMC. Having considered the recommendations of the consultant and the feedback from the first consultation, the TA set out his preliminary views and proposals for regulatory changes in a second consultation paper issued on 14 July 2006. The TA invited further views and comments from the industry and the interested parties on the matters covered in the second paper. A total of 23 submissions were received.

Office of the Telecommunications Authority
27 April 2007