Introduction
1. The Council welcomes the efforts of the Office of the Telecommunications Authority (OFTA) to address the problem of bottleneck access to customers in buildings, and the attempts to achieve the efficient allocation of transmission capacity in In-building Telecommunications Systems (IBTS) amongst telecommunications operators.
2. The Council notes that there is no comprehensive competition law in Hong Kong with general application across all economic sectors. If this were the case, then it would seem that the law, insofar as it relates to misuse of market power, could be drafted in a manner that brings in circumstances where building owners or others who are operating IBTS are distorting the competitive process. In the absence of such a law the Council accepts the Government's use of a class licensing regime to provide competition safeguards.
3. Nevertheless, a number of issues arise from the use of the class licensing device, as follows.
Design of IBTS
4. The Council notes that IBTS are usually constructed, installed and operated by property developers, rather than the ultimate building owners, who then have to take on the responsibility of providing access. It is conceivable that some developers might influence the design and setting of their developments to a degree that imposes barriers for some telecommunications operators but leverages advantage towards other particular telecommunications operators.
5. The Council urges OFTA to take necessary measures to ensure that devices installed in IBTS comply with a general standard set by OFTA to minimize any market distortion that might be arise through using particular proprietary interfacing technology.
Ownership of IBTS
6. The proposal in the Consultation Paper notes that that building owners should be Licensees, i.e. as outlined in the proposed Second Schedule to the Ordinance:
those persons (whether they be sole owners, joint tenants or tenants in common) who are vested with the legal estate or an equitable interest in the common parts of a building or buildings within a development in which the system is installed, established, operated and maintained.
- ......and where the property interest in a building or buidlings within the development is held in theform of undivided shares, the class of persons who is qualified as Licensees shall be
- the owners incorporation......; or
- if no owners incorporation ......all the registered owners who are vested with the legal estate or an equitable interest.
7. However, with some large new project developments, there is a period of time following the completion of construction, in which there is no owners incorporation. In these circumstances, management of the development will usually be handled by an entity under the control of the project developer, until an owners incorporation has been formed. In these circumstances the actual building owners have no control over IBTS.
8. In this regard, reference can be made to the 'Guidelines for Deeds of Mutual Covenant' issued by the Legal Advisory and Conveyancing Office for the drafting of deeds of mutual covenant by property developers (see Circular Memorandum No. 41A). The Guidelines note, under the heading 'Management Term', that provision should be made for the appointment of a 'First Manager' for an initial term of not exceeding 2 years.
9. The Council suggests that to cater for the above circumstances, the Government should ensure that the definition of the class of persons qualified as licensees, includes the entity or entities that have responsibility for management of a building up until an owners incorporation has been formed.
Educating Licensees on obligations
10. While the Council welcomes the fact that the licensing regime will impose a duty on licensees to maintain IBTS in a manner to ensure that interconnection is done promptly, in a non-discriminatory fashion, efficiently and at a fair and reasonable fee; some building owners may need special assistance from OFTA in fulfilling their obligations.
11. Having regard to the complicated nature of the obligations of being a class licensee, the Council urges OFTA to provide appropriate educational material and assistance for persons who will come under the class licence in order to assist them in meeting their obligations.
Monitoring the state of competition
12. The Council also suggests that OFTA should conduct a study/survey on class licensees every three years to gather information in the market as to:
- complaints regarding availability of communications services from tenants;
- complaints from competitors regarding problems in obtaining access to IBTS; and
- publish the results for public debate.
