The Consumer Council welcomes Government's move to end Hong Kong Telecom International's exclusive rights in respect of international calls and to improve domestic competition by increasing the opportunities for other companies to provide domestic services using Hong Kong Telephone's lines.
The Council has been a consistent advocate of improved competition and liberalisation for telecommunications and in March 1996 published a report, Achieving Competition in the Liberalised Telecommunications Market.
The Council believes that the arrangement surrounding the end of Hong Kong Telecom's exclusive international rights will mean full competition in the international market and bring greater opportunities for recent entrants to make a significant entry into the domestic market.
This is because the end of the cross-subsidy from international services to local fixed networks provides more incentive for newcomers to expand their services. Moreover, the agreement by Hong Kong Telecom that it will open up before the end of this year more than 50% of its domestic lines for use by competitors will make it faster and easier for them to do so. The fact that Hong Kong Telecom is obliged to charge the same prices across all of Hong Kong means that once competition is present in a significant area the benefits will be felt throughout Hong Kong.
The extent of the benefits to consumers will also depend on whether the current liberalisation results in effective competition in the domestic market. The Council notes that Hong Kong Telecom will not be allowed to increase its tariff, as proposed in the agreement, if it has not opened up 50% of its network. The Council therefore wishes to highlight the crucial role of the Telecommunications Authority in interpreting and enforcing the licence conditions, for example the monitoring of the price movement of telephone service charges and the ban on discriminatory pricing, that guarantee competition. It believes that it is essential that OFTA discharge these responsibilities in a vigorous manner. If the current measures do not prove sufficient to introduce effective competition, other steps, such as the immediate issue of new licences should be taken.
The Council is not in a position to comment on the compensation that is to be paid by the Government to Hong Kong Telecommunications as it does not have access to confidential commercial data. However, the Council does believe that complete liberalisation of the telecommunications market with the ending of Hong Kong Telecom's monopoly does provide the opportunity for Hong Kong to take a significant step forward in the provision of the telecommunications facilities that will be necessary for the 21st century.