CURRENT PERFORMANCE INDICATORS

Hong Kong has one of the world's most sophisticated telecommunications environments.

• Communication services accounted for 2.5% of Hong Kong's Gross Domestic Product in 1994 and provided 35?00 jobs in 1995.

• In 1995, four local fixed telephone operators provided over 3.2 million telephone lines.

• The popularity of facsimile communications has continued to grow at the expense of telex traffic. There were over 270?00 dedicated facsimile lines by the end of 1995, compared with 5 500 in 1985. In terms of facsimile lines per capita, Hong Kong is now ranked third in the world, after the United States and Japan.

• Four cellular phone operators offered services to over 680?00 customers in 1995.

• In 1995, over 1?00?00 customers subscribed to radio paging services provided by 35 operators.

• There were also over 100 other operators offering value- added services in 1995, such as Internet and call-back services.

• In 1994, a Hong Kong person made on average 256 minutes of International Direct Dialing (IDD) calls, a telephone service available to over 1?00 cities in the world. This compares with 51 minutes for the United States, 36 minutes for Australia and 11 minutes for Japan.

• The average cost of a residential telephone exchange line (through which unlimited local calls can be made) has dropped by 32% in real terms since 1985. Standard rates for outgoing IDD calls have also dropped significantly in real terms over the same period: by 75% to the United States, Canada and Australia, and by 55% to Japan.

• Telecommunications usage in Hong Kong is among the highest in the world :

			Hong	Japan	Singapore  United

			Kong			   States

			      (Per 100 Population)

     Telephone lines	52.7	50.0	50.0	   57.0

     Cellular phones	10.8	 5.6	10.8	   12.0

     Radio pagers	20.0	 7.2	31.6	   10.5

THE GOVERNMENT'S COMMITMENT

The Government is committed to ensuring :

• that the widest range of quality telecommunications services should be available to the community at reasonable cost;

• that telecommunications services should be provided in the most economically efficient manner possible; and

• that Hong Kong should serve as the pre-eminent communications hub for the Asia-Pacific region now and into the next century.

To promote fair and effective competition in the telecommunications market, the Office of the Telecommunications Authority (OFTA) was established as an independent industry regulator in 1993.

POLICY DIRECTIONS

We propose to :

• review the Telecommunication Ordinance to :
  • ensure that scarce resources are efficiently and fairly distributed to facilitate the provision of telecommunications services. This includes the supply and allocation of radio frequencies and telephone numbers and speedy installation of telecommunications equipment in residential and commercial premises;

  • promote fair competition and prevent anti-competition practices by introducing a stable legal framework which safeguards competition and governs interconnection, accounting separation and sharing of essential facilities among competitors in the market;

  • simplify the telecommunications licensing system to facilitate the introduction of new services and technologies to meet the modern communications needs of Hong Kong;

• maintain an active participation in regional and international organisations with a view to facilitating services and removing barriers. This includes participating in the World Trade Organisation, International Telecommunication Union, Asia Pacific Telecommunity and Asia-Pacific Economic Cooperation to promote the adoption of common radio frequencies and standards, mutual recognition of equipment certification, harmonisation of rules and regulations, and removal of barriers for trade in telecommunications services;

• develop a teleport with a site reserved for the setting up of satellite dishes. Located in Chung Hom Kok, the teleport will promote and support the further development of satellite communications in Hong Kong and strengthen its position as a premier regional telecommunications hub; and

• ensure that OFTA can keep pace with the rapid technological advancement in telecommunications services by investing in human resources development and upgrading equipment to facilitate operation.

In keeping with Hong Kong's free-market economic philosophy, we believe that, wherever possible, the private sector should be left to provide telecommunications services, with minimum government intervention. The Government should continue to confine its role to providing a sound, transparent and stable legal framework in which the industry can flourish.

The private sector makes its vital contribution by :

• investing in research and development and co-operating with local universities in developing new products and services;

• maintaining an active dialogue with the regulatory authority about its needs and challenges in developing and promoting new technologies and services; and

• exploring overseas market opportunities and collaborating with the Government in securing greater access to overseas markets.

LONG TERM ISSUES

Hong Kong is one of the world's most open and liberal telecommunications markets, providing advanced and sophisticated telecommunications services. We must continue to deregulate the local market to enhance competition. This will motivate competitors to develop new services and encourage the delivery of fibre optic and interactive multimedia services to all homes. This will lay the groundwork for an information superhighway which will lead Hong Kong into the Information Age. Only by doing so can we ensure that :

• our consumers will continue to enjoy telecommunications services of the highest international standards at competitive prices; and

• our telecommunications services industry will reap the full benefits of the global liberalisation of trade in services and secure better access to overseas markets.

Secretary for Economic Services

March 1996