8/14/2019 The Asia Pacific Region Has Become the Fastest Growing Telecom Market in the World

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The Asia Pacific region has become the fastest growing telecommarket in the world. Not only does the region contain two of theworlds most populous and emerging countries - China and India, itis home to some of the worlds most sophisticated telecom marketssuch as Hong king, Japan, Singapore and Australia.

While telecom liberalization and privatization are taking place in theasian markets, Hong Kong has become a power house for telecomconvergence, introducing a innovative carrier licensing frameworkthat provides rights to exploit fixed, broadband and wirelessservices under the same license.

Lets give some info about this market: Hong Kong is a leader intelecommunications with a strong market infrastructure. With 56lines per 100 people, Hong Kong has the highest teledensity in Asia,except for Japan. All exchanges are digital. More than 3.5m people

have mobile phones, one of the highest densities in the world.

The Office of the Telecommunications Authority (OFTA) isresponsible for regulating the rapidly developing and increasinglycompetitive telecommunications industry in Hong Kong.

With the support of the Legislative Council, the Telecommunications(Amendment) Bill 2001 was passed and enacted in May 2001. Thislegislation took effect in July 2001 to provide the legal basis for a 3Glicensing exercise. Then in July the Government issued anInformation Memorandum, inviting applications for Hong Kong's

third generation mobile services (3G) licences and setting out thereserve prices for the 3G auction, the auction rules and variousother elements of the licensing framework.

The Information Technology and Broadcasting Bureau confirmed thata hybrid method will be used for the issue of four 3G licencesinvolving a pre-qualification process followed by spectrumauctioning. The hybrid method will help ensure the quality of future3G networks as well as allocate efficiently spectrum.

Recognising the recent downturn of the telecommunications market,the Information Technology and Broadcasting Bureu has introduceda royalty-based payment scheme that is intended to minimize thefinancial burden on operators. The royalty scheme is underpinnedby a schedule of minimum payments, which minimise government'scredit risk but allow it to share the upside of the 3G business.

In October, Carrie Yau, the Hong Kong Secretary for InformationTechnology and Broadcasting, revealed the identity of the fourbidders who had been successful in their applications for provisional3G licences after the completion of the pre-qualification process ofthe 3G services auction.

The four successful bidders were: Hong Kong CSL Ltd., co-owned byTelstra and Pacific Century Cyberworks; Hutchison 3G HK Ltd., co-

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owned by Hutchison Whampoa and NTT DoCoMo Inc.; SmarTone 3GLtd., wholly owned by SmarTone Telecoms Holdings; and Sunday 3G,wholly owned by Sunday Communications.

In June, 2004, the Hong Kong government said it was consideringthe creation of a 'super regulator' for the territory'stelecommunications and broadcasting industries.

Currently, the two sectors are regulated by the Office of theTelecommunications Authority (Ofta) and the Broadcasting Authorityrespectively. However, as the industries have begun increasingly toencroach on each other's territories, the Hong Kong authorities haveannounced plans to consult the public by the end of this year on theproposed creation of a super-regulator.

Nowadays, fixed and mobile services are licensed under fixed carrierlicences and mobile carrier licences respectively, with differentrights and obligations imposed on the network operators. With theadvent of new technologies, fixed and mobile services will converge.In the new environment, says OFTA, it may become difficult toclassify a service as a fixed or mobile service as the service may beused by customers at fixed locations on some occasions and inmotion on other occasions. Accordingly, the existing separatelicensing frameworks for fixed and mobile services may not besustainable in the FMC environment.

A public consultation on the introduction of Broadband WirelessAccess (BWA) services is in progress. These services will serve bothfixed and mobile customers. It is therefore necessary to review theneed for a unified licence that would suit all forms of networks andservices.

Under the proposed unified carrier licensing framework, a licenseemay be allowed to provide (i) fixed services; (ii) mobile services; or(iii) both fixed and mobile services, depending on the scope of

services proposed by the licensees in their licence applications.

It is proposed that once the unified licensing framework is in place,the existing fixed carrier licence and mobile carrier licence would nolonger be issued to new entrants or to existing licensees whoselicences are due for renewal. Existing fixed or mobile carriers wouldhowever be permitted to continue to operate under their existinglicences until the licences expire. No fixed or mobile carriers wouldbe required to surrender their existing licences while the licencesremain valid. Instead, they may have the discretion to convert theircurrent licences to a unified carrier licence which covers their

existing scope of service, or covers a wider scope of services.

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