Hong Kong telecoms sector rings in regulation and opportunity

By Matt Hu, InvestHK
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With the availability of fixed-line, mobile, voice, data and broadband services, Hong Kong is at the forefront of worldwide telecommunications markets. All sectors of Hong Kong’s telecoms market have been liberalised, as determined by the market. The regulatory regime is to provide a level playing field in the telecommunications market.

A sophisticated telecoms infrastructure, tech-savvy professionals, strong consumer demand for high-tech products, a sound intellectual property protection regime and geographical proximity to mainland China mean that Hong Kong offers an excellent base for multinational telecoms companies as their regional hub to serve Asia-Pacific’s high-growth markets.

Top-ranking technologies

Hong Kong’s free market, sound regulatory environment and business readiness for the use of information technology combines with the city’s advanced telecoms infrastructure, which ranked number one in the Technological Infrastructure Index 2011, in the International Institute for Management Development’s World Competitiveness Yearbook, and number two in Boston Consulting Group’s Penetration of High Speed Optical Technologies Index 2011.

Among other elements, Hong Kong boasts:

  • A fully liberalised telecoms sector with no restrictions on the number of operators or foreign ownership;
  • Availability of non-exclusive licences for various telecoms, internet and value-added services to assist market entry by overseas companies;
  • Free flow of information with no censorship on content transmission;
  • 170% mobile penetration rate;
  • 80% household broadband penetration rate;
  • Highly skilled, multilingual, tech-savvy workforce.
Matt Hu Head of North China Investment Promotion InvestHK The Government of Hong Kong
Matt Hu
Head of North China Investment Promotion
InvestHK
The Government of Hong Kong

The city has six submarine cable landing stations and is connected to nine regional and transpacific submarine cable systems. It is also connected via overland cable networks to all three telecoms operators in mainland China.

To encourage the deployment of more submarine cables, the Office of the Communications Authority (OFCA), the statutory body responsible for regulating the telecoms industry in Hong Kong, has streamlined the application procedures and now provides a single point-of-contact service to assist interested parties.

Interested parties may submit applications together with supporting information to the OFCA, which will provide a centralised contact point coordinating the applicants with the relevant Hong Kong government departments and parties such as the Lands Department, Marine Department, Hong Kong Science and Technology Parks, Town Planning Board and Environmental Protection Department, with a view to expediting the applications.

The OFCA was formed on 1 April 2012, as the executive arm of the Communications Authority by merging the former Office of the Telecommunications Authority and the broadcasting division of the Television and Entertainment Licensing Authority.

Telecoms gateway

Thanks to Hong Kong’s strategic location and other business advantages, several telecoms companies and related equipment vendors are using Hong Kong as a gateway to the sizeable mainland Chinese market.

The OFCA has identified a number of priority tasks for 2012 and 2013, designed to ease the flow of business with the mainland, and also foreign investment. As part of these priorities, Hong Kong’s government and the OFCA will review existing regulatory regimes and rationalise the Broadcasting Ordinance and the Telecommunications Ordinance.

There are many other areas where the office is active. With a view to enhancing administrative procedures and licence requirements for tariff publication and filing requirements of licensees, the OFCA in the first quarter of 2012 issued guidelines to improve the transparency of tariff information and ensure consistent practice among licencees, after issuing a consultation paper on the subject in April 2011. The office will follow up with network operators on the implementation of the new arrangement.

Mobile moves

The OFCA has also been in discussions with the PRC Ministry of Industry and Information Technology (MIIT) about charges for mobile roaming services between Hong Kong and the mainland, and the parties have agreed that the one-card, multiple-number service is an effective substitute to address the issue of high mobile roaming fees.

The office is working with the MIIT and encouraging Hong Kong mobile operators to reach commercial agreements with mainland counterparts to fostering growth of this service. The office is also active in the International Mobile Roaming Working Group, established under the Asia-Pacific Telecommunity, to make recommendations for the region to address the mobile roaming fees issue.

Discussions are also ongoing with the MIIT on further opening up and lowering of the entry barrier to the telecoms market of Hong Kong service suppliers under the Closer Economic Partnership Arrangement between the PRC and its special administrative regions.

In response to aviation industry requests to provide mobile services to aircraft passengers, a licensing regime for appropriate service providers has been adopted. Applications have already been received for licences.

Global aspirations

With its close geographical and cultural proximity to the mainland, Hong Kong serves as the ideal springboard for mainland telecoms to go international. China Unicom, China Telecom, China Mobile, Huawei and ZTE all have a business presence in the city.

Ongoing government work in relation to cross-border communications includes:

  • Assisting with infrastructure rollout: coordinating with relevant departments and mainland authorities on the infrastructure for cross-border facilities including the Hong Kong-Zhuhai-Macau Bridge and a new railway network between Hong Kong and Guangdong;
  • Spectrum management: the OFCA coordinates the use of radio spectrum for broadcasting and telecoms services with neighbouring authorities;
  • Skills sharing: the OFCA explores opportunities for staff attachment to policy bureaus, overseas regulatory authorities and relevant mainland authorities.

Matt Hu is the head of North China investment promotion at InvestHK, a department of the government of Hong Kong

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