1) Introduction
1.1 Since the last telecommunications study was completed in 1988, the pace of change in global communications has accelerated. Three of these changes will have a major effect on Hong Kong as one of the region's leading trading, financial and commercial
centres.
Liberalisation and the emergence of competitive markets are leading to lower tariffs and higher service and innovation levels.
Other centres, notably Singapore, Sydney and Tokyo are trying to become the most competitive communications centre in the region, possibly leaving Hong Kong behind.
There is a move towards cost-based pricing and a rebalancing of international to local tariffs to foster domestic competition.
1.2 The Government responded to these developments by commissioning Booz Allen to update their 1988 study, identify the regulatory options that could be pursued as in response to these changes and to derive the economic benefits for the Hong Kong community that would be attached to each option. We were also asked to present a telecommunications strategy and policy framework that would naturally lead on from the results of our analysis.
1.3 Sections 2 and 3 discuss global regulatory and technological developments in the telecommunications industry as a context for the examination of the Hong Kong market in Section 4. Section 5 identifies the three broad regulatory options which emerge from this analysis and quantifies the economic benefits that would result from their implementation. Section 6 then recommends a potential strategy and policy the Government could pursue to capture these benefits.