4.8 In mobile services Hong Kong is a world leader. There are over 700,000 paging subscribers in the community, and the penetration of mobile is currently 2.5% of the population, greater than that of the UK or the US. The combination of competition with three cellular operators and a propensity to use the telephone has created one of the most dynamic and technologically innovative wireless markets in the world. Mobile subscribers have grown from 6,000 in 1986 to 134,000 by the end of 1990, and four CT2 operators have been licensed to provide service later this year.
4.9 Serious concerns were expressed by the large telecommunications users in Hong Kong about the quality of the service that was being offered to them by HKT and HKTI despite the well-developed infrastructure. Their criticisms centred around the lack of choice offered by the operator, the bundling of services to include elements which the users could provide more economically themselves, inflexibility on the part of HKT in providing tailored solutions, and a concern about tariff levels (see Exhibit 10). Large users are courted by other hubbing centres who are more flexible, and one major bank we spoke to is relocating its data centre to London for cost reasons, thereby reducing its telecommunications expenditure in Hong Kong. Several other firms we spoke to were either conducting - or were about to conduct - a major review of their telecom- munications expenditure and a strategy in relation to their business activities in Hong Kong with a view to relocating their telecommunications hub to another regional
centre.
Exhibit 10: Example of Bundled vs. Unbundled H.K. Telephone Services
PROPOSED RING NETWORK
Company A
Company D
HK Telephone
Ring network
Customer premises
Company B
Company C
☐Link from the ring to the customer premise
HISTORY OF A FAILED UNBUNDLED SERVICE REQUEST
Four large user groups decided to introduce a ring-fibre, 'metropolitan-network' system to obtain a higher capacity usage
They wanted to purchase an 'unbundled' product from HK Telephone; that is, they just wanted HKT to put in the dark fibre for them
• The users' expectation was that this service would be provided because until 1988 HKT had offered to 'pull fibre' for customers
•
•
When the proposition was put to them, however, HKT announced they no longer provided an unbundled service, and they offered a 'fibre 1000' service which would charge HK $55,000 for the equipment at each connection from the ring to the customer premises, and HK$110,000 per month for the service
The user group thus had to purchase a bundled service they did not want
• Dissatisfaction with the HKT offering led the user group to drop their plans