COMMUNICATIONS, THE MEDIA AND INFORMATION TECHNOLOGY
whether the arrangement remained appropriate and sufficiently updated in encouraging investment in the telecommunications network and facilitating effective. competition in the current market conditions. In particular, it is the Government's aim to have a competitive, advanced and high bandwidth telecommunications infrastructure that is capable of supporting demanding, new and innovative services to meet future needs and challenges, thereby furthering the goal of developing Hong Kong into a leading digital city. The first consultation was conducted in May to August. In December, the Government initiated a second-round consultation with a view to promulgating an updated policy in 2004.
Broadband and Internet Access Services
By year-end, virtually all households and commercial buildings were covered by the broadband network. The number of broadband accounts increased significantly during the year to 1 230 607 or 18 broadband accounts per 100 inhabitants, representing an annual increase of 24 per cent. In addition, 52 per cent of households. had broadband Internet access. The number of registered customer accounts with dial-up access was 1084 368, or 16 dial-up access accounts per 100 inhabitants. Internet Service Providers (ISPs) numbered 201 at year-end.
According to a report issued by the International Telecommunication Union (ITU) in September, Hong Kong ranks second in the world in terms of broadband penetration. On the ITU's Digital Access Index published in November, Hong Kong ranks No. 1 in the world in terms of affordability of Internet access.
Public Mobile Phone Service
The market for public mobile phone services is highly competitive in Hong Kong. At year-end, six firms were operating a total of 11 digital systems, serving a customer base of over 7.2 million. This represented an annual growth rate of 16 per cent. The penetration rate of public mobile phone services was about 106 per cent, one of the highest in the world.
In October 2001, the Government issued four 3G licences under an innovative royalty scheme. The Government also spearheaded the introduction of an open network access requirement whereby 3G network operators are required to make available 30 per cent of their network capacity for interconnection to, or access by, non-affiliated Mobile Virtual Network Operators and/or content providers on a non- discriminatory basis. This would facilitate the development of innovative applications and services through effective competition. (3G services began in January 2004).
The existing licences for second generation mobile services would expire in 2005 and 2006. To facilitate long-term investment and business planning by industry participants, as well as planning for any necessary transitional or migration arrangements, the Government consulted the industry on future licensing arrangements in August to October. It planned to embark on a second round of consultation in early 2004.
External Telecommunications Services
Competition in the external telecommunications services market was introduced from January 1, 1999. Competition in the market has led to a significant drop in International Direct Dialling (IDD) call rates. Consumer savings in the four years from 1999 to 2002 amounted to an estimated $25.5 billion.
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