XN000022-1992-06-03 — Page 4

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WEDNESDAY, JUNE 3, 1992

AS

"FOR EXAMPLE, WE ENVISAGE THE NEED FOR ONE OR MORE SUB-CAPS, WITHIN THE OVERALL PRICE CAP, TO ENSURE THAT CRUCIAL CHARGES, SUCH THE RENTAL FEE FOR A RESIDENTIAL LINE, ARE NOT INCREASED EXCESSIVELY TO OFFSET REDUCTIONS IN THE PRICES OF OTHER SERVICES," SHE ADDED.

ON THE CHARGES LEVIED BY HONG KONG TELECOM INTERNATIONAL FOR INTERNATIONAL TELEPHONE SERVICES, MRS BOSHER SAID AFTER INTENSIVE NEGOTIATION WITH THE COMPANY, THE GOVERNMENT HAD SECURED AGREEMENT IN PRINCIPLE FOR IDD CHARGES TO BE REDUCED BY AN AVERAGE OF ABOUT 12% OVER THREE YEARS: COMMENCING WITH AN 8% REDUCTION IN 1992/93; AND FOLLOWED BY FURTHER REDUCTIONS OF 2% IN 1993/94; AND 2% IN 1994/95.

THESE REDUCTIONS WOULD BE IMPLEMENTED IN TANDEM WITH THE INTRODUCTION OF THE NEW ARRANGEMENTS FOR LOCAL TARIFFS.

ADDRESSING MEMBERS' SUPPORT FOR INTRODUCING LOCAL NETWORK COMPETITION, MRS BOSHER AFFIRMED THE GOVERNMENT'S INTENTION TO REPLACE THE HONG KONG TELEPHONE COMPANY'S EXCLUSIVE FRANCHISE OVER THE LOCAL TELEPHONE SERVICE WITH A NON-EXCLUSIVE LICENCE WHEN THE FRANCHISE EXPIRES IN 1995.

"THIS WILL PAVE THE WAY FOR COMPETING NETWORKS TO PROVIDE LOCAL FIXED-LINK VOICE TELEPHONE SERVICES, JUST AS WE ALREADY HAVE COMPETITION IN MOBILE TELEPHONE SERVICES.

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SHE ALSO ASSURED MEMBERS THAT THE HONG KONG TELEPHONE COMPANY'S NON-EXCLUSIVE LICENCE WOULD INCLUDE A UNIVERSAL SERVICE OBLIGATION; MEANING THAT THE COMPANY WOULD BE OBLIGED, AS AT PRESENT, TO PROVIDE TELEPHONE SERVICE TO ANYONE WHO REQUIRED IT, REGARDLESS OF WHERE THEY LIVE.

"

'IN THE SHORT TERM, BEFORE EXPIRY OF THE FRANCHISE, WE WOULD BE PREPARED TO LICENSE COMPETITIVE NETWORKS WISHING TO PROVIDE NON- FRANCHISED SERVICES SUCH AS DATA AND FACSIMILE," SHE SAID.

ON COMPETING NETWORKS, MRS BOSHER STRESSED THAT NO DECISIONS HAD YET BEEN TAKEN ON HOW THE GOVERNMENT SHOULD GO ABOUT LICENSING NEW LOCAL NETWORKS AND WHETHER THE GOVERNMENT, RATHER THAN THE MARKET, SHOULD IMPOSE A LIMIT ON THE NUMBER THAT SHOULD BE LICENSED.

A

"THE MAIN CHOICE HERE IS BETWEEN A TENDER TYPE LICENSING PROCESS, IN WHICH GOVERNMENT SELECTS ONE OR MORE BIDDERS TO PROVIDE COMPETING NETWORK OR NETWORKS OR AN OPEN LICENSING REGIME HAS BEEN ADOPTED IN THE UK, SHE SAID.

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SUCH AS

INTERESTED

SHE ADDED THAT THE VIEWS OF LEGCO MEMBERS AND OTHER PARTIES ON THE APPROACH TO LICENSING WOULD BE MOST HELPFUL TO THE GOVERNMENT IN FINALISING THE PROPOSALS.

"FOR THERE TO BE EFFECTIVE COMPETITION, IT WILL BE NECESSARY FOR A NEW COMPETING LOCAL NETWORK TO INTERCONNECT WITH THE EXISTING FIXED-LINK TELECOMMUNICATIONS INFRASTRUCTURE OF THE HONG KONG TELEPHONE COMPANY AND HONG KONG TELECOM INTERNATIONAL.

THAT WOULD WHICH HAD BEEN

SHE ALSO BRIEFED MEMBERS ON THE BROAD PRINCIPLES APPLY TO NETWORK INTERCONNECTION, A COMMON VIEW ON REACHED WITH THE COMPANIES.

/MRS BOSHER