XN000022-1995-03-30 — Page 16

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The Government's Position Paper on Hong Kong's Telecommunications Policy of January 1994 also recognized the scope for liberalization of services outside of HKTI's exclusivities and the TA's responsibilities "to balance his obligation to protect HKTI's exclusivity with his responsibility to promote competition in services which lie outside that exclusivity".

Call-back Services. The essential question for the TA to answer is whether call-back services breach any of the items of the First Schedule to HKTI's licence.

HKTI has provided a detailed submission supporting its view that call-back services breach item (e) of the First Schedule, asserting that a call-back service is an international call service by indirect means which is in substance the provision of an external public telephone service. Item (e) reserves to HKTI "External public telephone services to subscribers to the Public Switched Telephone Network by radio, submarine cable and such overland cables as are authorized."

The TA agrees that only item (e) can be considered of interest. Therefore the TA concurs that HKTI correctly identifies the issue to be resolved, which is whether subscribers to the PSTN are being provided with an external public telephone service in contravention of the correct reading of item (e).

The fact that HKTI is given, by virtue of item (e), the exclusive right to provide an external public telephone service to subscribers to the PSTN cannot, and does not, prevent the use of methods whereby an external call is converted to an incoming call, or is charged at a lower rate. Any caller may communicate with someone overseas so as to avoid paying the outgoing rate, telling the person overseas to call back. The reverse charging system and the use of a calling card both enable the local caller to initiate a call, make use of HKTT's infrastructure for the purpose of communication overseas, and yet neither are the provision of an external public telephone service; rather they are methods by which the customer obtains access to the HKTI system at a more favourable rate. The expression "external public telephone services" does not incorporate the provision of a means of access to the external public telephone service. Furthermore, as HKTI itself acknowledges the legal construction of the licence cannot depend upon the tariff HKTI is entitled to charge (that is, whether it is an outgoing or incoming charge).

By virtue of its licence HKTI has the exclusive right to carry signalling data and speech messages along the infrastructure it provides to connect the local network in Hong Kong to the overseas system. But other service providers (for example, HKTC, the PMRS operators and, in future, FTNS operators) are entitled to provide access through the local network in Hong Kong to HKTI's external network. The crucial point is that subscribers to the PSTN are not being provided with an external public telephone service at the point where they are being given access to the PSTN or at the point where they have their calls switched by the local network and routed to the international gateway. The external public telephone service only starts at the points of interconnection between the local network and the international gateway.