CHAPTER 2
ASSESSMENT OF TELECOMMUNICATIONS DEVELOPMENT AND SERVICE PROVISION IN HONG KONG
This chapter assesses the current state of telecommunications development and service provision in Hong Kong, highlighting the achievements made in expanding the network and in introducing new technology. It compares Hong Kong with other countries in the region and with the UK, the US and other countries where appropriate.
The assessment is made after the introduction, which describes the regulatory framework and the policy changes that have occurred within the last few years.
2.1
REGULATORY AND POLICY ENVIRONMENT
2.1.1 Overview
The basic telecommunication services are operated by the two franchised companies HKT and CWHK on an exclusive basis. The regulation of these two companies rests with the Post Office. HKT has been granted the exclusive right, under franchise, to provide and operate local telephonic services up to 1995. HKT operates under a Scheme of Control agreed with the Hong Kong Government which permits the company to make a maximum return of 16% of its Shareholders' Funds. Tariff regulation is covered in Section 26(1) of the Telephone Ordinance. It prohibits HKT from charging telephone subscribers more than a prescribed maximum for the telephone service as set out in the Schedule. The Schedule can only be amended (or added to) by resolution of the Legislative Council. The operation of the Scheme of Control is coming under increasing criticism from HKT, the users of telecommunications and the other equipment suppliers. Moreover the price distortions which existed when the Scheme of Control agreement was introduced have continued. Since the scheme does not discourage across the board tariff adjustments, which tend to perpetuate such price distortions, they have become embedded in the system and are passed on from year to year. Customer premises equipment is provided on a competitive basis but requires "permission to connect" for each type of equipment. Other telecommunications services may be operated competitively so long as the service has been licensed under the Telecommunication Ordinance. The sale of radio communication apparatus is controlled by the Telecommunications Authority (TA) and is open to competition. Television broadcast services are provided by two private companies, licensed under the Television Ordinance, but the Telecommunications Authority is responsible for ensuring that the technical standards meet the relevant Code of Practice.
International telecommunications are provided under an exclusive licence granted by the Governor in Council to CWHK, under the Telecommunication Ordinance. The current licence granted in October 1981 runs until 2006.
By virtue of this licence CWHK has the exclusive right to provide the following services :
external telephone and data communication services
external dedicated and leased circuits
public external telecommunication system
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