TNAG-1779-FCO40-2539-Hong-Kong-international-telecommunications-1988 — Page 298

3.

Transition to competition within Hong Kong

The trend toward liberalization began in the late seventies and early eighties. It was increasingly apparent that the rapid expansion of telecommunications combined with advances in technology, was changing the environment in which HKT operated. HKT itself approached the Government to deregulate CPE and value added network services (VANS). Meanwhile the Authority itself was considering the benefits of more competition. In December 1982, the Government agreed to limit the franchise and Scheme of Control to the basic telephone service and to open up competition for other products and services. Many of the deregulated services required a licence but did not fall within the Scheme of Control. HKT transferred one third of its business activities (HK$900 million) into competitive subsidiaries where the tariffs were no longer regulated by Government. These services were provided by CSL, IBS and Computasia. HKT agreed to accounting procedures that would ensure that these companies were not cross subsidized in any way by the exclusive services. The services that were deregulated were:

Provision of subscriber's apparatus

PABX's

data modems

- ECIS (a form of subscriber apparatus) from July 1, 1984

- radio paging

- viewdata

- data messages

- mobile radio telephone

packet switched data

centralized alarm monitoring

· facsimile

In October 1985, all computer services were transferred out of HKT to Computasia Ltd.

In granting the right to provide services outside the Scheme of Control, the Government recognized that there was certain equipment which HKT was obliged to provide as a basic service but within a competitive environment. Thus certain types of equipment and services continue to be provided by HKT outside of the Scheme. These items are covered in the Obligatory Agreement and include PMBXS, miscellaneous telephone equipment, data and facsimile services.

Many of the deregulated services, such as public mobile radio telephone, radio paging and 'value added' services are authorized by the granting of a specific licence by the Authority under the Telecommunication Ordinance. The HKT subsidiary CSL, Hutchison Telephone and Chinatel operate public mobile radio telephone under Public Non-Exclusive Telecommunications Service (PNETS) Licences.

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