6.
4.
The Telecommunication Exemption from Licencing Order allows HKT to provide non telephonic telecommunication services over the public telephone system without a licence. [6]
There are, in summary, two different categories of service available from HKT Franchised Services; and Obligatory Services, while HKT's subsidiary companies supply Non-Franchised (competitive) services.
The current way HKT operates is to place as many of the services as possible within the Obligatory or Non Franchised Service definitions to avoid the restrictions of the Scheme of Control. This is creating a very complex structure of service provision and tariffing. For example, the basic charge for a line for facsimile is under the Scheme of Control whereas the premium charge for a Faxline comes under Obligatory Service. There are pressures for change in many areas.
The regulation of the international network
All international telecommunications in Hong Kong are provided under an exclusive licence granted by the Governor in Council to Cable & Wireless (HK) Ltd, under the Telecommunication Ordinance. CWHK Ltd is also granted by its licence the exclusive right to provide internal telegraph and telex services.
CWHK's international telephone system is connected to the public network of HKT. International revenue is shared between HKT and CWHK on an agreed 40:60 basis. HKT also provides the local ends of leased circuits and PSTN connection to CWHK for various international services originating or terminating in Hong Kong.
The licence was granted on October 1, 1981, the year of Cable & Wireless's privatisation and the year of the restructuring of the local branch into a Hong Kong registered company. The licence runs for 25 years until October 1, 2006. It is not a public document. However it is generally acknowledged that the Licensee must operate and maintain an international service to the satisfaction of the Telecommunications Authority.
Increases in tariffs must be within a scale of charges approved in writing by the Authority. Approvals are based on reviews carried out by CWHK and submitted to the Authority. In contrast with the regulatory problems and delays associated with local telecommunications the international licensee operates with the minimum of controls and delays, and with greater flexibility. Although the Licensee must present on request accounts and information relating to the operation of the service there is concern that the full benefits of falling real costs are not being passed on to the consumer. Secondly it is acknowledged that there is a degree of cross subsidization between the international and local services but it is not clear to the Authority how it operates, nor what are the implications for future tariff adjustments. We analyze this point in Chapter 5 of the report.
The Exemption Order also excludes from licencing, customers of HKT who attach apparatus to the HKT system. It was amended in 1987 to require customers offering services to third parties to be licenced.
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