TNAG-1779-FCO40-2539-Hong-Kong-international-telecommunications-1988 — Page 303

- full time Director with renewable appointment of some years' duration,

providing stability and the opportunity to develop expertise

- full time and permanent (hence also knowledgeable) staff.

Many countries are considering the establishment of such an independent body, even when there is continuing reluctance to introduce network competition (e.g. the majority and minority Witte Commission reports in West Germany, while disagreeing on the fundamental issue of network competition, both advocated the establishment of a separate regulatory institution).

BAH considers the establishment of such a body appropriate in Hong Kong. It could be much smaller than Oftel in the UK, with perhaps 15-20 staff, to handle economic, financial and technical regulation duties and complaints. We caution however that the efficacy of such an institution is critically dependent on the appointment of a Director General of the necessary calibre and with the appropriate experience of matters concerning pricing and regulatory control. It could come within Government but form a separate semi-autonomous body under the Economic Services Branch. It would bring together in one team the wide range of legal, technical, economic, and financial expertise required to regulate telecommunications effectively. It is estimated that it would cost approximately HK$7 million in annual operational costs and would require office equipment costing HK$310,000. See Exhibits A4 and A5. Irrespective of the outcome of the major telecommunications development study, BAH would recommend that these changes, should be made to the regulatory framework in Hong Kong.

The Telecommunications Authority has no statutory powers of intervention at present, which can result in long delays in the delivery of information. With the introduction of an RPI based formula during the period of transition to competition it might be advisable to have statutory powers for direct intervention on tariffs, service quality and restrictive practices. In the United Kingdom Oftel has the power of referral to the Monopolies and Mergers Commission. Even this suffers from the disadvantage that it is too large a sanction to apply for minor infringements of license conditions or for failure to supply required information. In Hong Kong the regulator could usefully be given more direct powers.

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