TNAG-2247-FCO40-3230-Business-interests-in-Hong-Kong-Cable-&-Wireless-1991 — Page 118

6.c) Regulatory Policy

6.7 For the policies recommended above a strong regulatory body will be necessary for

implementation. Four policy areas in particular must be addressed.

6.8

i) Terms of Competition: An analysis should be conducted on the parameters for action within the current franchise agreements. A clear definition needs to be made on what services are allowed, what services are not allowed, and a policy statement issued outlining the conclusions of that review. We advocate that the Government should adopt a policy which allows unlimited market entry for both facilities based and non-facilities based carriers. Facilities based licences without universal service obligations but with conditions on contributions to the provision should be issued for applications to all qualified companies who meet the appropriate financial, service and technological criteria and cable operators should not be excluded from bidding for them. While there are some potential synergies with the carriage of telecommunication services on the cable TV network and vice versa, it should be left to the respective operators (excluding the dominant telecoms carrier) to exploit them and not the Government to mandate the linkage. If an immediate liberalisation policy is pursued, pro active assistance should be offered regarding fair competition with the dominant carrier on issues such as the terms for interconnection and equal access, the creation of a scheme to which all operators could contribute to sustain universal services obligations, and the methodology for establishing a fair apportionment of international telecommunication service revenues. Price capping would still be necessary even under full liberalisation as was discovered by OFTEL in the UK.

6.9 ii) Oversight of HKT/HKTI: The regulator would be responsible for ensuring that HKT and HKTI continue to maintain separate accounting records for their domestic and international activities; implementing the price-capping procedures outlined above, and policing the industry to counteract predatory pricing or any other unfair competitive practices.

6.10 iii) Issuing Licences: A policy of issuing licences for facilities-based and non- facilities-based operators on the merits of their proposals and the prudent allocation of radio spectrum must be followed.

6.11 iv) Other Functions: Other responsibilities would include functions such as encour- aging the implementation of state-of-the-art technology and the administering of the national numbering plan by the regulatory body. Hong Kong will probably want to introduce "numbering portability" that will allow customers to change networks without changing numbers at the same address.