ENG-2004 — Page 468

402 Communications, the Media and Information Technology

to be issued, nor on timing for submission of applications for licences. By year-end, there were altogether 13 local fixed telecommunications network services (FTNS) operators. They included nine local wireline-based FTNS operators, one local wireless- based FTNS operator, one cable television operator which provides telecommunications services over its hybrid fibre coaxial network and two FTNS operators for distribution of domestic free TV programme services.

In 2004, the Government completed a review of the policy and regulatory regime for Type II interconnection, which refers to interconnection between two fixed telecommunications networks at the customer access network level to enable operators without a customer access network to provide services to customers through the networks of other operators. After two rounds of consultation in 2003, the Government concluded in July 2004 that mandatory Type II interconnection at telephone exchange level would be fully withdrawn by June 30, 2008, except for buildings meeting the 'essential facilities' criteria. In the run-up to June 30, 2008, Type II interconnection will be withdrawn on a building-by-building basis in buildings connected by at least two self-built customer access networks.

Traditional stand-alone voice networks, data networks and broadcasting networks are progressively migrating to the Next Generation Networks (NGNs), which support all forms of communications. This converged mode of transmission simplifies network structure and lowers costs. The Government will review the regulation of FTNS, which is based on the traditional Public Switched Telecommunications Networks, in the light of the different forms of network and service operation of NGNS. As a first step of an overall review, OFTA launched a consultation on the regulation of Internet Protocol (IP) telephony in October 2004.

Broadband and Internet Access Services

At year-end, virtually all households and commercial buildings were covered by the broadband network. The number of broadband accounts increased significantly during the year to 1 484 486, or 22 broadband accounts per 100 inhabitants, representing an annual increase of 21 per cent. In addition, 61 per cent of households had broadband Internet access. Internet Service Providers (ISPs) numbered 188 at year-end.

According to reports issued by the International Telecommunication Union (ITU) in 2003 and 2004, Hong Kong ranks second in the world in terms of broadband penetration. According to the ITU's Digital Access index published in November 2003, Hong Kong ranks No. 1 in the world in terms of affordability of Internet access.

With a view to further promoting the use of broadband technologies, the Government will consider allocating spectrum for the provision of services based on broadband wireless access technologies (including technologies based on the IEEE 802.16 series of standards). A public consultation on the licensing arrangement of such services was launched in December 2004.