ENG-2006 — Page 422

354 | Communications, the Media and Information Technology

entertainment and wireless application development industries. These are particularly important for SMEs that cannot afford the initial investment in expensive equipment and lack access to useful resources and business information. In addition, the Hong Kong Wireless Development Centre established the Hong Kong TD-SCDMA Service Development Centre in November 2006 to facilitate entry into the China market of Hong Kong companies involved in wireless applications.

Telecommunications

The Government's telecommunications policy facilitates the development of the telecommunications industry and enhances Hong Kong's position as an international telecommunications hub.

The Office of the Telecommunications Authority (OFTA) is the executive arm of the Telecommunications Authority. It oversees the regulation of the telecommunications industry in Hong Kong and administers the legislation governing the establishment and operation of telecommunications equipment and services.

Hong Kong's telecommunications market is fully liberalised and highly competitive. There are sector-specific pro-competition provisions in the Telecommunications Ordinance to ensure fair and effective competition in the telecommunications market.

Entering the Era of Convergence

Convergence of telecommunications services is taking place at a number of levels. At the core level, 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 on a single platform. At the access level, the boundary between fixed and mobile networks is also blurring. This converged mode of transmission enhances the efficiency of network operation, lowers costs and facilitates the quick introduction of innovative services to the market. Such a development requires OFTA to review and update the regulatory regime in a timely manner.

The promulgation of the regulatory framework for Internet Protocol (IP) telephony in June 2005 and the creation of the service-based operator (SBO) licence for the provision of IP telephony services in January 2006 were good examples of the Government's effort to keep pace with market and technology developments. Under the new regulatory framework for IP telephony, both local fixed network operators and SBO licensees are allowed to provide voice telephony services over IP networks. At year-end, there were five SBO licensees.

The current regulatory framework which demarcates fixed and mobile carrier services with differential regulatory arrangements may also need to be revamped in order to cater for the convergence trend. A consultation paper proposing a unified licensing framework was first issued in September 2005. In December 2005, a consultancy study was initiated to analyse the costs and benefits to stakeholders and the community arising from possible changes to the existing regulatory arrangements, such as fixed-mobile interconnection charging arrangement and fixed-