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Consultation Paper on The 1998 Review of Television Policy/The Review of Fixed Telecommunications

2 October 1998

Information Technology and Broadcasting Bureau 1F-2F Murray Building Garden Road Hong Kong

Dear Sirs,

Consultation Paper on The 1998 Review of Television Policy Consultation Paper on The Review of Fixed Telecommunications – A Considered View

We are responding with our comments on the two above consultation papers.

We appreciate the detailed consideration that has obviously gone into the two papers. We also appreciate the broad direction of the two towards a more open and competitive environment, supporting the further development of Hong Kong.

Our further comments are as follows: The two papers

1. Although both papers are being issued together, which we appreciate, we wonder if the growing relatedness of the two areas would justifytaking a further "quantum leap" to develop an integrated policyspanning both areas.

• For example, should there continue to be a separate Broadcasting Authority and Telecommunications Authority? The respective roles of each are touched upon in the television policy paper, but no comprehensive justification is given for the continued existence of two institutions. Either such justification should be provided, and their respective roles clearly delineated, or consideration should be given to merging them.
• As a second example, we note that the television policy paper takes a vigorous approach to requiring the incumbent cable provider, Wharf, to provide access to its lines, while the telecoms paper seems milder on the dominant incumbent, Hongkong Telecom. A more unified approach might result in a better and more equitable policy.

2. Although, as noted above, both papers are detailed and obviouslyresearched, there are surprisingly few references to overseas practice. We would strongly suggest that Hong Kong should not be trying toreinvent the wheel, but should try to identify and follow best practicein advanced overseas jurisdictions. We do not have the resources tobe a leader, rather, we should be a "fast follower".

Telecoms

3. We share with many commentators the concern that the three newcarriers have together achieved less than 2% market share, the incumbent provider Hongkong Telecom retaining more than 98%.There should be investigation of why this is so, and, if appropriate, vigorous action taken against any anti-competitive practices identified.With reference to point 1 above. We note nonetheless that the threat of competition has resulted in greatly reduced IDD prices, which hasbeen very beneficial for Hong Kong.

4. You may wish to commission a study, e.g. by academic specialists, of the dynamics of the telecoms market in Hong Kong comparing with leading overseas markets. We believe that the current vitality of the telecoms market in the US may relate strongly to the breakup of the previous monopoly of AT&T, whereas in Britain the Government failed to breakup British Telecom with the result that it retained a more than 90% share of the market.

5. In any event we believe that there should be no restriction in the number of licences issued, i.e. that the number of fixed line providers should not be restricted to the current four if more carriers wish to enter the market.

Television

6. We note that foreign ownership of a television (non-satellite) company is still restricted to 49%. This restriction should be dropped.

7. We are sympathetic to the stated goal of enabling a programme producer industry to develop. However, we suggest that the conditions for this would be more favourable if there were more television companies.

8. There should be no restriction on the number of television licences issued. In this regard, the various restrictions on the holders of a licence should as far as possible be dropped. For example, the requirement to operate an English channel should be dropped. We expect that market forces would lead to at least some English programming anyway; if this does not happen, and if Government believes English programming to be important for social purposes, it should pay for it directly out of taxation rather than forcing the industry to cross-subsidise.

9. We question the establishment of a joint Government-industry steering committee on DTT trials. Firstly (see point 2 above), we believe that Hong Kong's efforts should be directed in identifying and following best overseas practice rather than developing standards itself. Secondly, we would prefer Government to take responsibility for policy development itself - in which process it should take proper account of input from industry, users, public and experts - rather than delegating this function to committees of this kind which in our view are too easily captured by special interests.

We hope that the above comments are helpful.

Yours sincerely,

Alan LUNG Ka-lun
Chairman