Hong Kong decides to open telecom market
Jennifer Genevieve
Hong Kong, Jan 20: Hong Kong Telecommunications Ltd and the Hong Kong government agreed on Tuesday to an early end to Hongkong Telecom's international telecommunications licence, opening the market for competition from January 1999.Under the landmark agreement, Hongkong Telecom International Ltd will surrender its exclusive licence on March 31, 1998, in return for a package of compensation measures, including HK$6.7 billion (US$865 million) in cash, net of tax. The Hong Kong government said it planned to issue licences for competitive external telecommunications services, which would take effect from January 1, 1999, and for external telecommunications facilities from January 1, 2000.Consumers are set to save HK$17 billion in international direct dial (IDD) tariffs from the opening of the market. ``Before this agreement, our external telecommunications sector was out of line with the best current international practice and this has had adverse implications for our regional competitiveness in
telecommunications,'' secretary for economic services, Stephen Ip, said in a statement. ``This liberalisation coming at this time of economic uncertainty in the region will also give Hong Kong a significant economic stimulus.'' Hongkong Telecom's exclusive international licence was issued in 1981 and was due to end in 2006. Under the agreement, Hongkong Telecom will receive the cash compensation in two instalments of HK$3.35 billion each - one on March 31 and the other on July 1, 1998. It will also stop paying the government royalties under its exclusive international licence from January 20, 1998. Hongkong Telecom paid royalties of HK$532 million last year.``This agreement balances the interests of all stakeholders and provides fair compensation to Hongkong Telecom for giving up a valuable asset,'' Hongkong Telecom chief executive Linus Cheung said in a statement. Hongkong Telecom said it would continue to provide external services and facilities on an exclusive basis until the liberalisation
dates, and non-exclusively after that. With the surrender of the monopoly, Hongkong Telecom will be allowed to progressively raise monthly charges for residential exchange lines over a three-year period - subject to it opening at least 50 per cent of its local lines to competitors before the January 1, 1999 liberalisation date. ``This ``rebalancing'' is to remove the cross-subsidisation of residential exchange lines with revenue from international services,'' Hongkong Telecom said. Local telephone calls are free in Hong Kong. The current monthly charge for residential exchange lines is HK$68.90. Hongkong Telecom said new limits for its monthly charge would be fixed at no more than HK$90.00 from January 1, 1999, no more than HK$100.00 from January 1, 2000 and no more than HK$110.00 from January 1, 2001. ``It is proposed that no restrictions will apply to this charge from 1 January 1, 2002,'' Hongkong Telecom said. The deal also provides for the removal of a cap on Hongkong Telecom's charges for
business line rentals from July 1, 1998. Hongkong Telecom shares closed on a gain of HK$0.40 at HK$15.55 on Tuesday. ``There are not many monopolies left around the world and we are just following the general trend. It is good for the consumer but there are concerns mainly about the long-term effect on Hongkong Telecom, and for that we will have to wait and see'', said one analyst.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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