Telecommunications In Hong Kong: Industry Report

Telecommunications In Hong Kong

Product Type: Market Research Report
Published by: Asia Pacific Telecom Research Ltd
Published: January 2008
Product Code: R690-13

Description

Hong Kong is a Special Administrative Region of China. It lies on China’s southern coast, at the mouth of the Pearl River. It is a major port in Asia, acting primarily as a gateway between China and the rest of the world, though it is also a centre of trade, finance and tourism in its own right.

Hong Kong’s economy was built upon manufacturing but it is now largely services-based. While the manufacturing companies are still based in Hong Kong, most of their manufacturing activities have moved across the border into the neighbouring Chinese province of Guangdong.

Hong Kong’s telecom history is unusual in that the provision of telecom services has always been in private hands. The two original incumbent operators, one for domestic and the other for international services, held exclusive franchises for their respective areas of operation. The fact that they were private companies had some important implications when the government began to de-regulate the industry. Competition was introduced first in 1989 - in the mobile sector because the incumbent only had a monopoly over fixed-line services.

Hong Kong’s local services are among the most advanced available anywhere, and this is to a great extent the result of the government’s Scheme of Control that was in place while the incumbent operators held monopoly positions in the market. This Scheme of Control encouraged them to invest in their infrastructures, and the benefits of this are still being felt.

The local network has officially been open to competition since 1995. However, for some years little competition developed. More recently the new fixed-line operators have gained a greater foothold and the incumbent’s market share has fallen to less than 70%.

Since Hong Kong is a small territory, with no place more than a few dozen kilometres from any other, the concept of domestic long distance services does not exist.

Until 1998, international services were provided exclusively by a commercial company, but its service-based exclusivity was ended in 1998 and its facilities-based exclusivity was concluded at the end of 1999. Since then, major changes have taken place in the international telecom market, not least the dramatic fall in international tariffs and the increase in service quality resulting from the competition that was introduced. Today, international tariffs are a fraction of what they used to be while innovative marketing and new services contribute to greater customer satisfaction.

Mobile telephone services began in Hong Kong in 1984. In 1992, the first digital network was established, after which the mobile sector has gone from strength to strength. Government figures indicate that the penetration of mobile phones exceeds 130%.

Until fairly recently, Wireless Data Services had not been very popular in the territory. However, the situation began to change in 2001 when more content became available. Subsequently, Short Messaging Services (SMS) met with almost immediate success when introduced in early 2002.

Encouraged by the increased acceptance of Wireless Data Services, the regulator decided to issue 3G licences in 2001. An auction was planned for the four licences available, but only four bidders applied. The licences were therefore issued at the reserve price, and all four licensees have begun offering 3G services. The issue of one further licence is planned.

Broadband services took some time to become popular in Hong Kong. However, when the new fixed-line operators began extending their broadband-enabled networks to many more customers, the incumbent was forced to extend its broadband coverage much more widely than hitherto. Since then, take-up has been very fast. Hong Kong now has the second greatest broadband penetration in the Asia-Pacific region.

The Internet started to gain widespread popularity in 1995. One of the reasons for the rapid growth was the dynamism of the market, encouraged by the large number of ISPs in business. There is no limit to the number of ISP licences that the regulator will issue.

The first steps towards e-commerce were taken in the late 1970s but Hong Kong did not really capitalise on its first-mover position. The government was late in perceiving the benefits of e-commerce and thus for many years did little to encourage companies to modernise their business practices. The situation has changed in recent years, and Hong Kong has become one of the leading users of e-commerce in the Asia-Pacific region.

Initially, paging was a service that surprised everyone by the rapidity of its growth. By 1994, more than one person in five in Hong Kong used a pager. Then, with the introduction of cheap cellular mobile services, the situation changed rapidly, and subscriber numbers began to fall. The fall is continuing to this day.

Trunked Radio Services (TRS) first became publicly available in 1989 and there were great hopes that the territory would become a test-bed for TRS services. Unfortunately, these hopes were not realised, and TRS is now just a niche market.

Hong Kong has long had a capable and efficient cable and satellite infrastructure. As a result, the territory has emerged as a telecom and broadcasting hub for the Asia-Pacific region. It is served by a substantial number of cables and satellites that convey traffic to and from Hong Kong, both to supply Hong Kong’s own needs and for onward transmission to other countries. In particular, Hong Kong has become a hub for traffic to and from mainland China. Its position as the regional centre for many multinational companies has further encouraged investments in the infrastructure.

Pay-TV services have had a chequered history since their introduction in 1993. Part of the responsibility for this was the confused and confusing regulatory regime introduced by the government. Eventually one operator, using HFC cable, emerged as the sole operator and gained a firm foothold. More recently, it has been facing strong competition from new entrants to the market, particularly from the main fixed-line operator’s IPTV service. Today, Hong Kong’s Pay-TV market is thriving. Four operators currently provide services and others are expected to join in shortly.

Table of Contents

COUNTRY OVERVIEW: Introduction; History; Geography; Population; Politics; Economy; Summary
TELECOM OVERVIEW: Background; Current Situation; Environment; Operator Overview; Regulatory authority; Network Infrastructure; Statistical Summary; Further Information; Summary
REGULATORY ENVIRONMENT: Background; Current Situation; Telecommunications Policy; Legislation; Relevant Government Department; Regulatory Body; Type II Interconnection; Fair Competition; Digital Terrestrial Television; Foreign Ownership; Summary
LOCAL SERVICES: Background; Current Situation; Access Lines in Service; Service Providers; Tariffs; Further Information; Summary
LONG DISTANCE SERVICES: Introduction
INTERNATIONAL SERVICES: Background; Current Situation; Volume of International Traffic; External Fixed Network Operators; Tariffs; Choosing an Operator; Summary
MOBILE TELEPHONE SERVICES: Background; Current Situation; Number of Subscribers; Licensees; Market Consolidation; Market Shares; Tariffs; Number Portability; CT2 Services; Further Information; Summary
WIRELESS DATA SERVICES: Background; Current Situation; WAP Services; General Packet Radio Services; Short Messaging Services; Multimedia Messaging Services; 3G Licensing; Launch of 3G Services; 3G Subscribers; The Asia Mobility Initiative; Further Information; Summary
BROADBAND SERVICES: Background; Current Situation; Number of Subscribers; Networks; Market Shares; Applications; Further Information; Summary
INTERNET SERVICES: Background; Current Situation; Regulatory Position; Number of Subscribers; Key Drivers of Internet Usage; Key Inhibitors of Internet Usage; Internet Telephony; Internet Service Providers; Electronic Service Delivery Scheme; Further Information; Summary
ELECTRONIC COMMERCE: Background; Current Situation; Legislation; Market Overview; Value of E-Commerce; Public Key Infrastructure; Drivers of E-Commerce; Further Information; Summary
PAGING SERVICES: Background; Current Situation; Number of Subscribers; Service Providers; Further Information; Summary
TRUNKED RADIO SERVICES: Background; Current Situation; Number of TRS Stations; Operators; Summary
CABLE AND SATELLITE INFRASTRUCTURE: Background; Current Situation; Regulatory Changes; Terrestrial Cables; Submarine Cables; Cable Operators; Satellites; Satellite Operators; Domestic Satellite Operators; Summary
PAY-TV SERVICES: Background; Current Situation; Regulatory Changes; Merging the Regulators; Pay-TV Licensees; Current Operators; Services Available; Pay-TV Service Statistics; Tariffs; Further Information; Summary
COMPANY PROFILES: China Mobile Peoples Telephone Co Ltd; CSL New World Mobility Ltd; Hutchison Global Communications Ltd; Hutchison Telephone Ltd; i-Cable Communications Ltd; New World Telecom Co Ltd; Pacific Century Cyberworks Co Ltd; PCCW Mobile HK Ltd; SmarTone Communications Ltd; Wharf T&T Ltd
CONTACT DETAILS: Government; Trade Organisations; Telecom Companies; Other IT Companies
APPENDIX 1: Satellites Serving Hong Kong
APPENDIX 2: Submarine Cables Landing in Hong Kong
LIST OF EXHIBITS: COUNTRY OVERVIEW; TELECOM OVERVIEW; LOCAL SERVICES; INTERNATIONAL SERVICES; MOBILE TELEPHONE SERVICES; WIRELESS DATA SERVICES; BROADBAND SERVICES; INTERNET SERVICES; ELECTRONIC COMMERCE; PAGING SERVICES; TRUNKED RADIO SERVICES; CABLE AND SATELLITE INFRASTRUCTURE; PAY-TV SERVICES; COMPANY PROFILES

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