Speeches and Presentations



LCQ19: Broadband Internet access services

Following is a question by the Hon Charles Mok and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Legislative Council meeting today (December 4):

Question:

I have received complaints from some members of the public, pointing out that quite a number of remote areas such as outlying islands and villages in the New Territories, etc. as well as some residential buildings in the urban area have access to broadband Internet access services provided by a single fixed network broadband data service operator (operator). When the service contracts are renewed, such operators often increase their charges drastically to a level much higher than that those they are charging other users who have access to services provided by more than one operator. It has been reported that the Consumer Council has pointed out that the adoption of differential charging for different areas by the operators might amount to discriminatory pricing and urged the Government to solve the problem of such services in remote areas being monopolized by operators. In this connection, will the Government inform this Council:

(a) whether it has assessed if the operators' practice of adopting differential pricing for users in different areas is a breach of the relevant licence conditions; whether the authorities will review the existing legislation with a view to eradicating such practice; if they will, of the details; if not, the reasons for that;

(b) of the respective separate and overall household penetration rates and coverage of the Fibre-to-the-Home (FTTH) and Fibre-to-the-Building (FTTB) services across the territory, and such percentages in each District Council (DC) district, as at the end of October this year; the respective percentages of the numbers of households and buildings which access the Internet via channels other than fibre-based networks in the relevant totals in each DC district;

(c) whether the percentage of the number of buildings covered by the FTTH or FTTB services in the total number of buildings has increased since the introduction of the Registration Scheme for Buildings with Optical Fiber-based Access Networks; how many of these two types of buildings are situated in remote areas, with a breakdown by DC district; and

(d) whether the authorities took any specific measure to promote the development of fibre-based networks in remote areas (including encouraging operators to invest in the development of networks) in the past three years, so as to enhance the penetration rate, reliability and connection speed of the broadband Internet access services in remote areas; if they did, of the details; if not, the reasons for that?

Reply:

President,

(a) Under the existing Section 7N of the Telecommunications Ordinance (Cap. 106) (TO) (hereinafter referred to as "Section 7N"), a licensee who is in a dominant position in a telecommunications market shall be prohibited to discriminate between persons who acquire the services in the market on charges or the conditions of supply. The prohibition provision applies only where in the opinion of the Communications Authority (CA) such discrimination has the purpose or effect of preventing or substantially restricting competition in a telecommunications market. If the pricing of an operator falls under the price discrimination which is prohibited under Section 7N, the CA will conduct an investigation in accordance with the TO and the established procedures and take regulatory actions where necessary.

Between 2011 and 2012, the CA received a number of complaints against a residential fixed broadband service provider about charging different monthly service fees for different areas. The CA, having regard to the number of service providers in the residential fixed broadband service market in Hong Kong, their respective market shares and the feasibility of using mobile broadband service as a substitute for the residential fixed broadband service, has concluded that the service provider in question is unlikely to be in a dominant position in the relevant market, and hence the prohibition provision under Section 7N is not applicable. Besides, the CA considers that it is not uncommon for operators to set different prices for different customer groups in a highly competitive telecommunications service market, and it may not amount to a deviation from the normal operation of the market resulting in a breach of Section 7N.

The Competition Ordinance (Cap. 619) (CO) was enacted in June 2012 and will be implemented in phases. The competition provisions of the TO, including Section 7N, will be repealed after the conduct rules of the CO coming into force. By then, any anti-competitive behavior in the telecommunications industry will be regulated by the CO which applies across different sectors. The Administration has no plan to review the relevant legislation.

(b) and (c) When the Voluntary Registration Scheme for Buildings with Optical Fibre Access Networks (the Scheme) was launched in November 2010 with the participation of five operators, the numbers of residential buildings registered with fiber-to-the-home (FTTH) and fibre-to-the-building (FTTB) were about 2 100 and 6 600 respectively. The Scheme was expanded to cover non-residential buildings in Hong Kong in April 2013. At present, there are a total of seven operators participating in the Scheme. As at October 2013, the Scheme has recorded over 11 200 FTTH and 2 300 FTTB residential buildings, accounting for about 72% and 11% of the total households respectively across the territory. However, we do not have a breakdown by districts. The number of FTTH residential buildings has now increased by more than four times as compared with that in the early days of the Scheme. In the meantime, some of the FTTB residential buildings have been upgraded to FTTH, resulting in a relative drop in the number of residential buildings using FTTB access technology.

(d) With the full liberalisation of the telecommunications market in Hong Kong, the provision of fixed broadband service, the network coverage and the type of technologies adopted are primarily based on the operators' commercial considerations. Regarding whether fibre-based network service will be provided in remote areas, it is a matter of commercial decisions for the operators. Upon the receipt of a request for fixed broadband service in remote areas, the Office of the Communications Authority (OFCA) will relay it to operators and encourage them to explore feasible options, with a view to enhancing the network coverage of the subject areas and meeting market needs.

OFCA will, as it has been the case all along, be committed to offering facilitation measures to encourage and assist operators to invest in network expansion, so as to enhance network coverage and access. These measures include providing assistance to operators in establishing network across public streets, government-owned bridges and tunnels; explaining to property management companies and owners' corporations the responsibilities and accountability of operators in respect of network rollout in private premises, etc.

Wednesday, December 4, 2013