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Following is a speech by the Secretary for Information Technology and Broadcasting, Mrs Carrie Yau, at the E1 Mix Function today (January 19):

Good evening ladies and gentlemen,

It is a great pleasure to be able to chat with you all tonight about Hong Kong's IT sector. The best way for me to feel the pulse of what is happening in the industry is to get together with professionals and entrepreneurs like yourselves at an event like this, where we can talk business in such a relaxed atmosphere. It also gives me a chance to let you know that the government wants to do all it can to make it as easy and hassle-free as possible for the IT industry to flourish in Hong Kong. In the lingo of the industry, this is a great networking opportunity for me.

Of course, the biggest network nowadays is the Internet which has reached into every corner of the globe after its debut at a Geneva physics lab in 1990. It is hard to believe that the world's biggest IT revolution has all happened in the space of a decade. It was only five years ago that Java script hit the Internet portals. Now we're talking about Next Generation Internet, 3G phones, media convergence, VR and interactive TVs.

What does the future hold? British Telecom's chief technologist Peter Cochrane reckons that wireless communicators will be able to instruct our preferred communications networks to display e-mails or even business presentations on the nearest available TV screen or computer monitor. 'Bluetooth' technology being developed will allow our mobile phone and land-line phone at home to automatically switch incoming calls to each other depending on where we are, or to turn down the heating in the house automatically once everyone leaves the room. So how do these concepts become a reality? Two key components are : having the proper infrastructure and having the right environment or culture for IT ideas to flourish and be tested.

In Hong Kong, like other advanced economies, the telecommunications and Internet industries have become major economic drivers. They accounted for about 3.5% of GDP in 1998 and 1999. Since the Hong Kong government launched the 'Digital 21' IT strategy in November 1998, we have made significant progress in strengthening our Internet and telecommunications sectors. Some key indicators to illustrate this point : one in every two households has a computer; more than one-third of the population uses the Internet; A recent AC Nielsen survey of 18 economies found that Hong Kong people spent the longest time surfing the Net, ahead of Internet users in the US and Canada; we have more than 220 ISPs which operate in a totally free and unfettered environment.

This buoyant e-culture is mainly due to our visionary entrepreneurs who have been quick to invest in and introduce new advanced and enabling technologies. The digitisation of our telecoms network in 1995 - the first place in the world to do so - was the catalyst for the development of new digital technologies and applications, including the world's first commercial video-on-demand services. Today, broadband services are available to all commercial buildings and 90% of households. Our external connectivity of 44 Giga-bits-per-second, one of the highest in Asia, is due to increase 10-fold within the next three years thanks to the deregulation of the external facilities and services market.

Apart from being well and truly wired to the rest of the world, Hong Kong is also world leader in the use of wireless technologies. Our mobile phone penetration rate of 71% is the highest in the world after Scandinavia.

All of these elements clearly reflect our position as a major - I would say THE major - telecommunications and Internet hub in the Asia-Pacific Region. And they have laid the foundations for the rapid uptake of newer and emerging technologies such as 3G mobile phones and GPRS, which will come onto the market in the next year or so.

The fact that we have done so well, in such a short space of time is, I believe, due to one critical point : a firm commitment to liberalise the telecommunications market. This is a point that is frequently commented on when I discuss our IT and telecoms sectors with ministers or regulators from other countries or at various international fora. There remains a lot of scepticism in governments around the world that deregulation and liberalisation are the correct paths to follow. And yet my overseas counterparts always seem impressed when I tell them that our telecoms infrastructure is 100% privately owned and operated, and that we expect investments of HK$13 billion in new IT and telecoms infrastructure over the next few years. To me the benefits are obvious. And that is why the government will continue to maintain a fair, open and liberal telecommunications and IT market in Hong Kong.

With all of this in mind, you should not be surprised to hear that I am very optimistic about the future development of Internet-based applications. And for Hong Kong, I see two major developments that will have significant implications on our Internet industry.

Next Generation Internet

The first is R&D work taking place in Hong Kong on the next generation Internet. Our universities have signed a Memorandum of Understanding with the University Corporation for Advanced Internet Development, which is the consortium of American research universities currently engaged in the development of the Internet2 project. We expect the R&D infrastructure for the Next Generation Internet to be in place in the second quarter of this year. Some local universities have already teamed up with other institutions overseas in areas such as tele-medicine, multicasting and virtual reality. I expect the results of this R&D work will give a new meaning to Internet-based applications.

Mobile Internet

The second development is Internet mobility. With the convergence of mobile technology, the Internet and hand-held computing, the mobile Internet is taking shape. Many new and innovative applications are already emerging. Internet connectivity is increasingly being built into mobile phones, pagers and other portable devices, allowing easy access to the net without the need for a wire connection to a PC or a laptop. Industry analysts predict that by the end of 2004, more than 1.5 billion mobile phones, PDAs, and Internet appliances will be in circulation, all equipped with wireless capabilities. This is expected to bring the number of people using wireless data technology from about 170 million worldwide in 2000 to more than 1.3 billion by 2004 - a more than seven-fold increase in the space of four years.

This will obviously present opportunities in Hong Kong. With our strength in mobile communications and Internet technologies, we will be well-positioned to capture the growth of the next generation commerce, or what we call m-commerce.

Someone less optimistic may query if the recent close down or downsizing of dot-coms in Hong Kong have not posed any risks to our Internet and web companies. I think that this however has also provided new opportunities - the dot-coms market is now consolidating and the most important of all is to have viable and well designed business plan. I was just back from India, there are a number of Indian companies which are transforming themselves from traditional to IT business. They have well designed business plan and low cost service. They are eager to enter into the Hong Kong market. One such company is the Goenka Infotech Limited which is providing value added service on the web. Hong Kong company can partner with them, taking advantage of their strong software industry and low development cost, and Hong Kong's creativity and strong marketing capability, to explore the huge market in both Hong Kong and the Greater China area.

Ladies and gentlemen, I am sure all of you have some brilliant ideas on how to capture the business opportunities in the Internet world. While the industry will take the lead in making cyber dreams come true, I can assure you that the government will help you realise these dreams by continuing to foster a conducive environment, supported by sound and effective policies. I look forward to working together with the IT industry, and people like yourselves, to make Hong Kong the e-hub of Asia.

Thank you.

End/Friday, January 19, 2001

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