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Following is a question by the Hon Sin Chung-kai and a written reply by the Secretary for Commerce and Economic Development, Mr Frederick Ma, in the Legislative Council today (July 2):
Question:
On April 27, 2007, the Telecommunications Authority (TA) issued a statement announcing that it would, subject to a two-year transition period, de-regulate the Fixed-Mobile Interconnection Charge (FMIC) arrangement by withdrawing the regulatory guidance in favour of a structure for payment of FMIC based on the Mobile Party's Network Pays (MPNP) methodology. TA has stated that in the future primary reliance will be placed on negotiated outcomes between the fixed and mobile network operators, with TA intervening only if agreement cannot be reached. In this connection, will the Government inform this Council:
(a) whether TA plans to withdraw the regulatory guidance on MPNP at the end of the transition period as scheduled;
(b) whether it has assessed if TA's allowing PCCW-HKT Telephone Limited (PCCW) to increase its FMIC with effect from June 1, 2008 is consistent with the policy of de-regulating the current FMIC arrangement; if it is assessed so, of the reasons for that;
(c) whether it has assessed if PCCW's decision to increase its FMIC tariff without prior notice or consultation with other telecommunications operators is consistent with TA's preference for negotiated outcomes; and
(d) whether TA will provide assurances that the deadline of April 27, 2009 for withdrawal of the regulatory guidance on MPNP will not be deferred?
Reply:
Madam President,
In accordance with the current regulatory guidance issued by the Telecommunications Authority (TA) in June 1995 on fixed-mobile interconnection charge (FMIC) arrangement, the principle of "mobile party's network pays" (MPNP) is adopted, under which for every call made from a fixed line to a mobile phone, or from a mobile phone to a fixed line, the mobile network operator has to pay an interconnection charge to the fixed network operator.
Under PCCW's licence, amendments to the interconnection charges which were in force at December 1, 2004 are subject to TA's prior approval. The TA shall approve every such amendment where, in the TA's opinion, the amended tariff would not be in contravention of the competition provisions of the Telecommunications Ordinance (TO). If the TA does not approve or disapprove the application, it will be deemed to be approved after a period of 30 days from the date of receipt of the application.
In his Statement dated April 27, 2007, the TA announced that a number of regulatory changes would be adopted as a consequence of his review in relation to fixed mobile convergence. This includes, among others, the withdrawal of the existing regulatory guidance in favour of MPNP, subject to a transition period of two years.
PCCW published in the gazette on May 23, 2008 the revised FMIC Tariff. The TA published a statement on the same date to explain his position regarding PCCW's application. On June 18, 2008, a mobile network operator (MNO) submitted to the TA and requested for an investigation on the tariff increase conduct of PCCW under Section 7L or other competition provisions in the TO. Separately, two MNOs filed appeals in respect of the case with the Telecommunications (Competition Provisions) Appeal Board on June 6, 2008.
Against the above background, my reply is as follows:
(a) & (d) The TA reiterates that the current regulatory guidance in favour of the MPNP arrangement will be withdrawn on April 27, 2009 as set out in the TA Statement of April 27, 2007.
(b) & (c) The FMIC arrangement is a regulatory matter which falls within the ambit of the TA. When considering the approval or disapproval of the application for an increase in FMIC Tariff, the TA exercises his power under the relevant licence condition impartially and independently.
While the TA encourages fixed and mobile operators to negotiate commercially the future FMIC arrangement after the withdrawal of the current regulatory guidance which is in favour of the MPNP arrangement, it is currently not a licensing requirement for PCCW to inform nor consult other operators about the change in the level of FMIC Tariff in advance. In addition, since the liberalisation of the local fixed market in July 1995, it has not been an established practice for OFTA to undertake any industry consultation in relation to changes in the level of PCCW's FMIC Tariff.
The Government has received legal advice that the specific issues set out in parts (b) to (c) are matters that fall within the scope of the two separate appeals filed with the Telecommunications (Competition Provisions) Appeal Board as set out in the above reply. Since these matters are now sub judice, the Government is not in a position to comment further at this juncture.
Ends/Wednesday, July 2, 2008
Issued at HKT 15:26
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