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The Office of the Telecommunications Authority (OFTA) today (December 4) issued a consultation paper to seek public views on the future arrangement of Special Condition (SC) 3.4 under the Fixed Carrier Licence (FCL) held by PCCW-HKT Telephone Limited and Hong Kong Telecommunications (HKT) Limited (collectively referred to as "PCCW").
SC 3.4 provides, among other things, that amendments to specified published tariffs of PCCW on interconnection must first be approved by the Telecommunications Authority (TA) and the TA shall approve such amendments if he does not consider the amended tariff would be in contravention of the competition provisions of the Telecommunications Ordinance.
Among all the fixed network operators, SC 3.4 is a special licence condition applicable only to PCCW, the incumbent operator in the market of local fixed telecommunications service. SC 3.4 is aimed at maintaining the ex ante tariff regulation on certain interconnection services provided by PCCW.
"Since SC 3.4 came into operation in January 2005, the TA has introduced a number of regulatory changes, including the introduction of the service-based operators licensing regime, the withdrawal of regulatory guidance on Fixed-Mobile Interconnection Charge and the implementation of the Unified Carrier Licence. In view of these significant changes and in the light of the impending expiry of the FCL granted to PCCW in June 2010, the TA considers that it is appropriate to review the future arrangement for SC 3.4," a spokesperson of OFTA said.
Having duly considered the latest market situation, the TA has identified two possible options to deal with the future of SC 3.4 under PCCW¡¦s FCL - the removal of SC 3.4 in its entirety from PCCW's FCL or keeping SC 3.4 in PCCW's FCL but removing individual tariff items governed by SC 3.4 on a case by case basis.
"As the regulator of the telecommunications sector, the TA has the duty and responsibility to ensure that our regulatory framework is proportionate and commensurate with the market development. He has an open mind about the options about the future arrangement for SC 3.4 and would like to invite the industry to come forward with their views and comments for his consideration," the spokesperson said.
Interested parties are invited to submit views or comments on this consultation paper. All submissions should reach OFTA on or before February 4, 2010. The consultation paper can be downloaded from the following hyperlink at OFTA's website:
http://www.ofta.gov.hk/en/report-paper-guide/paper/consultation/consultation-ftn.html
Background
The local fixed telecommunications service market (market) was deregulated on July 1, 1995. Between July 1, 1995, and January 14, 2005, as the incumbent operator in the market, PCCW was presumed to be the only dominant player in the market and was regulated as such. During this period, all PCCW's tariffs for both its wholesale and retail services (including the introduction of new tariff or a change or amendment to an existing tariff) were subject to prior approval of the TA.
On January 14, 2005, the TA lifted the prior approval requirement on PCCW's tariff with the issuance of a replacement FCL. While the ex post tariff approval arrangement was to be applied to all retail services of PCCW, the TA decided to maintain ex ante regulation on certain interconnection services so as not to disturb the status quo with respect to the then interconnection arrangements. SC 3.4 was accordingly incorporated in PCCW's FCL to give effect to such regulation. Under SC 3.4, any amendment to the published interconnection tariffs of PCCW which were listed in Schedule 7 to the FCL must first be approved by the TA in writing.
In July 2009, PCCW made a request to the TA to carry out a review on SC 3.4 and applied for removal of SC 3.4 from its FCL.
Ends/Friday, December 4, 2009
Issued at HKT 12:58
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