Madam President,

Thank you Madam President for allowing me to speak. I wish to use this opportunity to thank Members for supporting the appropriation of $6.7 billion and for approving our proposed two regulations to amend the Telecommunication Regulation and the Telephone Regulation, so that we could implement the agreement reached with Hong Kong Telecom (HKT) for the early termination of the monopoly in external telecommunications services. The liberalisation of the entire telecommunications market and the introduction of competition more than 7 years ahead of schedule will benefit consumers and strengthen the competitiveness of Hong Kong.

Our previous record in liberalising telecommunications market speaks for itself. From telecommunications equipment, radio pagers, mobile phones to the introduction of call-back international telephone services, we can see the benefits competition can bring to consumers, and the increases in efficiency and improvement in competitiveness in all sectors of the economy.

We believe that the early termination of HKT's monopoly in external telecoms services will bring over $17 billion in direct consumer benefits. Liberalising international telecommunications market will also bring in investment, stimulate the economy, create employment opportunities and remove the hindrance from the monopoly on the introduction of new technology, so as to ensure Hong Kong's position as the telecommunications hub in the Asia-Pacific region.

Members may feel a bit anxious on whether the price paid now will commensurate with the returns in future, just like parents facing the same anxiety at their daughter's marriage not knowing whether she will have happiness, after paying the "dowry". But I can assure Members that competition will be an honest husband that will not let you down. From experience in Hong Kong and worldwide, a fair and effective competitive environment will definitely be beneficial to consumers.

It is of course of utmost importance that Government regulation can ensure a truly level playing field, particularly at the commencement of competition, since the new operators need appropriate regulations to ensure that they will not be unfairly attacked by existing operators with advantages in the market. In this regard, both DG, OFTA and I have explained that existing legislation already possess sufficient provisions for measures against anti-competitive behaviour and operators with dominance. With regard to the liberalisation of the telecommunications market, we will adopt an open and fair system in choosing successful applicants. But suitable supervision of licensees' behaviours is still needed, for example in the area of protection of clients' information and data and the prohibition of all anti-competitive behaviour.

Considering that external telecoms services will be liberalised in less than 10 months' time, we have decided to advance the review on telecommunications policy previously scheduled for mid-year. We will issue a consultation document in April to invite the industry and interested parties to submit their views on the way the market should be liberalised. This way, we can complete the review and issue licences to applicants meeting the criteria earlier - from around September, so that new operators will have sufficient time to prepare for the commencement of services from 1 January next year.

I know Members have considered carefully the issue of local residential exchange line tariffs. We have explained that the Agreement we have reached with HKT will result in an opening of the local fixed telecommunications market to much greater competition. HKT is required to open up at least 50% of its local network by January next year before any increases in local residential tariffs will be allowed. We expect to see real competition in the local market as these exchange lines are opened up. With competition disciplining the market, local tariffs will remain at reasonable level.

Members who have just spoken can rest assured that the Government is determined and has substantial reserve powers to monitor and regulate a liberalised telecommunications market. These powers are contained in the Ordinance, Regulations and licence conditions. Amongst other things they allow us to ensure a fair, competitive market and the Telecommunications Authority has the ability to intervene and set both technical and commercial conditions if the industry cannot reach satisfactory arrangements by commercial negotiation. Therefore, these powers allow us to establish interconnection arrangements between the established players and new external services licensees and the Telecommunications Authority has already commenced a consultation exercise on the development of delivery fee arrangements which encompasses this matter.

Lastly, let me thank Members, especially the Hon James Tien and those who attended the committee meeting, for supporting the full liberalisation of the telecommunications market in order to allow Hong Kong consumers, and Hong Kong in general, to gain much benefits through this liberalisation. Thank you.