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Hong Kong - A Regional Telecommunications and Internet Hub

Written by  K C Kwong
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K C KwongIssue:Asia-Pacific II 1999
Article no.:6
Topic:Hong Kong - A Regional Telecommunications and Internet Hub
Author:K C Kwong
Title:Secretary for Information Technology and Broadcasting
Organisation:Government of the Hong Kong Special Administrative Region
PDF size:24KB

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Article abstract

Hong Kong is renowned for its excellent telecommunications infrastructure and services. Its telecommunications industry has a cutting edge over that in many developed countries in both coverage and sophistication. For instance, Hong Kong has broadband coverage to practically all commercial buildings and some 75% of households. And Hong Kong has a mobile telephone penetration of some 44%, with comprehensive network coverage extending to such places as the Mass Transit Railway, road tunnels and other confined areas such as shopping arcades. Hong Kong also has the worlds first commercial rollout of Video-on-Demand.

 

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Hong Kong is already a key regional telecommunications hub. However, in this ultra-competitive era, we still need to maintain a sustainable advantage. This is particularly important when we are seeing an exponential growth in forecast traffic as a result of the growth of the Internet. Indeed, it is generally accepted that traffic volume over the Internet will soon overtake the traffic volume over conventional Public Switched Telephone Network (PSTN). Thus, Hong Kong considers it important to serve as not only a telecommunications hub but also as an Internet hub for the region in order to remain competitive in the Information Age. Whether we can meet this challenge depends on our ability to provide efficient telecommunications infrastructure and services at reasonable costs, and to promote Hong Kong as an Internet content hub. Efficient Telecommunications Infrastructure and Services Hong Kong is in a comparatively advantageous position with regard to the provision of telecommunications infrastructure and services. We already have very good fundamentals. In Hong Kong, telecommunications infrastructure and services are provided entirely by the private sector. Our telecommunications market is one of the most open in the world. There are no foreign ownership restrictions and we are committed to providing a level playing field. Our licensing regime is technologically neutral. We adopt a pro-consumer and pro-competition regulatory framework for the telecommunications industry. We place a limit on the number of licenses only if there are constraints such as the availability of radio spectrum, a need to avoid unnecessary environmental disruptions such as road openings to lay cables or a need to encourage investment in particular sectors. Local fixed telecommunications We have an excellent communications backbone. The local fixed telecommunications network in Hong Kong has been fully digitalised since 1995. The penetration rate, at 55 lines per 100 population, is among the highest in developed cities around the world. There are four operators providing local fixed telecommunications network services in Hong Kong. Our broadband network covers about 75% of households mostly using optical fibres installed up to the ground floor or basement of multi-storey buildings where most Hong Kong people reside The broadband household coverage will be extended to about 80% at the end of 1999. The advanced broadband network in Hong Kong has attracted innovative projects from the private sector. As well as the worlds first commercial rollout of Video-on-Demand, there is the development of core and value-added services for data and Internet services and advanced digital TV solutions. The latter project is also a world first which will enable consumers to download movies and interactive video games on to their computer screens. Apart from the local fixed networks, there is a territory-wide hybrid optical fibre/coaxial cable/microwave network operated by a subscription television broadcasting company. This network covers over 90% of the homes in Hong Kong. We have recently decided to permit the use of this network for telecommunications and broadband Internet services, subject to the company making binding commitments on matters such as network cable rollout. This would further facilitate the development of Hong Kongs broadband services. In the light of advanced developments of innovative wireless technology, we have recently decided that licenses would be issued for operators to provide local fixed telecommunications service based on wireless networks. With the decreasing costs of wireless technology and the capability of wireless networks to provide broadband services in the near future, our recent decision to provide room for development of such wireless-based networks will provide new and attractive investment opportunities in the telecommunications sectors and enhance Hong Kongs position as a world-class telecommunications centreMobile telecommunications Hong Kong is amongst the most competitive and vibrant markets for mobile telecommunications services in the world. Consumers have a wide choice of eleven digital networks operated by six operators. Both the European GSM standard and the North American TDMA and CDMA standards are in operation in Hong Kong. The penetration of mobile phone services in Hong Kong is 44%, which is among the highest in the world. Hong Kong is the third place in the world to introduce Mobile Number Portability (MNP) and the second place to adopt a more efficient intelligent network approach in implementing MNP. The implementation of MNP has removed the last barrier to the consumers freedom of choice and has brought more effective competition in the market. As a result, airtime charges and handset prices are now at very affordable levels. We expect that the introduction in the next couple of years of the third generation mobile phones, with their ability to access the Internet and convey large amounts of data, voice and video signals at high speed, will further spur the demand for mobile telecommunication services. For the third generation mobile services, we would adopt our existing approach to allow the market to choose the technology and technical standards, which meet the needs of consumers. Trials for the third generation mobile services are about to be conducted in Hong Kong External telecommunications Infrastructure and Services To serve as a regional telecommunications hub and Internet hub, Hong Kong needs to have sufficient capacity for external circuits (through satellite channels or overland/submarine cables). Hong Kong also needs to exploit its geographical position, particularly in relation to Mainland China in encouraging the hubbing of large-capacity optical fibre cables through Hong Kong. The prices for international leased circuits between Hong Kong and other countries or cities needs to be competitive or lower than those between other countries. In the provision of external services, Hong Kong is well connected with the rest of the world by over 30 earth stations of various types and seven submarine cable systems. Two overland optical fibre cable systems connect Hong Kong with the rest of China. A liberalised external telecommunications also helps to promote Hong Kong as a regional telecommunications and Internet hub. Therefore, in October 1998, we decided that licences for external services-based telecommunications operators would be issued freely on the basis of market demand for operation from 1 January 1999. We are also permitting the use of different technologies, including international simple resale of leased circuits, Internet telephony, etc., for the operation of external services. Such liberalisation has brought much lower prices and better quality for International Direct Dial (IDD) services in Hong Kong. As of mid-May 1999, there were 97 licensees for external telecommunications services. A further step was taken on 5 May 1999 to progressively liberalise our external telecommunications market with effect from 1 January 2000. In addition to the four incumbent local fixed telecommunications network services licensees which will be able to operate all forms of external telecommunications facilities, we will -issue licences for the operation of non-cable-based external telecommunications facilities with effect from 1 January 2000; issue licences for the operation with effect from 1 January 2000 of external telecommunications facilities based on submarine or land cables to those who invest directly in bringing physical cables to Hong Kong; issue licences for the operation with effect from 1 January 2003 of external telecommunications facilities based on submarine or land cables to those who have acquired capacity through the purchase of Indefeasible Rights of Use of cables; and permit Hong Kong-licensed broadcasters that invest in their own facilities to uplink or downlink programs to satellites to make use of their spare capacity by carrying other companies broadcast programs and various telecommunications services. We believe that these measures will favour investment in external telecommunications facilities and help meet the forecast demand for external capacity, particularly for data and multi-media applications. Hong Kong as an Internet Content Hub Hong Kong cannot serve as an Internet hub if there are only telecommunications infrastructure and services and no applications and content. With more content available from Hong Kong, traffic flowing to and from Hong Kong will be increased and there will be incentives for the establishment of direct Internet circuits from other countries or locations to Hong Kong. With more direct connections to other places, other countries or cities can choose Hong Kong as a transit centre. The significance of Hong Kong as a regional hub would grow. Hong Kong is well positioned in the provision of Chinese Internet content and related applications. Hong Kong can exploit the bilingual proficiency of its people and its close connection with the vast market of Mainland China in the area of development. Our universities and trade and industrial organisations are working actively to develop Internet-based applications and contents, which will leverage on our uniquely advantageous position. For example, the Chinese University of Hong Kong has prepared a translator for translating traditional and simplified Chinese characters for use in the Internet. The Hong Kong University of Science and Technology has produced an intelligent Internet application to support the translation between Chinese and English languages. A local IT company has digitised Siku Quanshu, a comprehensive collection of classical Chinese texts spanning five thousand years and containing some 800 million Chinese characters, on an ISO 10646 standard platform. In 1998, we completed a comprehensive review of broadcasting policies. We have decided that changes would be made to the TV broadcasting licensing framework and market to create an environment conducive to the development of innovative multi-media services using new technologies. Cyberport Our proposed development of a Cyberport will help pave the way for the realisation of Hong Kong as a major Internet content hub. This Cyberport project will be implemented through partnership between the Government and the private sector. We plan to build in the Cyberport an ultra-modern intelligent building complex, equipped with state-of-the-art broadband telecommunications and information backbones to meet the needs of leading IT applications and services companies. Also, the Cyberport will provide a wide range of shared facilities for tenants, such as a media laboratory, a cyber library and a cyber mall. Our target tenants of the Cyberport are companies that apply advanced IT for applications and services to enhance the competitive edge of our leading businesses and industries, and for multi-media and other content creation, such as film production, 3-D graphics and animation. Since we intend to make the Cyberport a central point for exchange of expertise in technological advances, tenants introducing new, leading-edge applications of IT to Hong Kong will be most favourably considered. In addition, services enhancing traditional business, for example, electronic commerce, companies providing essential services in support of tenants global or regional business, and utilising Cyberport as a hub on the global information infrastructure will also be highly considered. We expect that both leading multinational and local information technology and services companies will be attracted to the Cyberport. Local companies will be able to benefit through working closely with market leaders and achieve synergy, including collaboration in developing local content and applications. Conclusion The telecommunications and information technology sectors are fast moving. Whether Hong Kong can stay at the forefront in these sectors in the region depends on our responsiveness to innovation and new technologies, and our ability to exploit our high quality infrastructure and knowledge skills. The Government of the Hong Kong Special Administrative Region will continue to provide a favourable investment environment and an open, fair and predictable regulatory framework to help establish Hong Kong as a world-class telecommunications and Internet centre.

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