Hong Kong, China – Consultations on the Licensing Framework for Unified Carrier Licences

This Practice Note outlines the consultation processes that occurred in Hong Kong, China concerning the unified carrier licensing framework.  The consultation processes, individually and as a whole, included good practices and procedures and thus may serve as a helpful reference for other countries preparing to undertake similar consultations.

 

In May 2008, the Office of the Telecommunications Authority (OFTA) of Hong King China announced that the government had decided to create a Unified Carrier Licence (UCL).  This UCL will act as a single licensing vehicle for all fixed, mobile, and converged services.  The adoption of the UCL regime is the culmination of a process that began in 2005 with the initiation of a consultation on fixed-mobile convergence (FMC).  Box 1 provides a chronology of the move to the adoption of the UCL in Hong Kong, China.

 

Box 1

Chronology of the Adoption of the Unified Carrier Licence Regime in Hong Kong, China

September, 2005

The Office of the Telecommunications Authority[1] (OFTA) of Hong Kong, China releases the first consultation paper on Fixed-Mobile Convergence (FMC), “Consultation Paper on Revision of Regulatory Regimes for Fixed-Mobile Convergence”.

July, 2006

OFTA releases the second consultation paper on FMC, “Deregulation for Fixed-Mobile Convergence, Second Consultation Paper”.

April, 2007

The Telecommunications Authority (TA) releases its Statement on “Deregulation for Fixed-Mobile Convergence”.  In this Statement, the TA recommends that the Secretary for Commerce and Economic Development should create the Unified Carrier Licence

December, 2007

The Secretary for Commerce and Economic Development (SCED) initiates a public consultation on the proposal to create a UCL regime.  In this regard, the Secretary publishes “Consultation Paper on the Creation of a Unified Carrier Licence under the Telecommunications Ordinance”.

 

At the same time, OFTA begins a related consultation process to study issues related to the implementation of a UCL regime that fall within the scope of the TA’s authority.   OFTA publishes its consultation paper, “Licensing Framework for the Unified Carrier Licence”.

May, 2008

The TA releases its Statement, “Licensing Framework for Unified Carrier Licence”.

 

 

In the first consultation paper issued on fixed-mobile convergence, OFTA identified six areas of the regulatory framework that would need to be revised in the environment of FMC:

          (i.)      licensing regime;

        (ii.)      certain rights and obligations that are currently applied differentially to the fixed and mobile carriers;

       (iii.)      interconnection charging arrangement between fixed and mobile services;

      (iv.)      local access charges;

        (v.)      fixed/mobile number portability; and

      (vi.)      numbering plan.

 

OFTA stated that the purpose of the first consultation paper was to solicit feedback on issues (i) and (ii).  OFTA indicated that it was necessary to assess the cost and benefits of any possible regulatory change related to issues (iii) through (vi).  OFTA indicated that it would commission a consultant to conduct the necessary economic studies and to undertake a public consultation with respect to these matters.  The report of this consultant is linked as a Reference Document to this Practice Note.  Please see the link below.

 

In the first consultation paper, the Telecommunications Authority (TA) proposed the UCL for carriers operating fixed, mobile, and converged services.  The TA received a total of nine submissions, which the TA published on its website.  Feedback received during this first consultation suggested that stakeholders favoured a review of all substantive issues in a holistic fashion.  Based on the feedback received from stakeholders and on the consultancy report on FMC, OFTA initiated a second consultation in which the TA set out a number of proposals for the UCL regime and requested comments and views on a number of regulatory issues.  The issues canvassed in the second consultation included:

 

  • FMC market development in Hong Kong, China;
  • Interconnection settlement arrangements;
  • Interconnection links between fixed and mobile networks;
  • Local access charges;
  • Unified Carrier Licence; and
  • Other recommendations included in the consultancy report commissioned by OFTA.

 

The second consultation paper set out the recommendations of the consultant commissioned by OFTA to study various issues related to FMC, the TA’s comments and preliminary views, and questions for consideration.  The second consultation paper included a summary of the submissions received during the first FMC consultation as an annex to the consultation paper.  The second round of the FMC consultation concluded in mid-October, 2006.

 

In April 2007, the TA issued a Statement on the UCL regime entitled “Deregulation for Fixed-Mobile Convergence”.  In this Statement, the TA set out its concluded views and the regulatory changes that were adopted as a result of the review and consultations on fixed-mobile convergence.  Specifically, the TA addressed regulatory issues related to Fixed-Mobile Interconnection Charges; Local Access Charges; the UCL; Fixed Mobile Number Portability; and Road Opening and Building Access Rights. 

 

With respect to the UCL, the TA stated that it would recommend to the Secretary for Commerce and Economic Development (SCED) that the UCL be created by subsidiary legislation that would cover the general conditions, period of validity, and licence fee of the UCL.  The TA indicated that if the SCED approved the creation of the UCL, it may conduct further consultations. 

 

The TA’s Statement provided a background to the issue of deregulation and FMC, including a summary of the second consultation and the responses received.  Each of the issues set out in the second consultation paper was addressed in detail.  The Statement set out the proposals related to the issues canvassed in the second consultation paper, the questions posed to stakeholders in this second paper, the views of the consultant, a response and an analysis, and the TA’s ultimate conclusion.   

 

In response to the recommendations made by the TA, the SCED initiated a consultation on the creation of a UCL in December 2007.  In this regard, the SCED published “Consultation Paper on the Creation of a Unified Carrier Licence under the Telecommunications Ordinance” (the Secretary’s Paper).  The Secretary’s consultation paper sets out the SCED’s proposal for creating the UCL as a new form of carrier licence and covers the General Conditions (GCs) of the UCL, period of validity, and the licence fee for the UCL.

 

At the same time, OFTA published a consultation paper on issues relating to the UCL that fall within the TA’s realm of responsibility.  OFTA’s consultation paper, entitled “Licensing Framework for the Unified Carrier Licence”, set out detailed proposals regarding the licensing framework to be adopted for granting UCLs under different scenarios by the TA.  OFTA’s consultation paper addressed the Special Conditions (SCs) that the TA proposed to attach in addition to the GCs of the UCL and the arrangements for migrating existing carrier licences to the UCL regime.  (The Secretary’s Paper also addressed issues related to the conversion of existing carrier licences to the UCL and the migration to the new regime.)  OFTA’s consultation paper urged stakeholders to read its consultation paper in conjunction with the Secretary’s consultation paper.  There was therefore a coordinated approach to the consultation process.

 

The OFTA’s consultation paper included a draft sample UCL.  It also set out a draft of proposed SCs to be attached to the UCL.  The Secretary’s consultation paper set out a draft of the proposed GCs of the UCL.  In addition, the OFTA’s consultation paper included a table summarizing the scope of service covered by the UCL in comparison to existing carrier licences.  The Secretary’s Paper included a draft of the proposed fee schedule for the UCL.

 

A total of 11 and 16 responses were received in response to the consultation papers published by SCED and OFTA, respectively.  The submissions were published on the websites of the Commerce and Economic Development Bureau (CEDB) and OFTA.

 

In May 2008, the TA issued a Statement that set out its conclusions about the issues raised for consideration in the consultation paper OFTA issued in December 2007.  This Statement, entitled, “Licensing Framework for Unified Carrier Licence”, addressed Rights under the UCL, Obligations under the UCL, the Interconnection Regime for the UCL, the General Approach for granting UCLs, the Replacement of the Four Fixed Carrier Licences issued in 1995, and the Conversion of Mobile Carrier Licences.  The Statement detailed these issues, the TA’s initial proposal, the responses received to each proposal, the TA’s subsequent analysis and consideration, and the TA’s conclusion about each issue. 

 

The Statement includes a sample UCL as an Annex.  The SCs applicable to UCLs are also set out in an Annex to the Statement.  The GCs will be included in the regulations that will be promulgated by the government on the recommendation of the SCED.



[1] OFTA is the executive arm of the Telecommunications Authority (TA) who is the statutory body responsible for regulating the telecommunications industry in Hong Kong, China.

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