LC Paper No. CB(1)139/99-00
Ref : CB1/BC/18/98/1
Bills Committee on Telecommunication (Amendment) Bill 1999
Minutes of meeting
held on Monday, 6 September 1999, at 8:30 am
in the Chamber of the Legislative Council Building
Members present :
Hon SIN Chung-kai (Chairman)
Hon David CHU Yu-lin
Hon HO Sai-chu, SBS, JP
Hon Fred LI Wah-ming, JP
Hon MA Fung-kwok
Dr Hon Philip WONG Yu-hong
Hon Howard YOUNG, JP
Hon YEUNG Yiu-chung
Hon Mrs Miriam LAU Kin-yee, JP
Members attending :
Hon Martin LEE Chu-ming, SC, JP
Hon Christine LOH
Members absent :
Hon Eric LI Ka-cheung, JP
Hon CHOY So-yuk
Public officers attending :
Ms Eva CHENG, JP
Acting Secretary for Information Technology and Broadcasting
Mr M H AU
Acting Director-General of Telecommunications
Ms Gracie FOO
Principal Assistant Secretary for Information
Technology and Broadcasting
Miss Priscilla TO
Assistant Secretary for Information Technology and Broadcasting
Attendance by invitation :
Cable & Wireless HKT CSL Limited
Mr SHUEN Shiu-man
Group Manager, Radio Planning
Mr Adam WONG
Director, Mobile Networks
Cable & Wireless HKT Limited
Mr Norman YUEN
Deputy Chief Executive
Mr Fred TIPSON
Director of Regulatory Affairs
Hong Kong Cable Television Ltd
Mr Vince LAM
Strategic Planning Director
Ms Kou Li CROWTER
Legal Manager, Commercial Affairs
Hutchison Telecommunications (Hong Kong) Ltd
Mr Peter WONG
Fixed Network Director
Mr Tony MA
Senior Manager - Commercial
New T&T Hong Kong Limited
Ms Agnes TAN
Mr Malcolm LEUNG
Legal & Regulatory Counsel
New World Telephone Limited
Mr Pedro CHING
Mr Thomas YAU
Senior Manager, Regulatory & Carrier Affairs
Peoples Telephone Company Limited
Mr Ali BAIREKTAR
General Manager, Technical Division
Miss Sze Yuk Ying
SmarTone Mobile Communications Limited
Mr Hubert NG
Chief Executive Officer
Sunday (Mandarin Communications Ltd)
Mr Craig EHRLICH
Group Managing Director
Ms Emilia HOASJOE
Clerk in attendance :
Miss Polly YEUNG
Chief Assistant Secretary (1)3
Staff in attendance :
Miss Connie FUNG
Assistant Legal Adviser 3
Ms Anita SIT
Senior Assistant Secretary (1)8
I Meeting with mobile phone operators, Fixed Telecommunication Network
Services operators and the Administration
The Chairman welcomed representatives of mobile phone operators
(MPOs) and Fixed Telecommunication Network Services (FTNS) operators to
the meeting. He said that the purpose of this meeting was for the
Bills Committee to exchange views with operators in the telecommunications
industry on the Telecommunication (Amendment) Bill 1999 (the Bill), and
for the Administration to take note of the deputations' views and to provide
supplementary information where necessary. He then reminded the deputations
that when addressing the Bills Committee, they were not covered by the
protection and immunity provided under the Legislative Council (Powers
and Privileges) Ordinance (Cap. 382). Their written submissions were
also not covered by the said Ordinance. He then invited the representatives
to present their views.
Presentation of views by representatives of mobile phone operators and
Fixed Telecommunication Network Services operators
Cable & Wireless HKT CSL Limited (CWHKT/CSL)
2. Mr Adam WONG highlighted the views of the company as follows :
- In view of its phenomenal growth, mobile telecommunication would
likely become an equally important platform as fixed telecommunication
for E-commerce and Internet applications in the foreseeable future.
However, MPOs had experienced difficulties in gaining access to tunnels
and buildings, including unfair treatment, denial of access and exorbitant
rentals. The access fees charged by tunnel operators and landlords
of shopping malls were about 20 times and seven times respectively the
rental for general roof-top sites.
- The level of access fees was not the outcome of market forces, since
licensed MPOs had the obligation to provide service coverage in tunnels
and other shielded areas of public places while tunnel operators and railway
corporations enjoyed monopolistic rights to the respective infrastructure
- If Hong Kong was to develop into a leading telecommunication centre
and Internet service hub in Asia, legislation should be enacted to provide
MPOs with an unconditional right to install and maintain network facilities
on land and buildings just as FTNS operators had the same right to install
their cable networks.
- Legislation to provide for unconditional access by MPOs should apply
to future buildings and facilities and the necessary space and sites should
be reserved at the planning stage for future installation of mobile network
facilities. As regards access to existing buildings and facilities,
the criteria for determining access fees charged on MPOs should be drawn
up by an independent body in consultation with the industry and other relevant
- The company supported the enactment of general competition legislation,
as the proposed provisions on competition safeguards in the Bill applied
only to licensees under the Telecommunication Ordinance but not to other
affiliated commercial entities.
Cable & Wireless HKT (CWHKT)
3. Mr Norman YUEN highlighted the following points delineated in the
company's written submission -
- The company had all along supported amendments to the Telecommunication
Ordinance in order to meet present day needs and to provide an appropriate
regulatory framework for the telecommunication industry. However,
the proposed amendments were not comprehensive enough to reflect and facilitate
the phenomenal development of the industry.
- The company supported proposed amendments seeking to provide clear
standards and guidelines for the industry, such as the proposal to increase
the maximum penalty which might be levied by the Telecommunications Authority
(TA) for breaches of licence conditions or directions of TA, and the proposal
to empower TA to make determination in the case of unreasonable obstruction
to installation of telecommunications facilities.
- The Bill conferred on TA wide-ranging powers, but did not spell
out the principles and objective criteria that TA should follow in exercising
its powers. For example, the Bill did not specify how and on what
basis TA should form his opinion that a licensee was in breach of the competition
protection provisions. The proposed provisions might also lead to
a flood of frivolous lawsuits, and a licensee being sued for such breaches
could hardly raise a defense against or challenge TA's opinions as the
basis for his opinions was not known.
- While decisions of most regulatory bodies in Hong Kong were subject
to some sort of appeal on merits, (whether to the Court, or to specifically
constituted appeal bodies or the Chief Executive in Council), the Bill
did not provide an appeal mechanism against TA's opinions, determinations,
directions and decisions. The general remedy of judicial review was
only a limited remedy as the Court would mainly consider the process of
reaching a decision, rather than whether the decision per se was lawful
- The Bill provided TA with almost unfettered discretion to mandate
facilities sharing and interconnection, and absolute discretion as to the
calculation of compensation including whether compensation was payable
at all. The company considered that these proposed provisions were
an infringement on private property rights, and would stifle innovation
and investment. As pointed out in the joint legal advice by Michael
Thomas Q.C.S.C., Johannes CHAN of the Hong Kong Bar and Tim Eicke of the
English Bar (CB(1)1842/98-99(02)), those provisions conferring wide ranging
powers on TA without the limits of these powers being clearly spelt out
were not concordant with the human rights provisions of the Basic Law,
the Bill of Rights Ordinance and the International Covenant on Civil and
- General competition legislation should be enacted but this should
not delay enactment of the present Bill.
Hong Kong Cable Television Ltd
4. Mr Vince LAM highlighted the following points raised in the company's
- The proposed Section 6A in the Bill conferred on TA wide-ranging
powers. In exercising his powers, TA was subject to certain requirements,
including policy directions of the Secretary for Information Technology
and Broadcasting etc. However, in view of the absence of anti-trust
or competition laws in Hong Kong, it was doubtful whether the proposed
requirements were adequate in checking the broad and loosely-defined powers
proposed for TA.
- An appeal procedure should be drawn up and an independent appeal
body should be set up with the powers to quash the orders, determinations
or decisions of TA which had led to the appeal. The appeal body might
be chaired by a LegCo Member and augmented by industry experts, representatives
from relevant licensees and consumer interest bodies.
- The Bill was timely and necessary. With proper checks and
balance in place, it would facilitate the development of Hong Kong into
a telecommunication hub in the region.
Hutchison Telecommunications (Hong Kong) Limited (Hutchison)
5. Mr Peter WONG stated that the company was in support of the Bill
in general, and in particular, the proposed provisions which purported
- grant access right to MPOs to install radiocommunication facilities
in public places;
- clarify the powers of TA on interconnection; and
- consolidate the powers of TA to promote fair competition in the
6. Mr WONG also highlighted the growing importance of mobile telecommunication
as a utility and the difficulties being faced by MPOs, as detailed in the
company's written submission. The company also supported the provisions
on competition safeguards and considered that the proposed provisions on
interconnection would facilitate the early completion of cabling by the
three new FTNS licensees.
New T&T Hong Kong Limited
7. Ms Agnes TAN informed members that the company welcomed the Bill
in general, though it considered that refinements were needed for some
proposed provisions. She further submitted the following views on
behalf of the company -
- Before and after the liberalization of the fixed telecommunication
market in 1995, new FTNS operators had been frustrated by the lack of clarity
in the functions and powers of TA and had to engage in protracted and difficult
"commercial negotiations" for interconnection access with the dominant
FTNS operator. The company considered that in the absence of a clear
legal basis for the definition and management of competition in the telecommunications
market, TA had grave difficulty in rectifying inappropriate operating relationships.
- The functions of TA should be clearly spelt out in legislation to
avoid uncertainties. Whilst TA should be vested with the necessary
powers to fully discharge his functions, there should be adequate checks
on his powers. The company considered that an independent appeal
board with the responsibility to review the decisions of TA, and where
appropriate, to quash the decisions, should be established.
However, this appeal board should not have the authority to substitute
the decisions of TA. Appropriate guidelines should be formulated
to safeguard against abuse of the appeal mechanism.
New World Telephone Limited (New World)
8. In presenting New World's submission, Mr Pedro CHING confirmed that
the company supported proposals to enhance competition safeguards, including
the proposed increase in penalty for breach of licence conditions, allowing
TA to obtain information from other parties on alleged breaches of licence
conditions by a licensee, and availing civil remedy to parties who suffered
losses as a result of anti-competitive practices engaged by a licensee.
On the subject of interconnection, the company supported the proposed measures
to consolidate TA's power in determining the terms and conditions of interconnection.
9. On access to land and buildings, Mr Petro CHING said that the proposed
provisions were not satisfactory as the current problem of landlords/tunnel
operators charging exorbitant rentals for access had not been adequately
addressed. The proposed provisions would place a heavy burden on
MPOs to satisfy TA that there were grounds for TA's intervention.
Moreover, he said that TA's intervention would be a lengthy process which
might delay network roll-out. Mr CHING further proposed that MPOs
be granted the right similar to that of fixed network licensees to install
their network equipment in shielded areas pending the conclusion of a commercial
agreement on access. This would enable timely provision of mobile
services and a more equitable bargaining relationship between MPOs and
landlords. Either party could apply to TA for arbitration if an access
agreement could not be reached after protracted negotiation.
People Telephone Company Limited (People)
10. Mr Ali BAIREKTAR said that in general, the company welcomed the
amendments proposed in the Bill. He stressed the importance of providing
fair and equitable access as that currently available to FTNS operators
so as to enable MPOs to provide quality mobile telecommunication services.
As MPOs had the licence obligation to provide service coverage in tunnels
and other shielded areas of public places, they were put in a disadvantaged
position when bargaining with landlords/tunnel operators on access rentals.
The company considered that the proposed provisions on access to lands
and buildings could balance the needs and interests of MPOs, landlords/tunnel
operators and the public.
SmarTone Mobile Communications Limited (SmarTone)
11. In presenting the views of the company, Mr Hubert NG said that SmarTone
in principle supported the Bill which aimed to enhance the development
of a dynamic information infrastructure for Hong Kong. He also made
the following points-
With the very high penetration of mobile telecommunication services
and the prospective convergence of fixed and mobile services, the company
considered that it would only be fair and equitable for MPOs and FTNS operators
to receive equal treatment.
The company supported the Government's policy of providing ubiquitous
coverage for mobile telecommunication services. Currently, MPOs were
often refused entry or required to pay exorbitant rentals to gain access.
This situation was incongruent with the prevailing practices in other countries
where tunnels and shopping malls only charged MPOs at cost or a minimal
fee for access.
The company therefore supported any proposed amendments in the Bill
which would enhance MPOs' position in gaining access and which would help
to reduce the difference in treatment between MPOs and FTNS operators.
Sunday (Mandarin Communications Limited) (Sunday)
12. Mr Craig EHRLICH requested members to give due consideration to
the policy objectives for telecommunications services and consumers' interest.
He commented that past Government policies on telecommunications had facilitated
substantial accomplishments of the industry but it should be recognized
that telecommunications technologies were on the edge of a revolution in
wireless applications. New mobile technologies in future would be
the convergence of mobile and fixed services with the handset becoming
the fastest means for data delivery. He stressed that mobile telecommunication
services would have a much more important role to play in future.
13. Mr Craig EHRLICH further commented that whilst the
intention was to adopt a technology-neutral approach in policies, in practice,
policy decisions were in favour of fixed telecommunication services.
The company considered the Bill a step in the right direction but did not
go far enough to achieve the policy objectives.
14. To conclude, Mr Craig EHRLICH urged members to view mobile telecommunication
services from a forward looking perspective and put mobile network services
on par with fixed network services in examining Government policies on
telecommunications and the present Bill.
Discussion with representatives of MPOs and FTNS operators
15. In response to members' enquiry about reasonable criteria for determining
access fees, Mr Adam WONG of CWHKT/CSL opined that the criteria should
be drawn up through a consultation process involving all relevant parties.
The opportunity cost of providing access by landlords/tunnel operators
was a reasonable basis for calculating the access fees. He stressed
that in the long run, MPOs should be given the right of access to land
and buildings as were FTNS operators at present. The access right
of MPOs should thus be taken into account when planning for buildings and
other structures, thus obviating the need to negotiate for access by MPOs.
If this policy direction was adopted in future, determination of access
fees would be a transitional issue only.
16. Regarding the feasibility of installing common network facilities
to be shared by different MPOs in order to save space and costs, Mr Adam
WONG of CWHKT/CSL said that each radiocommunications installation consisted
of two elements, an antenna and a broadcasting machine. At present,
common antennas had already been installed in many shielded areas, but
it was technically not feasible to share the use of broadcasting machines
among different operators. However, the size of new models of broadcasting
machines were as small as refrigerators.
17. As to whether the licensed MPOs had ever sought to negotiate collectively
with tunnel operators for access, Mr Craig EHRLICH of Sunday and Mr Adam
WONG of CWHKT/CSL confirmed that MNOs had sought to negotiate collectively
with tunnel operators for placement of common facilities, but tunnel operators
insisted on negotiating separately with individual MPOs and required MPOs
to install separate facilities.
18. On some members' concern about discriminatory charges and denial
of access by landlords/tunnel operators affiliated with a particular MPO,
Mr Hubert NG of SmarTone said that although Sun Hung Kai Properties Limited
was a shareholder of SmarTone and Tai Lam Tunnel, SmarTone was charged
on the same basis as other MPOs for access to Tai Lam Tunnel. He
understood that the operator of Tai Lam Tunnel had not rejected the access
of any MPO. Mr Peter WONG of Hutchison said that the company was
charged for access to properties owned by Hutchison Whampao Limited on
the same basis as other MPOs.
19. Mr Craig EHRLICH of Sunday said that there had been discriminatory
treatment to different MPOs by some property owners in the past, but the
situation had changed over the past year and Sunday found it easier to
obtain access at present. He considered that the issue at stake was
the level of charges. Mr Adam WONG of CWHKT/CSL said that the company
had negotiated for access to some properties owned by companies affiliated
with certain MPOs for many years but could only obtain access at exorbitant
20. As to whether there had been incidents whereby tunnel operators
had agreed with affiliated MPOs on very high access fees and then quoted
these fees as benchmark reference for subsequent negotiations with other
MPOs, Mr Tony MA of Hutchison and Mr Craig EHRLICH of Sunday confirmed
that their companies had encountered such incidents.
21. On the difference between the access fees charged by Government
tunnels and those charged by private tunnels, Mr Tony MA of Hutchison said
that the access fees charged on the company by private tunnels were about
eight times those charged by Government tunnels. Mr Hubert NG of
SmarTone pointed out that generally speaking, private tunnels charged higher
access fees than Government tunnels, partly due to the fact that the access
agreements with Government tunnels were concluded at earlier times.
Mr Adam WONG of CWHKT/CSL said that the access fees charged by Government
tunnels and private tunnels were about six times and 20 times respectively
that of the rentals for installations at general rooftop sites. In
reply to Mr Howard YOUNG's request for further information on the level
of fees payable, Mr Pedro CHING of New World said that the revenue generated
from the usage of the mobile phone services of the company in tunnels only
accounted for about 30% of the total access fees payable by New World to
22. On some deputations' suggestion of using the rental value of the
premises used for installation of network facilities as the basis for determining
access fees, Mrs Miriam LAU considered the potential benefits that could
be derived from the placement of network facilities could not be fully
reflected in the market rental value of the premises concerned. On
another suggestion of using the cost-plus (i.e. costs plus a reasonable
profit element) basis for fees determination, Mrs LAU also pointed out
that there could be considerable cost differences between different properties
and infrastructure facilities and the concept of a reasonable profit element
was also ambiguous. Finally, she queried that using costs as the
basis for fees determination might be unfair to tunnel operators, bearing
in mind that MPOs could determine their charges on commercial considerations
whereas BOT tunnel operators could not determine the level of tolls entirely
on their own accord.
23. Mr Petro CHING of New World said that whilst it was acceptable for
MPOs to pay a reasonable access fee for obtaining access to private properties,
he considered that currently, the fees being charged were unreasonable
as they could be as high as HK$600,000 a month for BOT tunnels. Mr
Hubert NG of SmarTone and Mr Craig EHRLICH of Sunday shared the view that
as MPOs were required by their licence to provide service coverage in tunnels,
they could not negotiate with tunnel operators on an equal footing.
Given the licence obligation, they considered that it would only be fair
to provide MPOs with a statutory right of access to tunnels.
24. On whether MPOs had encountered difficulties in gaining access to
Government tunnels, Mr Pedro CHING of New World said that the company operated
a PCS network. Unlike GSM network operators, the company had not
been able to obtain access to Government tunnels so far. He added
that in this regard, the Government had acknowledged that the delay in
providing access was not due to any fault of the company and therefore
the company would not be penalized for the delay.
25. Mrs Miriam LAU asked whether the licence requirements, including
the one relating to network coverage in tunnels, had been made known to
MPOs at the time when they applied for their licence. She also enquired
whether the Government had made any indication to MPOs on the possible
enactment of legislation to regulate access fees charged on them by landlords/tunnel
26. In response, Mr Hubert NG of SmarTone confirmed that the licence
conditions were made known to bidders in the licence tendering exercises.
He also informed members that compliance with the licence conditions was
assured through a performance bonds system. Mr Craig EHRLICH of Sunday
said that the company was aware of the licence requirement on coverage
and the performance bonds system when applying for a MPO licence, but had
not envisaged that tunnel operators would take advantage of their monopolistic
position and demand exorbitant fees. He added that when most of the
existing tunnels were built, the tunnel operators might not have foreseen
the rapid growth of mobile telecommunication.
27. On some members' concern that the access provisions in the Bill
would affect the existing agreements on access entered into by the landlord/tunnel
operators and MPOs, Mr Pedro CHING of New World said that this was a legal
issue to be resolved though the company would prefer that the access provisions
would apply upon enactment. Mr Adam WONG of CWHKT/CSL said that the
company fully respected the spirit of contract but was also concerned whether
MPOs would be treated equally with FTNS operators in the near future.
28. Mr Howard YOUNG enquired about the feasibility of appointing a private
independent arbitrator instead of applying to TA for arbitration in the
case of both parties failing to reach an agreement on access. Mr
Ali BAIREKTAR of People and Mr Pedro CHING of New World indicated that
the companies would accept either the TA or an independent body as the
29. Mr Martin LEE requested the attending representatives to note that
the views expressed and questions raised by individual members at this
meeting did not represent any collective views of this Bills Committee.
However, the Bills Committee and other non-Committee Members would take
into consideration their views when examining the provisions of the Bill.
He also suggested that the attending MPOs and FTNS operators liaise among
themselves and if possible, reach some form of consensus on issues related
to the Bill. He added that it would be most helpful if the Bills
Committee could be advised of any such consensus.
II Any other business
30. The Chairman thanked the representatives for attending the meeting
and said that if the deputations had further views to submit, they would
be welcome to do so in writing.
31. The meeting ended at 10:25 am.
Legislative Council Secretariat
30 September 1999