LC Paper No. CB(1)1680/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/PL/ITB/1

Legislative Council
Panel on Information Technology and Broadcasting

Minutes of meeting
held on Monday, 12 April 1999, at 2:30 p.m.
in Conference Room A of the Legislative Council Building

Members present :

Hon SIN Chung-kai (Chairman)
Hon MA Fung-kwok (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon David CHU Yu-lin
Dr Hon Raymond HO Chung-tai, JP
Hon Eric LI Ka-cheung, JP
Hon Fred LI Wah-ming
Hon YEUNG Yiu-chung
Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk
Hon Timothy FOK Tsun-ting, JP
Hon LAW Chi-kwong, JP

Members absent :

Prof Hon NG Ching-fai
Hon James TO Kun-sun
Hon Howard YOUNG, JP

Public officers attending :

For Item III

Mr Alan SIU
Principal Assistant Secretary for Information
Technology & Broadcasting (C)

Acting Director of Information Technology Services

Assistant Director (Infrastructure)
Information Technology Services Department

Mr Owen WONG
Senior Systems Manager
Information Technology Services Department

For Items IV and V

Mr Geoffrey WOODHEAD
Principal Assistant Secretary for Information
Technology and Broadcasting (E)

Mr Anthony S K WONG
Director-General of Telecommunications

Senior Assistant Director of Telecommunications

Clerk in attendance :

Miss Polly YEUNG
Chief Assistant Secretary (1)3

Staff in attendance :

Ms Sarah YUEN
Senior Assistant Secretary (1)4

I Confirmation of minutes of meeting and matters arising
(LC Paper No. CB(1)925/98-99)

The minutes of the Panel meeting held on 11 January 1999 were confirmed.

II Date and items for discussion for next meeting

2 Members agreed to discuss "progress of the Year 2000 (Y2K) compliance exercise under the purview of the Information Technology and Broadcasting Bureau" at the next meeting to be held on Monday, 10 May 1999, at 2:30 p.m. They also agreed that subject to the Administration's confirmation of its readiness, one of the following items would also be discussed -

  1. 1998 review of fixed telecommunications;

  2. Review of the Control of Obscene and Indecent Articles Ordinance; and

  3. The Cyberport Project.

(Post-meeting note: The Administration later proposed to include the items "Public Opinion Survey on the Operation of the Control of Obscene and Indecent Articles Ordinance" and "1998 review of fixed telecommunications" in the agenda. The agenda item on "progress of the Year 2000 compliance exercise under the purview of the Information Technology and Broadcasting Bureau" was also revised to "progress of the Year 2000 compliance exercise under the purview of the Information Technology and Broadcasting Bureau, and in the Office of the Ombudsman and the Government Records Service Division, Chief Secretary for Administration's Office" to ensure coverage of the Y2K exercise in these two Units, which were not overseen by other Panels.)

3 Where the Y2K issue was concerned, members noted that after the first round of Panel meetings to review the Y2K progress in different policy areas, the Secretariat would make a consolidated report to the House Committee.

III Secure Central Internet Gateway System
(LC Paper No. CB(1)1092/98-99(01))

4 The Principal Assistant Secretary for Information Technology and Broadcasting (C) (PAS/ITB(C)) briefed members on the funding application for a new commitment of $21 million under the Capital Works Reserve Fund Head 710 Computerisation to establish a Secure Central Internet Gateway System (the proposed system) for use by Government bureaux and departments in gaining access to the Internet, and in disseminating information, communicating and transacting business with the community over the Internet. Members noted the funding request would be put to the Finance Committee at its meeting to be held on 23 April 1999.

The need for the proposed system

5 The Administration considered the proposed system necessary because the development in the use of the Internet by Government departments/bureaux had been faster than expected. In elaboration, the Senior Systems Manager, Information Technology Services Department (SSM/ITSD) reported that only about ten departments had their own homepages in 1995 but in 1997, all Government bureaux and departments had set up their own homepages in bilingual form. Moreover, the public was requesting not only written information but also multimedia contents. All such developments had resulted in a capacity requirement beyond the original capacity of the Government Information Centre (GIC) when it was first established in 1995 for hosting Government homepages. GIC's existing capacity thus fell short of satisfying new web hosting demands.

6 At Miss Emily LAU's request for details of departments/bureaux that had been unable to disseminate interactive information because of insufficient capacity of the present system, the Acting Director of Information Technology Services (DITS (Atg)) explained that the community's aspirations for interactive contents had long been recognised. When GIC's capability to develop interactive contents was enhanced by the proposed system, Government departments/bureaux would be encouraged to provide interactive information accordingly. SSM/ITSD further advised that ITSD would assist in the development of interactive contents for individual bureaux/departments pursuant to their requests.

7 As for the number of visitors to Government homepages, SSM/ITSD reported that there had been significant growth since 1995. While the monthly visits to Government homepages was below 2 million in July 1997, there were over 6 million visitors monthly as at March 1999. He undertook to provide the 1995 figure after the meeting for members' information. Admin.

(Post meeting note: ITSD has advised after the meeting that the monthly visitor figure of December 1995 was 67,000.)

8 Noting the significant growth in visitor number and the fact that the use of Internet in Government had developed faster than expected, Miss Emily LAU urged the Administration to be more proactive in assessing and preparing for such developments. She also enquired about the availability of visitor growth estimates and whether the proposed system could accommodate the estimated growth. In response, DITS (Atg) clarified that the proposed system served to enhance GIC's capability not for accommodating more visitors, but to develop interactive and innovative applications on the Internet and to standardise security measures to facilitate centralised monitoring and control of security risks.

Security measures

9 At Mr Kenneth TING's request for examples of irregular activities which would require improved provision of security features to protect Government's internal networks, SSM/ITSD reported that intrusion attempts had frequently been detected but so far, the GIC had been able to protect Government information from being altered with its network intrusion recognition and response system.

10 Explaining how the proposed system could help standardise security measures within Government systems, SSM/ITSD pointed out that at present, an array of security features were provided by different Internet Service Providers (ISPs) at different fee levels. However, with the establishment of the proposed system to provide a secure central gateway for Government bureaux and departments to gain access to the Internet in substitution of the current dial-up Internet access connection to ISPs, the Administration would be able to adopt and apply the same comprehensive Internet security standards across Government.

11 On whether the Security Wing of the Police or the Security Bureau's Government security officer would be involved in designing the security measures, SSM/ITSD advised in response to Mr James To that the proposed system was established to adopt and apply comprehensive Internet security standards across Government. The Police would be asked to provide security advice as and when required. ITSD was already working closely with them on general Internet security matters. ITSD was also observing security guidelines issued by the Security Bureau in developing Government computer systems.

12 On Mr James TO's concern about the comprehensiveness of the security standards to be adopted and whether reference had been made to overseas experience, SSM/ITSD confirmed that in seeking to make the proposed system's security standards comprehensive and comparable to international ones, reference had been made to various overseas/international Internet security guidelines such as those promulgated by the Internet Engineering Task Force. At members' request, SSM/ITSD agreed to provide additional information on the security standards adopted in planning for the proposed system. Admin.

The proposed system's storage capacity

13 Where storage capacity was concerned, the Administration advised that the proposed system would be able to enlarge GIC's information storage capacity from 4 to 38 GB of web content. Some members considered the proposed increase too modest to cope with the accumulation of information files over the years and the increasingly common use of byte-consuming multimedia elements. In response, SSM/ITSD pointed out that these two factors had already been taken into account when designing the proposed system. He further pointed out that the storage of information for use on the Internet was different as files would be compressed when saved to facilitate users' downloading. As such, the proposed increase in storage capacity, worked out after extensive consultation with user departments/bureaux and careful reference to past experience in expanding Internet use, should be sufficient at least for the coming years from a technical point of view. At the Chairman's request, SSM/ITSD undertook to provide information on the basis for calculating the proposed capacity before the relevant Finance Committee meeting.Admin.

(Post-meeting note: The required information referred to in paras 12 and 13 has been circulated to members vide LC Paper no. CB(1)1139/98-99.)

14 On when the planned storage capacity of 38 GB would be used up, SSM/ITSD pointed out that this would depend on the pace in which Government departments/bureaux upgraded their homepage contents. He noted Miss Emily LAU's comment that sufficient allowance should be made for future developments to obviate the need for incremental capacity increase as this might incur higher costs.

Other matters

15 Elaborating on the authentication services to be provided by the proposed system, SSM/ITSD explained that such services were necessary to strengthen the protection for the public in their communication with the Government over the Internet. The certification authority to be set up by the Hongkong Post could provide the necessary authentication services required by the GIC.

16 On the availability of financial provisions for hiring professionals to test the proposed system, SSM/ITSD assured members that outside professionals would be engaged to conduct regular security assessments to verify the effectiveness of the proposed system and to closely check and monitor all its communication interfaces. PAS/ITB(C) supplemented that the costs for such professional service had already been included in the $10 million annual recurrent expenditure mentioned in para 18 of the paper.

IV Opening of the external telecommunications services (ETS) market
(LC Paper Nos. CB(1)1089/98-99(01) and 1092/98-99(02))

Effects of liberalisation on market share

17 Noting that 76 Public Non-exclusive Telecommunications Service (PNETS) licences had been granted since the full liberalisation of the ETS market from 1 January 1999, Mr Fred LI enquired about the market share of the licensees. In response, the Director-General of Telecommunications (DG Tel) advised that most consumers were still using the service of the original operators because time was required for making service preparations and as such, only some ten PNETS licensees had launched ETS. On account of commercial sensitivity, he declined to release market share figures which Mr Fred LI considered necessary for ascertaining if the liberalisation of the ETS market had weakened Hongkong Telecom (HKT)'s dominance in the International Direct Dialling (IDD) market. He further explained that while the Office of the Telecommunications Authority (OFTA) could make a general assessment of the market situation at the end of 1999, more specific clientele figures had to be provided by the operators themselves. He however pointed out that being listed companies, some of the operators would likely include such information in their annual reports.

Economic benefits

18 At Mr Fred LI's request for specific figures of the weighted average reduction in IDD prices for calls to and from the Mainland, DG Tel explained that there was difficulty in providing the required figures as there were three sets of rates for routes to and from the Mainland, namely, that for the Shenzhen route, and those for routes to and from within and without the Guangdong Province. He however pointed out that reduction had been the greatest for routes outside Guangdong because of greatly reduced international accounting rates of settlements negotiated by the Government.

19 The Chairman urged the Administration to ensure that the economic benefits from liberalisation would be as estimated when the Provisional Legislative Council was requested to approve payment of $6.7 billion to HKT to end its monopoly in the external telecommunications market. In response, DG Tel advised that the estimated economic benefits had been worked out on the assumption of a 15% fee reduction. Since this had already been achieved, and price reductions might even be greater during special promotion exercises or when special discounts were offered to certain consumers, the actual benefits could even be greater. As for the progress of liberalisation, he stressed that liberalisation of the external telecommunications market was taking place as committed when HKT was paid to surrender its monopoly. While the ETS market had been liberalised as scheduled with licences issued freely on demand, DG Tel estimated that there would also be an increase from one to at least four players in the external telecommunications facilities market upon its liberalisation from 1 January 2000.

20 In response to members' request for figures on foreign investment and employment opportunities resulting from liberalisation of the ETS market, PAS/ITB(E) said that a number of companies were already planning to set up various service centres in Hong Kong although analysis of the incoming investment had yet to be conducted. DG Tel supplemented that with the market only liberalised for four months, comprehensive investment figures had yet to become available. However, having regard that a few scores of companies had already been licensed, certain job opportunities should have already emerged. In the past month, a major international Internet company had begun operation in Hong Kong. He assured members a more detailed assessment would be possible by the end of 1999.

Other concerns

21 Responding to Miss Emily LAU's concern about the letter from City Telecom (H.K.) Ltd. expressing concern about the delay in making a decision on the licensing of additional external facilities-based telecommunications operators, PAS/ITB(E) stressed that as the issue was complicated, there was a need to study different views of relevant parties before finalising the decision. He however assured members that the Administration was fully aware of the urgency of the matter to allow sufficient time for the industry to prepare for market entry and would make a decision within the first half of 1999.

22 On the impact of the development of Internet telephony on the ETS market, DG Tel confirmed that since there were no restrictions on the technologies to be employed for the provision of ETS under the International Simple Resale (ISR) licence, some ISR licensees were already making preparation to launch ETS by way of Internet telephony.

23 Addressing Miss CHOY So-yuk's concerns about the quality of long distance call service, DG Tel assured members that service choice effected by the full opening of the ETS market had already brought about competition to ensure service quality. He further pointed out in response to Mr Kenneth TING that while certain minimum licensing requirements regarding the operator's technical support and investments would be set, the Administration had no intention to require all licensees to attain a certain high level of service as consumers should be at liberty to weigh quality against price and make their own service choice. To address members' concern, DG Tel agreed to work closely with the Consumer Council in promoting consumer awareness. He further assured members that the Administration would investigate and follow up all service complaints. Admin.

V Implementation of the mobile phone number portability scheme
(LC Paper No. CB(1)1089/98-99(02))

24 Mr Fred LI enquired if reluctance on the part of the operators to release their clients had led to unsuccessful Mobile Number Portability (MNP) applications. In response, DG Tel pointed out that the major reason for unsuccessful applications so far had in fact been the inability to cope with the sudden upsurge in workload on the part of both the original operator and the new operator. He assured members of OFTA's effort to ensure that consumers wishing to change over to another mobile network of their choice would be able to do so with full co-operation from the original network operator. Apart from holding daily meetings with network operators during the first two weeks of implementation, operators were not allowed to detain or delay their clients. So far, no such irregularities had been detected.

25 As to whether warnings had been issued to operators in response to complaints against them, DG Tel advised that since most complaints stemmed from the new operators' failure to activate the new card in time, they could be settled by taking prompt remedial actions identified at the daily review meetings. As such, there was no need to issue warnings. On the latest figures on complaints about the MNP service and anti-competitive practices, DG Tel reported that as at 10 April 1999, there were 196 complaints on the former and none on the latter.

26 At Mr Fred LI's request for details on the operators involved regarding the 98,115 successful number portings, DG Tel advised the Administration had not kept such records and had no intention to release such details in consideration of their commercial sensitivity and transient nature.

27 On the average porting time, DG Tel assured members that more than 90% customers could switch operator on the next day of application. Moreover, rejected applications would also be re-processed as quickly as possible to ensure that the affected customers were duly ported at the earliest available time slot.

28 The meeting ended at 3:45 p.m.

Legislative Council Secretariat
7 July 1999