LC Paper No. CB(1)138/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/PL/ITB

Legislative Council
Panel on Information Technology and Broadcasting

Members present :

Hon SIN Chung-kai (Chairman)
Hon MA Fung-kwok (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Dr Hon Raymond HO Chung-tai, JP
Hon Eric LI Ka-cheung, JP
Hon Fred LI Wah-ming
Prof Hon NG Ching-fai
Hon Howard YOUNG, JP
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

Member attending :

Hon Mrs Sophie LEUNG LAU Yau-fun, JP

Members absent:

Hon David CHU Yu-lin
Hon James TO Kun-sun

Public officers attending:

For Items III to V

Mr K C KWONG

Secretary for Information Technology and Broadcasting

For Items III and IV

Mr M H AU

Acting Director - General of Telecommunications

For Item III

Mrs Rita LAU

Deputy Secretary for Information Technology and Broadcasting (1)

Mr Eddy CHAN

Commissioner for Television and Entertainment Licensing

For Item V

Mr K H LAU

Director of Information Technology Services

Clerk in attendance:

Miss Polly YEUNG

Chief Assistant Secretary (1)3

Staff in attendance:

Ms Sarah YUEN

Senior Assistant Secretary (1)4

---

IConfirmation of minutes of meeting and matters arising
(LC Paper No. CB(1)60/98-99)

The minutes of the Panel meeting held on 14 July 1998 were confirmed.

IIDate and items for discussion for next meeting

2. Members agreed to discuss the following items at the next meeting to be held on Monday, 14 September 1998, at 2:30 p.m. -

1. Use of dangerous goods in film production;

2. Regulation of obscene and indecent materials transmitted through the internet; and

3. Progress of Year 2000 compliance exercise in Government.

   (Post-meeting note: In response to the Administraion's enquiry, the Panel Chairman has subsequently instructed that 2(c) be revised to cover government-funded organisations as well.)

III1998 Review of the Television Environment
(LC Paper No. CB(1)59/98-99(01))

Consultation in connection with the 1998 Review of the Television Environment (the TV Review)

3. In reply to some members' query about the absence of a clear policy direction in the information paper despite two previous rounds of consultation, the Secretary for Information Technology and Broadcasting (S/ITB) explained that the first two rounds of consultation were conducted to set the detailed scope of the TV Review and to invite the industry and interested parties to contribute substantive views on the subjects covered in the Review. The Administration was still in the process of finalising policy proposals for public consultation in late summer and as such, would not be able to reach any policy decisions until after the said consultation.

4. Responding to a member's suggestion that the TV Review and the Review of Fixed Telecommunications (the FT Review) should tie in with each other having regard to the impact of the convergence of telecommunications, information technology and broadcasting services on broadcasting policies, S/ITB pointed out that the two reviews were already being conducted in parallel so that interface issues and areas of common concern could be considered and addressed at the same time. Members noted that the two relevant consultation papers would also be released at the same time.

5. To clarify some members' doubt about the Administration's claim that respondents to the TV Review all supported deregulation of the television market to enhance competition, S/ITB confirmed that this was the general consensus although different respondents might differ on the extent of "competition". He also reaffirmed the Government's commitment to further liberalising the television industry and opening up the market for more competition. Members noted that to fulfil this commitment, it was the Administration's plan that specific measures would be finalised based on public feedback to the TV Review.

6. On whether the proposed four-week consultation period would be sufficient for the industry and the public at large to comment on the policy proposals, S/ITB assured members that apart from receiving submissions, the Administration would take the initiative to solicit views of the industry by organising forums and seminars. The Administration would also publicise the consultation exercise through the mass media to stimulate response.

Television programmes

7. A member was concerned about the failure of some news and documentary programmes to cater for the needs of disadvantaged groups in the community, such as by providing subtitles to assist viewers with hearing impairment. In reply, the Commissioner for Television and Entertainment Licensing advised that the issue should better be addressed in the Broadcasting Authority (BA)'s Code of Practice than in the present TV Review.

8. On the appropriateness or otherwise of requiring TV stations to maintain a certain proportion of locally produced programmes so as to safeguard the well-being of the local TV production industry and preserve local traditions and culture, S/ITB emphasised that while programming would be one of the areas under review, there was a need to exercise prudence in requiring a certain proportion of programmes to be broadcast. Members were however assured that since appealing to the tastes of local audience would contribute to a programme's popularity, TV stations would take care to maintain a certain proportion of local programmes.

9. Regarding programme quality which, in a member's view, had an important bearing on viewers' programme choice, S/ITB explained that the issue would not be covered in the TV Review as the BA's Code of Practice had already provided guidelines. Moreover, there was difficulty in imposing programme standards as quality judgement was subjective.

Opening of the subscription TV market

10. In addressing members' concern about the level of competition in the subscription TV market generated by the grant of a video-on-demand (VOD) programme service licence upon expiry of Cable TV's three-year exclusivity, S/ITB advised that the TV Review would address this issue, as well as the progress of the conversion of Cable TV's network to optical distribution or other forms of transmission. Members noted that the Administration's intention was to announce their policy proposals on these two issues in the consultation paper so as to facilitate understanding of the rationale behind the proposals.

Regulation

11. S/ITB confirmed that a major task of the TV Review was to consider the need for adjustments to the regulatory framework governing television broadcasting in the light of technological developments. He noted some members' views that the two existing legislative frameworks for telecommunications and broadcasting services (i.e., the Telecommunication Ordinance (Cap. 106) and the Television Ordinance (Cap. 52)) should be amended to empower the Office of the Telecommunications Authority (OFTA) and the BA to take responsibility for carriage and content control respectively and that the licensing procedures should be simplified. S/ITB acknowledged these concerns and pointed out that a piece of new, technology-neutral legislation would be useful in catering for the possibilities in store in a technology-convergent environment and assured members that the matter would receive due attention in the TV Review.

IV1998 Review of Fixed Telecommunications
(LC Paper No. CB(1)59/98-99(02))

Consultation in connection with the 1998 Review of Fixed Telecommunications (the FT Review)

12. Explaining the objective of the FT Review, S/ITB assured members that in consideration of the benefits brought about by open competition, the Administration would uphold the principle of further opening up the telecommunications market. As such, the FT Review was conducted to determine the best way of liberalisation.

13. In response to members' request to release publicly the submissions received, S/ITB reiterated that for confidentiality reasons, it could not accede to the request because specific consent had not been sought for the Government to release publicly the views received. However, to address members' concerns for greater openness, he agreed to seek respondents' permission to release their submissions in the forthcoming consultation on specific policy proposals. He also confirmed that a summary of the views received so far would be attached to the consultation paper to be released in September 1998 to provide an overall picture of public response to further liberalisation of the telecommunications market. He urged caution on the part of members in interpreting the summary as some of the views were expressed by large establishments while some were contributed by individuals. As far as the Administration was concerned, the most important thing to consider was whether the views were valid regardless of the background of the respondents.

14. Members however considered it highly useful to peruse the original submissions to facilitate deliberation on the future package of policy proposals. The Administration, in response, agreed to provide the Secretariat with a list of the respondents to the FT Review as well as the TV Review so that the Panel could contact the respondents direct for release of their submissions. In response to a member's comment on the need to gauge the views of consumers so as to present a balanced picture, S/ITB confirmed that some of the submissions were from consumer and user organisations. He added that the Administration would not just consider the submissions but would also make reference to day-to-day regulatory problems and the market situation so that the most appropriate way forward to further open up the telecommunications market could be mapped out.

(Post-meeting note : Letters have been sent to all the known respondents to the two Reviews in August 1998)

Network availability and accessibility

15. On network development, S/ITB advised that the three fixed telecommunication network services (FTNS) operators licensed in 1995 had been installing and expanding their local network infrastructure on schedule as required under their respective licence. However, as the installation of necessary infrastructure took time, the Administration was closely monitoring the progress of interconnection to ensure that the three FTNS operators would have access to the exchange lines of Hong Kong Telephone Company Limited.

16. As regards members' concerns about standardisation and compatibility of facilities to safeguard network accessibility, S/ITB emphasised that OFTA had already set clear guidelines on network interconnection and in-building distribution systems. S/ITB opined that where interconnection and network accessibility were concerned, the major problem was the physical limitation on the number of operators that could be accommodated by existing facilities, especially in old buildings. In consideration of this, the Administration had been encouraging property developers to ensure access to telecommunications and broadcasting networks in constructing new buildings.

17. Addressing concerns about network quality, S/ITB assured members that operators were required to attain certain service quality standards and network coverage under their licences. Moreover, network quality was also a concern for the operators as it would affect consumers' choice.

Matters related to competition

18. On whether the Competition Policy Advisory Group chaired by the Financial Secretary would have a role to play in the FT Review, S/ITB advised that the Information Technology and Broadcasting Bureau (ITBB) had been regularly updating the Group on the progress of the FT Review. As far as telecommunications was concerned, the Administration believed that there would be a level playing field upon expiry of the three-year moratorium on the issue of further FTNS licences and the liberalisation of Hong Kong's external telecommunications services. S/ITB however agreed that if the installation of network and interconnection could proceed at a quicker pace, full competition could develop earlier.

19. In reply to a member's query about the "managed competition" approach referred to in para 10 of the Administration's information paper, S/ITB explained that a few respondents which had made substantial capital investments but which had not yet achieved the target level of returns would prefer competition to be introduced at a slower pace. Whilst pointing out that as long as there was a level playing field, all players could benefit from competition as they would have to operate in a more cost-effective manner and be more responsive to market needs, S/ITB also highlighted the need to balance the interests of consumers as well as operators who had invested substantially in the networks so as to attract capital investment. In this connection, a member opined that such a balance should be achieved through allowing the operators a wider scope of services under their licences, rather than by restricting competition.

20. At a member's request to provide information on the employment opportunities expected to be created as a result of the liberalisation of the telecommunications market, S/ITB said that there was difficulty at present in making such estimates as external services competition would not take place until 1 January 1999 while external facilities competition would not start until 1 January 2000.

International commitments

21. On Hong Kong's international commitments other than the review of the three-year moratorium on the issue of further FTNS licences under the World Trade Organisation (WTO) Agreement on Basic Telecommunications, the Acting Director-General of Telecommunications clarified that Hong Kong's commitment under the said WTO Agreement was to review the further opening up of the fixed telecommunications market. There was no undertaking whatsoever on the outcome of the review. The opening up of Hong Kong's market was to be dealt with in the next round of trade talks to be conducted in 2000 having regard to the pace of liberalisation of telecommunications markets in other countries. At the Chairman's request, the Administration agreed to provide members with details on Hong Kong's commitments under the said WTO Agreement. S/ITB further assured members that Hong Kong's interest was of foremost concern when the Administration entered into any international agreement.

Admin.

VInformation technology development
(LC Paper No. CB(1)59/98-99(03))

22. S/ITB elaborated on the set of powerpoint presentation materials provided by the Administration.

The work of ITBB

23. On the co-ordinating role of the ITBB in overseeing the development of IT and encouraging its wider use in the public and private sectors, especially in the development of high-technology industries, S/ITB stressed that the Bureau was fully aware of its role and would ensure all sectors could benefit from the application of IT. Where high-technology industries were concerned, members noted that there were at present two high-level bodies, namely, the Commission on Innovation and Technology and the Industry and Technology Development Council. S/ITB was a member of the latter and there was close co-operation between the ITBB and the Trade and Industry Bureau (TIB) in applying IT in this area. Likewise, while the application of IT in education was the policy responsibility of the Education and Manpower Bureau, the ITBB would provide its input if required. S/ITB added that the ITBB was mainly involved in the technological aspects while the application of IT in different policy areas would be the responsibility of the policy bureaux concerned.

24. At a member's request, S/ITB undertook to inform the Panel of its schedule of work plans after the allocation of resources had been finalised.

Admin.

25. Commenting on a member's suggestion that the ITBB should enlist the assistance of tertiary institutions in IT development, S/ITB assured members that the ITBB recognised the important role these institutions could play in the promotion of IT and was already liaising closely with them for advice and assistance. In reply to the Chairman, S/ITB further confirmed that the Administration was considering to set up an advisory body within the next two months comprising members of the public, the industry and the academia to advise it on the overall direction of information infrastructure development.

Development of electronic service delivery

26. In response to a member's request to prioritise the development of touch-screen service, S/ITB assured members that the service would be duly considered as a form of electronic service.

27. Concerning the development of electronic identity cards, S/ITB informed members that the ITBB was discussing with the Immigration Department the conduct of a feasibility study on the subject and that it would be some time before identity cards could be used as smart cards to access electronic services. The Chairman pointed out that Hong Kong should actively promote the use of smart cards so as to establish its leading role in Asia in this area. Meanwhile, members agreed that the issue of electronic service delivery should be included in the Panel's list of outstanding issues. At the Panel's request, the Administration would provide a detailed paper in due course.

International and bilateral co-operation on IT-related matters

28. As regards international agreements on IT-related matters, S/ITB explained that international trade agreements might have already covered such matters although there might be a need for a separate international agreement to address problems specific to electronic trade. Meanwhile, Hong Kong would benefit from bilateral co-operation with advanced countries such as Australia and Canada. Members noted that such bilateral co-operation was aimed at promoting exchange activities and carried no obligations and rights as in the case of an international agreement.

Broadband information infrastructure

29. In response to a member's concerns about the target, if any, for the penetration of broadband network and any specific measures to achieve the target, S/ITB confirmed that as all broadband networks were privately-owned, the best the Government could do was to provide an environment conducive to investment and network development. He however reported that all exchanges had already been linked to optical fibre cable rings a few years ago and 40% of them had been connected to buildings. In addition, the FTNS operators all had plans to fully upgrade their networks to fibre optics, and there were other trunk networks available such as that of Cable TV. He further reported that the Administration would state its stance on broadband network penetration in the September consultation paper.

Other concerns

30. In reply to a member's question on Cable TV, S/ITB advised that while an interim review on Cable TV's licence would be conducted this year, both the TV and the FT Reviews would cover issues related to Cable TV's network. The Administration would be able to present its views on the utilization of the Cable TV network in September 1998.

31. On the legal implications of the development of IT in matters such as content control, privacy, security, copyright and its impact on society at large, members noted that they would be dealt with by the respective bureaux and departments. The Administration cautioned that care had to be exercised in deciding whether to tackle such problems by self-regulation or by legislative measures.

VIAny other business

32. In view of the far-reaching implications of the TV and telecommunications policies, members agreed to hold a special meeting to examine the two relevant consultation documents with the Administration when they were published, and to invite representatives from relevant trades to present their views.

33. The meeting ended at 12:45 p.m.

Legislative Council Secretariat
31 August 1998