Cost Implication of the Access Fees Charged by Tunnel Operators
on Mobile Network Operators

At the Bills Committee on 30 September 1999, a member requested for supplementary information on the current access fee into tunnels. As indicated in the Administration's response to the Bills Committee issued on 4 September 1999 [CB(1) 1860/98-99(01)], the average cost of each minute of a mobile phone call made in BOT tunnels is about $4.3 per minute, which is about five times mobile telecommunications operators are currently charging mobile phone users on average. According to the information provided by the mobile telecommunications operators, the payment of access fees constitutes 14% to 21% of their operating costs. Considering access fees to BOT tunnels only, they account for 0.8% to 1.6% of the operating cost. Details are set out in Annex.

2. We believe an assessment based on dividing the total access charges payable by mobile network operators by the whole customer base of mobile network services is not a very meaningful indicator. The total subscription base for mobile phones stands at 3,460,000 as at June 1999, whereas the access fees into tunnels in 1998/99 was above $50 million. However, access fees into tunnels only form one part of access fees into shielded areas. By the same token any landlord of a shielded area can divide the fees charged by the total subscription base. We do not consider this an appropriate assessment of whether access fees are reasonable. As mentioned in paper [CB(1) 1860/98-99(01)], we intend to conduct consultation on the guidelines for charging access fees, including, but not limited to, the following charging models :

  • an incremental cost-based model that includes only costs such as the costs of additional resources incurred by the tunnel operators to enable the installation, operation, management and maintenance of the mobile network facilities inside the tunnels;

  • a revenue-sharing model that involves the estimation and sharing with the tunnel operators of the additional revenue being generated through the usage of the mobile network facilities inside the tunnels;

  • access charges that are based on the valuation of property rights such as the retail rental value of spaces on equivalent premises; and

  • various combinations of above models to be applicable under specific circumstances.

Information Technology and Broadcasting Bureau
4 October 1999

Access Fee as a Percentage of Mobile Operators' Operating Costs

Proportion of mobile operator's expenditure attributable to the payment of access fees to tunnel operatorsProportion of mobile operator's expenditure attributable to site rental cost (exclude rates & management fee)
Company A0.8%16%
Company B0.9%14%
Company C1.2%15%
Company D1.3%17%
Company E1.4%20%
Company F1.6%21%

Source : Six mobile telecommunications operators