Home Asia-Pacific IV 2001 Regulation – Keeping Pace with Technology’s Advancing Frontier

Regulation – Keeping Pace with Technology’s Advancing Frontier

by david.nunes
Anthony S. K. Wong Issue: Asia-Pacific IV 2001
Article no.: 7
Topic: Regulation – Keeping Pace with Technology’s Advancing Frontier
Author: Anthony S. K. Wong
Title: Director-General
Organisation: Office of the Telecommunications Authority (OFTA)
PDF size: 20KB

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Article abstract

Convergence involves more than mere technology; it is a coming together of services and markets. In IP technology the distinction between voice and data is disappearing. Anthony S. K. Wong, Director-General of Telecommunications at the Telecommunications Authority of Hong Kong, presents a view of the numerous regulatory aspects of telecommunications convergence. A strong advocate of regulatory adaptability over rigidity, he describes the effects of telecoms-broadcasting convergence, liberalisation and technology-neutral regulation.

Full Article

We are living in a time when the physical world is getting smaller as the cyber world expands its frontier. Distance remains, yet distance is also bridged by increasingly complex and ubiquitous tangible and intangible links to which we refer as telecommunications networks. From voice to data, from fixed to mobile, from telecommunications services to multimedia services, this is an age in which ‘telecommunications’ is crowned with a richer meaning than it used to have. Telecommunications have progressed to such a stage that not only the technology converges, so do the services and markets. The telecommunications regulatory frameworks in many countries were established at a time when circuit-switched voice service was the synonym of telecommunications service. Hence it was only natural that when new forms of transmission or services emerged, new regulations were created. This happened, for example, with the regulation of voice and data services. The distinction lay not only in the technology employed, namely circuit-switched as opposed to packet-based, but also in the end-purpose being served. The universal obligation and numbering requirement might only apply to circuit-switched voice traffic, and different international settlement rates might apply to IDD calls and Internet traffic. However, with technology converging, particularly with the emergence of IP telephony, the distinction between voice and data is fast disintegrating. IP telephony is very much a voice service, yet its underlying technology is ‘data-based’. Should it be regulated as voice or data? As more and more voice traffic migrates to the IP platforms by traditional network operators, regulations built on that distinction are increasingly difficult to sustain. Whilst IP telephony is a result of the convergence of technology, the emergence of telecommunications-cum-broadcasting operators is as much due to the convergence of technology as to the convergence of market and services. The maturity of IP, digital and compression technologies are allowing more and more telecommunications services to be mixed with broadcast services. TV programmes, movies and news footage are now available to viewers through the Internet. Broadcasters are making use of the extra capacity of their networks to offer telecommunications services. The service and market convergence poses challenges to the established broadcasting and telecommunications frameworks. Should programmes transmitted through the Internet be subject to broadcasting regulations? Should broadcasting networks be subject to the telecommunications regulations? Should interconnection be mandated between broadcasting and telecommunications networks? These are but some of the more prominent issues. There are many more. To name but a few, should broadband interconnection be regulated differently from narrow-band? Should fixed and mobile networks be accorded equal carrier status and subject to the same rights and obligations? As technology advances, new issues will keep arising. Hong Kong has developed one of the best telecommunications systems in the world and is riding right in the middle of this tide of technology progress. We have no reservations about welcoming this tide with open arms. New technology and services bring in new business and economic opportunities. They also improve the quality of life of the people by providing a quick, convenient and reliable access to the cyber world of information, commerce and entertainment. We have been working to improve the regulatory environment to capitalise on the benefits that are brought by such progress. As firm believers of the market-driven approach, we think that there is no better way to bring in new technology the soonest than to open up the market. Competition is indeed the best way to speed up progress. To gain a foothold in a competitive market, operators will not only need to provide quality services, they will need to provide ‘new’, ‘innovative’ and ‘up-to-date’ quality services. To this end, we have made firm commitment to liberalise the Hong Kong telecommunications market. It began as early as in 1995, with the local Fixed Telecommunications Network Services (FTNS) market. At present, Hong Kong has 10 local FTNS operators making use of different technologies to build their own networks. Four of them are wireline operators, one uses cable modem technology over its hybrid fibre coaxial cable and the remaining five use wireless solutions. In the external FTNS market, the competition is even keener, with 25 operators using either cable or satellite means to construct their external telecommunications facilities, and the number is still rising. In 2003, Hong Kong will further and fully liberalise its local and external FTNS markets. The competition amongst operators in employing new technologies for building up more cost-effective, high-capacity and advanced networks will get more intense than ever. Equally important is our commitment to establishing a technology-neutral regime. Technology is constantly evolving and therefore any technology-specific regulation will become obsolete very quickly. Thus, in our view, IP telephony is just another innovative form of voice telecommunications service that we see no reason either to disallow or to treat differently from the traditional voice service, provided that the quality of IP telephony service is comparable with that of circuit-switched voice. The numbering and settlement issues that follow will need to be worked out carefully, not only between the industry and us, but also globally with our counterparts in other countries. The important thing is that we do not resist progress simply because it might affect the established structure. In many cases, without some form of technical standards, the growth of new technological applications might not be able to go very far. Compatibility is a vital element that enables new products and applications to take off. We have been actively encouraging operators to sit together and develop open or compatible standards for themselves to follow. Take our mobile service as an example: at present there are already six 2G operators operating 11 networks on practically all technical standards. On 22 October 2001, we issued four new licences for 3G services. The 3G licensees will be permitted to use any IMT-2000 standards adopted by the ITU within their assigned 3G frequency for 3G mobile services, subject only to the requirements that the various standards are compatible with each other from the users’ point of view, and that the interests of the existing 2G consumers are adequately safeguarded. The licensees are also permitted to upgrade their technology during the licence period to 4G, 5G. How this is to be done is left in the hands of the imaginative and innovative operators. A further feature of the Hong Kong 3G licensing regime that is worth mentioning is that each 3G licensee is required under its licence condition to open up at least 30 per cent of its network capacity to non-affiliated companies for the provision of contents or for functioning as a Mobile Virtual Network Operator (MVNO). This regulatory requirement is created to deal with the convergence of the mobile phone market with the fast expanding content provision market such as in e-commerce or m-commerce. The open network requirement will stimulate competition in the content provision market using the 3G platform. On another front, faced with the convergence of the broadcasting and telecommunications markets, we introduced in 2000 a series of legislative changes in Hong Kong to define more clearly the respective duties of the telecommunications and broadcasting regulatory authorities. Put simply, the Broadcasting Authority regulates the content side of the matter, whilst the Telecommunications Authority regulates the transmission networks, broadcasting or telecommunications. In fact, we no longer treat them as distinct. The cable television company of Hong Kong has since 2000 been allowed to make use of its cable network to provide telecommunications services. All other broadcasters in Hong Kong are similarly allowed, upon application, to use their extra network capacity to carry telecommunications signals. On the other hand, all ‘traditional’ telecommunications networks are permitted to carry broadcast programmes for broadcasting licensees. It is our goal to mandate interconnection between telecommunications and broadcasting networks in a digital multimedia environment in the longer term. Conclusion These are just a few examples showing how we deal with the issues as new technology and services emerge and converge. There are many more issues that are yet to be resolved, and we do not pretend to have ready answers to all. In any case, there are no standard solutions. The telecommunications market of each country is different, and regulators must approach the matter by taking into account the particular circumstances of their countries. We have still a long way to go. The most important thing is that we should recognise that regulatory framework is as much an evolving matter as technology, and be prepared to meet changes with an open-minded and pragmatic attitude, always keeping the interests of the industry and consumers in mind. Adaptability fosters growth, whilst rigidity stifles it.

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