The existing section 3 of the Telephone Ordinance provides the Telecommunications Authority (TA) with powers to administer the telecommunications numbering plan in Hong Kong. It also empowers the Secretary for Information Technology and Broadcasting (SITB) to make regulation to provide for the allocation, assignment, lease or sale, whether by auction or tender, etc., and the amount of fees to be levied for the right to use a number or code designated by the TA. The fees so prescribed may not be limited to the administrative costs. Since we are bringing all provisions relating to telecommunications in existing legislation into the Telecommunication Ordinance, the new section 32F seeks to re-enact section 3 of the Telephone Ordinance.

2. In our first public consultation exercise on the legislative amendments to the Telecommunication Ordinance in 1996, some respondents had pointed out that the allocation and sale of the right to use a number or code would in effect put a surcharge on the licensees or the public. They suggested that the proceeds should go to charity. However, under the existing section 3 of the Telephone Ordinance, the TA does not have the powers to channel the proceeds to charity. In 1997, the TA conducted a public consultation on the Special Number ¹ Arrangement to ensure that the allocation of numbers to users would be conducted in a more efficient, equitable and transparent manner. The consultation paper also proposed that a separate Special Number Fund should be established and that the proceeds should be allocated for charity and telecommunications-related educational and research projects. The proposal was generally supported in the submissions received during the 1997 public consultation exercise. We had also included the proposal in the public consultation paper "1998 Review of Fixed Telecommunications - A Considered View".

3. We therefore seek to introduce the new section 32F(5)(b) to the Bill to empower the SITB to require, by regulation, the proceeds to be -

(i)	paid to a charitable institution, or an institution carrying out education, or research and development, activities connected with telecommunications;
(ii)	applied towards promoting education, or research and development, connected with telecommunications; or
(iii)	paid to a fund established by the TA for holding the proceeds for the purposes of (i) and (ii).

4. The new section 32F(5)(c) also empowers SITB to impose requirements, by regulation, on the TA in relation to the establishment and management of the relevant fund. The regulation is subsidiary legislation subject to negative vetting. As explained at the last Bills Committee meeting held on 6 October 1999, we intend to set up a committee including individual members of the public to advise the TA on the establishment and management of the fund.

5. At the last Bills Committee meeting, while some members showed their support to the proposal of using the proceeds for charity, others were concerned whether it was consistent with the Government's financial principles, including whether this might involve hypothecation of revenue. There is no question that the proposal would compromise our well-established financial principles. We should note that the Office of the Telecommunications Authority (OFTA) operates as a Trading Fund, which was approved by the Legislative Council by resolution in May 1995. In accordance with the OFTA Trading Fund Resolution, one of the prescribed services of the OFTA Trading Fund was to support the TA in controlling and administering the telecommunications numbering plan. Trading funds can retain revenue generated from the provision of prescribed services to fund the activities relating to those services. Hence, revenue from special numbers belongs to the OFTA Trading Fund and not the General Revenue Account, therefore, there is no hypothecation of revenue. In the light of the comments received during the previous rounds of public consultation on the auctioning of Special Numbers as explained above, we agreed with the suggestion that the auction proceeds should be used for charity, or for education, research and development activities connected with telecommunications. The proposed section 32F will provide a proper framework for the TA to apply the auction proceeds for such purposes.


Information Technology and Broadcasting Bureau
October 1999

1. A "Special Number" may either be a "number" or "code" or "block of numbers" or "block of codes which is of particular value to the user.