LC Paper No. LS173/98-99

Object(s) of the Bill

To amend the Telecommunication Ordinance (Cap. 106) following the consultation on proposals set out in the consultation paper entitled "1998 Review of Fixed Telecommunications : A Considered View" issued by the Information Technology and Broadcasting Bureau in September 1998 with a view to:

1. enhancing competition safeguards;
   
   
2. improving interconnection and access arrangements to telecommunications services;
   
   
3. streamlining licensing procedures; and
   
   
4. providing the Telecommunications Authority with powers over certain technical areas.

LegCo Brief Reference

2. ITBB CR 7/5/11(99) Pt. VI dated 30 April 1999 issued by the Information Technology and Broadcasting Bureau.

Date of First Reading

3. 12 May 1999

Comments

4. The last major amendment to the Telecommunication Ordinance (Cap. 106) ("the Ordinance") was made in 1993 in preparation for the introduction of competition in local fixed telecommunication network services. In order to bring the Ordinance up to date and make it more suitable to cope with anticipated developments in the telecommunications sector, the Government has formulated proposals for further amendments to the Ordinance. Most of the proposals in this Bill are modelled on the proposals set out in the consultation paper entitled "The 1998 Review of Fixed Telecommunications : A Considered View" published by the Information Technology and Broadcasting Bureau ("ITBB") on 3 September 1998.

Provisions on promoting of fair competition in the telecommunications market

5. At present, significant regulatory powers of the Telecommunications Authority ("TA") over licensees derive from provisions in the licences rather than through the primary legislation. To consolidate the TA's powers for the promotion of fair competition and to extend this across the whole telecommunications market, the Bill seeks to incorporate into the Ordinance powers now provided in the General Conditions of the Fixed Telecommunications Network Service ("FTNS") licences.

6. Other proposals for promoting fair competition in the telecommunications market are summarized as follows :

1. increasing tenfold the penalties for the breaching of licence conditions which the TA may impose, from $20,000 to $200,000 for the first occasion of a failure to comply; $50,000 to $500,000 for a second and $100,000 to $1,000,000 for a third and subsequent occasions;
   
   
2. empowering the TA to apply to the Court of First Instance in cases where the TA considers that the maximum penalty which he can impose is insufficient - in such cases, the Court of First Instance may impose a financial penalty of up to 10% of the turnover of the company in the concerned market segment in the relevant period or $10 million per breach, whichever is the higher; and
   
   
3. providing for a right to civil remedies which will be available to all persons who suffer damage arising from the breach of the provisions prohibiting anti-competitive practice and misleading or deceptive conduct, or of licence conditions or directions relating to matters in these provisions.

Provisions on improving interconnection

7. To clarify the TA's powers on interconnection, the Bill proposes to give the TA the powers to make a determination on interconnection at any feasible technical point and on such terms and conditions as appear to the TA to be fair compensation for access to and use of the appropriate part of the network or line.

Provisions on access to buildings and land

8. To address the problems which mobile telecommunications operators have encountered in gaining access to shielded areas of public areas (e.g. shopping malls and tunnels), the Bill provides for the right of licensees authorized by the TA to have access to land to place and maintain a radiocommunications installation for the purpose of providing a radiocommunications service to such public areas. However, this right is exercisable only where the TA is satisfied that the authorization of access to land is in the public interest and a reasonable fee is paid by the licensee to persons having a lawful interest in the land.

9. To improve the right of access to telecommunications services, new section 19B of the Bill provides that a term in a lease agreement, deed of mutual covenant or commercial contract that restricts the rights of residents to have access to the public telecommunications services of their choice is void on and after the day on which that section comes into operation.

Provisions on streamlining licensing procedures

10. The licensing arrangements are reorganized in clause 4 (new sections 7 to 7O). Under these arrangements, the Chief Executive in Council is to issue, and prescribe conditions in, exclusive licences. The Secretary for Information Technology and Broadcasting ("the Secretary") will prescribe the general conditions applicable to carrier licences, such as FTNS licences and Public Radiocommunications Services licences. The TA will issue all licences other than exclusive licences. The TA will also specify class licences to regulate non-essential services which do not require the licensee to take up an actual licence if he meets the licence conditions published in the Gazette.

Provisions on TA's powers over technical areas

11. The Bill introduces new Parts to the principal Ordinance dealing with technical regulation, including standards and certification requirements for telecommunications equipment; the management of the radio spectrum and prevention of interference, including the power to allocate frequencies and the examination, certification and authorization of operating personnel.

12. The Bill also provides for the Secretary to issue regulations on the allocation, assignment, lease or sale of the right to use certain telecommunications numbers.

General matters

13. The Bill imposes an obligation on the TA to provide reasons in writing when making a determination, direction or decision under the Ordinance. There are also provisions on consultations and the requirement to issue guidelines for the exercise of the TA's powers, including those relating to the creation of class licences and prescription of technical standards and specifications.

14. If enacted, the Bill will come into operation on a day to be appointed by the Secretary by notice in the Gazette.

Public Consultation

15. The proposals have been the subject of two rounds of consultation with the telecommunications industry and one round of public consultation. According to the Administration, the comments received, where appropriate, have been incorporated into the Bill.

Consultation with the LegCo Panel

16. The LegCo Panel on Information Technology & Broadcasting was briefed on the proposed amendments at its meeting on 8 February 1999. At the meeting, some members of the Panel raised concerns on various matters, such as the adequacy of the proposed financial penalties for anti-competitive acts, the circumstances under which the TA will grant authorization of access to buildings and land and the TA's powers in relation to interconnection arrangements. (Please refer to LC Paper No. CB(1)1176/98-99).

Conclusion

17. This Bill introduces certain significant changes relating to the control and regulation of the telecommunications services in Hong Kong. Both the public and Members have expressed their concerns. The Bill warrants detailed scrutiny by Members and it is recommended that a Bills Committee be formed.


Prepared by


FUNG Sau-kuen, Connie
Assistant Legal Adviser
Legislative Council Secretariat
10 May 1999

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