Interconnection Revisited: Time for a Change or Not?

Type II Interconnection: no topic is more important or disputed in telecoms than interconnection, especially at the local loop, therwise know as unbundled local loop and in Hong Kong as Type II interconnection. This is especially true when the customer access network (CAN) is broadband, defined in Hong Kong as a telecom transmission medium above 144 Kbps. Core network interconnect (in Hong Kong called Type l) is universally accepted, although in the

age of the WWW indirect interconnect through Internet is also easible. Should that be the approach to broadband interconnect? The broadband market is increasingly competitive with low end user rates and over 40 per cent household penetration. Should unbundled loops be unavailable or sold at competitive market prices only? Should they be regarded as an essential facility? Are they a bottleneck? Should new entrants be treated differently from ISPs? In February 2003 the FCC in the USA voted to abolish unbundling for broadband networks on the grounds it discouraged investment by the incumbents and encouraged wholesale buying rather than building
by the new entrants. Should Hong Kong now follow the FCC example? If yes, what are the consequences for competition? If not, should the principles of network charging be changed? For example, should there be a shift from LRAIC (long-run average incremental cost) to something closer to FDC (fully distributed cost)? How does Hong Kong compare with other economies? What do the economics of network construction look like? Is the reference model outlined in OFTA’s April 1999 Statement Type II Interconnection Between New World elephone and Hong Kong Telephone still relevant?

Panel One: Hong Kong’s Type II Interconnection Policy Review


• MH Au, Deputy Director-General of Telecommunications, OFTA – Time for a change or not?
• Stuart Chiron, Director of Regulatory Affairs, PCCW-HKT – Time for a change in
• Agnes Tan, Director of Legal, Regulatory and Carrier Affairs, Wharf T&T – Time for a change in practice?
• Ricky Wong, Chairman, HK Broadband Network – An alternative network approach?
• Dumas Chow, General Counsel, New World Telecom – A mix strategy?
• York Mok, HKNet and Chairman, HKISPA – An ISP’s view



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