Regulatory Approach to Emerging Issues: IP Telephony

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Regulatory Approach to Emerging Issues

IP Telephony
Mr. Eric Lam Head of Regulatory Division 2 Office
of the Telecommunications Authority Hong Kong,
China
17 May 2006
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Overview of Hong Kong Telecom Market
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Hong Kong Telecom Market

• A city with a population of 7 million and 1,092
  square kilometres in size
• Basic telecommunications infrastructure well
  developed
• Telecommunications networks/services totally
  liberalised

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Hong Kong Telecom Market (2)

• Network coverage
• Fixed telephone coverage - 100
• Fixed broadband coverage - 98 over home 100
  over commercial buildings - by fibre, DSL, cable
  and power line
• Mobile telephone coverage 100 in all tunnels,
  residential and commercial areas, only not
  available in certain spots of country parks and
  remote islands
• Telecom service penetration (as of December 2005)
• 55 fixed phone penetration (by population)
• 66 broadband penetration (by household)
• 123 mobile phone penetration (by population)

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Hong Kong Telecom Market (3)

• Number of telecom networks
• Ten wireline-based fixed networks
• One wireless fixed network
• Ten 2G mobile networks (based on GSM900, GSM1800
  and IS-95 CDMA)
• Four 3G mobile networks (based on WCDMA)

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Hong Kong Government Policy

• The guiding principles observed in setting
  telecom policy and regulation
• Market Driven
• Pro Competition
• Pro Consumer
• Light-handed Regulation
• Low Entry Barrier
• Technology Neutral

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IP Telephony
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IP Telephony Policy

• Apply the minimum and proportionate regulation on
  IP telephony
• Objective of Regulation enhancement of
  long-term consumer interest and promotion of
  efficient investment in the telecommunications
  sector
• Continue upholding technology neutral principle
• Operators should be able to adopt any
  technologies
• Continue playing a facilitator role
• The market should be allowed to manage the shape
  and pace of the transition to the IP-operating
  environment

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IP Telephony Licensing

• After public consultation, OFTA cleared way
  forward for IP telephony services in Jun 2005
  where two-class licensing regime is adopted
• Class 1 service has all the attributes of
  conventional fixed telephone service and is
  required to meet licensing requirements
  applicable to conventional fixed telephone
  services
• Class 2 service does not have all the
  attributes of conventional telephone service and
  only needs to meet minimal licensing conditions
  with the main purpose to protect consumer
  interests and safeguard fair competition

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IP Telephony Licensing (2)

• Facilities-Based Operators
• Fixed Telecommunications Network Service (FTNS) /
  Fixed Carrier (FC) licensee already authorised
  to provide IP telephony services subject to
  compliance with all relevant licence conditions
  (in effect only Class 1 services are authorised
  before licence amendments)
• FTNS/FC licensee can seek licence amendments for
  operation of Class 2 services

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IP Telephony Licensing (3)

• Services-Based Operators
• To implement the regulatory framework for IP
  telephony service announced in Jun 2006, OFTA,
  after public consultation, created a new
  Services-Based Operator (SBO) Licence in Jan
  2006, permitting the operation of Class 1 and
  Class 2 services
• The commencement of the new SBO Licence opens up
  opportunity for service operators (without
  facilities) to compete with fixed network
  operators (with facilities) in the telephony
  market
• Benefits encourage investment in service
  innovation and benefit consumers who are able to
  enjoy greater choices of innovative services at
  lower prices

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IP Telephony Licensing (4)

• Services-Based Operator (SBO) Licence
• Open for application in Jan 2006
• No limit of the no. of licence to be granted
• No foreign ownership restriction
• Valid for one year and renewable on an annual
  basis

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Class 1 and Class 2 Services Similarities

• Customers are assigned with 8 digits numbers
  under Hong Kong Numbering Plan (HK numbers)
• Customers are able to make/receive calls to/ from
  other parties assigned with HK numbers (i.e.
  any-to-any connectivity if HK numbers are
  assigned)
• Same requirements for access to emergency call
  services (999) and backup power supply for both
  Class 1 and Class 2 services

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Class 1 and Class 2 Services Differences

• Use of different prefix numbers for service
  differentiation by consumers
• Class 1 service 8-digit numbers with prefix 2
  or 3 (the same numbering block currently used
  by conventional fixed telephone services)
• Class 2 service 8-digit numbers with prefix 57
  or 58
• Declaration for avoidance of consumer confusion
• Class 2 service operators need to declare
  service as Class 2 service in all marketing
  materials
• Class 1 service no declaration required

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Class 1 and Class 2 Services Differences (2)

• Number Portability
• Class 1 service operators need to support number
  portability between Class 1 services
• Class 2 service no number portability required
• Directory Enquiry and Printed Directory Service
• Class 1 service operators need to provide a)
  telephone directory enquiry services and b)
  printed telephony directory services free of
  charge to their customers
• Class 2 service no such obligation

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Consumer Protection Emergency Call Services

• Both Class 1 and 2 service providers must provide
  free access to emergency call services to the
  customers
• Both Class 1 and 2 service providers must provide
  location information, including locations of
  nomadic customers, to the Police free of charge
  
• Operators are required to develop procedure to
  maintain updated location information of the
  nomadic customers

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Consumer Protection Backup Power Supply

• For lifeline users, Class 1 and 2 operators
  must provide backup power supply to network
  equipment and customer premises equipment. If
  not, they are not allowed to provide service to
  lifeline users
• If no backup supply is available, operators need
  to remind customers that the service is not
  suitable for lifeline devices by affixing label
  on wall socket panel or taking other reasonable
  steps (e.g. cautionary reminder on telephone
  bill)

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Consumer Protection Backup Power Supply (2)

• Lifeline device is an emergency alarm service for
  elderly and handicapped people (lifeline users)

Lifeline Device
Lifeline Service
Source Senior Citizen Home Safety Association of
Hong Kong
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IP Telephony Interconnection Arrangement

• For gaining access to conventional PSTN, SBO
  licensee should seek a hosting connection to the
  network of at least one FTNS/FC licensee by
  commercial negotiation
• Hosting FTNS/FC licensee is responsible for
  routing of traffic of IP telephony service hosted
  to and from networks of other carriers
• Interconnection charge
• Commercially agreed for traffic between SBO and
  hosting FTNS/FC
• Normal charging arrangement applies for traffic
  between circuit-switched networks of hosting
  FTNS/FC and other carriers

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IP Telephony Interconnection Arrangement (2)
B
A
IP Phone User
B
A Commercial agreement between SBO and hosting
FTNS/FC licensee B Normal routing of traffic
to/from fixed and mobile carriers
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IP Telephony Summary
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Thank You
http//www.ofta.gov.hk