Broadband Open Access

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• Broadband Open Access
• in Hong Kong

Eric Lam Head, Economic Regulatory Division OFTA,
Hong Kong 18 May 2004
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Contents

• Current status
• Liberalisation policy
• Broadband roll out and access - overcoming last
  mile
• Broadband services - wholesale and retail
• Mobile services - open network access (ONA)
  requirement for 3G
• Hong Kong Experience

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Current Status (1)

• Hong Kong population 6.8 million
• Number of households 2.2 million
• Broadband connections
• exceeded 1.2 million by end-2003
• 1.1 million to households
• penetration rate 18 by population, 50 by
  households at end-2003
• More homes connected via broadband than narrowband

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Current Status (2)

• Digital Access Index (DAI) released by ITU in Nov
  2003
• Hong Kongs broadband penetration rate is among
  the highest in the world
• Hong Kong has the most affordable Internet tariff
  in the world

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Liberalisation Policy

• Progressive liberalisation of local fixed network
  market since 1995
• Full liberalisation since January 2003
• Liberalisation enables investment in
  infrastructure by incumbent and new entrants
• At present, 11 licences issued for local fixed
  network operation

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Overcoming Last Mile (1)

• How to overcome bottlenecks and congestion in
  rolling out the customer access networks, or the
  last mile
• Two-pronged approach
• Facilitating the construction of self-built
  customer access networks by new entrants to
  bypass the local loops of incumbent
• Type II interconnection policy

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Overcoming Last Mile (2)

• Facilitating self-built customer access networks
• Technology-neutrality
• Waiving wayleave fees for cables and ducts
  underneath public streets and pedestrian
  pavements
• Coordination of road-opening work and sharing of
  duct routes underneath public streets and
  pedestrian pavements - guidelines are issued

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Overcoming Last Mile (3)

• Facilitating self-built customer access networks
• Statutory right of access to common areas of
  buildings for network rollout
• Providing sufficient space for equipment rooms
  and cabling facilities for telecommunications in
  new buildings
• Coordination with building managers and owners
  incorporations on building access
• Education programmes to enhance public awareness
  of benefits of building access

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Overcoming Last Mile (4)

• Rollout of broadband customer access networks
• Near ubiquitous broadband reach of incumbents
  copper-based local loop network using DSL
  technology
• 85 household coverage of the cable modem service
  riding on the HFC network for cable TV
  broadcasting
• by middle of 2004, 45 of household coverage
  based on fibre-to-the-building

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Overcoming Last Mile (5)

• Type II interconnection
• Interconnection by one operator to copper-based
  customer access network of another operator to
  reach customer of the former operator
• Since 1995, extended to broadband interconnection
  from March 2001
• Type II interconnection to
• In-building wiring systems
• Local loops underneath public streets

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Type II Interconnection - Illustration
MDF
SW
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Overcoming Last Mile (6)

• Type II interconnection
• Requirement for Type II interconnection to
  in-building wiring systems extended to
  in-building wiring systems owned by landlords and
  building managers under Class Licence for
  In-building Telecommunications Systems, October
  2002
• Type II interconnection policy currently under
  review in the light of market development

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Broadband Services - Wholesale (1)

• Broadband services at wholesale level
• Network operators have no licence obligation to
  offer wholesale services
• Note however the open access obligation of the
  HFC network operator

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Broadband Services - Wholesale (2)

• Wholesale operators
• The incumbent is the predominant wholesaler of
  broadband services using in majority of cases DSL
  technology (and in some cases fibre).
• A fibre-based network operator has recently
  launched wholesale broadband services
• The HFC network operator has plans to open its
  network using cable modem for open access by
  non-affiliated ISPs

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Broadband Services - Wholesale (3)

• From ISPs perspective
• Lack of true competition at wholesale level
• Margin squeezing by incumbent operator
• Potential for ISPs to further enhance consumer
  interest in terms of choice, quality and
  innovation may be limited as a result

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Broadband Services - Retail (1)

• The competition landscape
• The affiliated companies of the incumbent
  operator and the HFC operator are the two largest
  ISPs for broadband
• Other ISPs mainly rely on the incumbent
  operators network to offer broadband services
• Two other network operators are also active
  players of retail broadband market using fibre
  and LMDS technologies

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Broadband Services - Retail (2)

• WLAN hotspots
• 2.4 - 2.4835 GHz, 5.15 - 5.35 GHz and 5.725 -
  5.85 GHz for public WLAN services
• Shopping malls, cafés, airport terminals, hotels
  etc.
• Class Licence for public WLAN
• registration at no fee
• As of 1 April 2004, 20 registered class licensees
• over 250 hotspots in Hong Kong
• Powerline
• use of electrical wiring network within buildings
  to provide broadband services

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Broadband Services - Retail (3)

• Relatively high speed of broadband connections
• DSL - dedicated speed of up to 6 Mbps because the
  length of local loops is short
• Fibre - dedicated speed of up to 10 Mbps
• Variety of broadband symmetrical and asymmetrical
  applications, such as
• voice over IP
• video phone
• broadcast quality television programmes

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Mobile Services - 3G (1)

• 3G - a mobile broadband service
• Current status
• Four 3G licences issued in September 2001
• Launch of first 3G services in January 2004 -
  service applications include video call, web
  call, video streaming/download of news, sports,
  movies etc
• Other three 3G licensees have plans to launch
  services within 2004

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Mobile Services - 3G (2)

• Open network access requirement
• to make available 30 of network capacity for
  interconnection to, or access by, non-affiliated
  Mobile Virtual Network Operators (MVNOs) and/or
  content providers by commercial agreements,
  failing which by TAs determination
• seven MVNO licences issued
• To create a competitive and vibrant content and
  e-commerce market over the 3G platform
• To cater for Hong Kongs situation of having six
  2G operators but only four 3G licences

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Mobile Services - 3G (3)

• The eleven 2G licences will expire in 2005/06
• Consultation on the licensing arrangement on the
  expiry of the 2G licences
• Preliminary proposal in second consultation paper
  19 March 2004
• Renewal of 2G licences (except licences for CDMA
  and TDMA) with capacity to offer 3G
• One new licence in 800 MHz band for 3G
• ONP requirement
• Second consultation ends on 19 June 2004

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Hong Kong Experience (1)

• Current status of broadband development not the
  result of Government participation or
  subsidization in investment of infrastructure
• Pro-competition regulatory policy drives
  broadband prices down to affordable level
• Technological development and high population
  density give extra push
• Deregulation to allow market entry for network
  investment

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Hong Kong Experience (2)

• Low regulatory barrier for ISPs to enter the
  market
• Need to keep track of market development
• and to scale back/terminate regulation when
  market is effective

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• For more information please visit
• www.ofta.gov.hk
• Thank You