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Fixed-mobile interconnection : the case of China and Hong Kong SAR

Authors Xu, Yan View this author's profile
Issue Date 2000
Source International telecommunication union , Aug, 2000
Summary This case study has provided an in-depth comparative review of policy approaches to network interconnection in China and Hong Kong SAR, both vertically and horizontally. These have been in sharp contrast, due to differences in the regulatory frameworks. Vertically, the interconnection policy in China has experienced a revolutionary leap forward before and after the establishment of the quasi-independent regulator - the Ministry of Information Industry (MII). The affiliation of China Telecom with the former Ministry of Posts and Telecommunications (MPT) had led to above-cost interconnection fees, protracted negotiations and unfair technical arrangements. As a result, political intervention over interconnection has been frequently requested. The different market position of China Unicom before and after the establishment of the MII has shown that an ineffective regulatory framework is perhaps the largest competitive barrier for new entrants. Horizontally, the controversial status of the former MPT in China and the completely independent status of OFTA in Hong Kong SAR have led to differing levels of regulatory perseverance in liberalising the telecommunications sector, and, in consequence, different approaches in dealing with network interconnections. The less-problematic experience in Hong Kong SAR demonstrates how important an independent regulatory agency is for a secure and healthy competitive market. OFTA's cost-oriented and market-driven principles on network interconnection pricing have, to a certain extent, prevented the occurrence of market distortion, while its transparent guidelines on interconnection have guaranteed the fairness and effectiveness in implementing network interconnection. If OFTA had in close affiliation to any of the operators, it would likely not have been possible for it to have taken this regulatory approach in the past few years. Clearly, an effective regulatory framework is one of the most critical factors in facilitating network interconnection, and in creating a truly competitive market. One of the lessons to be learned from this case study is that the affiliation of the incumbent operator with the regulator can place new entrants on a path to financial loss and frustration. Therefore, it seems timely for international organisations such as the ITU and the WTO to strengthen their stance in encouraging member states to ensure the independent status of their national regulators. Moreover, in countries where an independent regulator is still to be established, certain international standards over technical aspects of network interconnection, such as points of interconnection, traffic routing, signalling and quality of interconnection, might prove to be helpful.
Note A case study prepared for International Telecommunication Union.
Language English
Format Technical report
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