2009 Hong Kong - Telecoms, Mobile and Broadband

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Last updated: 11 Mar 2009 Update History

Report Status: Archived

Report Pages: 113

Analyst: Stephen McNamara

Publication Overview

Hong Kong has a sophisticated telecommunications infrastructure. The report covers trends and developments in telecommunications, mobile, Internet, broadband, and converging media including VoIP and IPTV developments. Subjects include:

·         Market and industry analyses, trends and developments;

·         Facts, figures and statistics;

·         Industry and regulatory issues;

·         Infrastructure;

·         Major players, revenues, subscribers, ARPU;

·         Internet, VoIP, IPTV;

·         Mobile voice and data markets;

·         Broadband (FttH, DSL, cable TV, wireless);

·         Convergence and digital media.

 

Researcher:- Lisa Hulme-Jones

Current publication date:- March 2009 (15th Edition)

Next publication date:- April 2010

Executive Summary

Hong Kong, a Special Administrative Region (SAR) of China, takes pride in the way it has built one of the most sophisticated telecommunications markets in the world. Hong Kong’s regulator, the OFTA, has played a major role in developing the telecom sector. The island has put in place substantial infrastructure which supports one of the world’s highest penetrations of mobile phones and telephone services.

 

By early 2009, the territory had more than 3.7 million fixed telephone lines in service, giving 100% fixed line household penetration rate and 53% fixed line population penetration rate, among the highest in Asia as well as in the world. As a result of open competition in the local FTNS market and government’s withdrawal of its mandatory Type II interconnection policy, over 80% of residential households are able to enjoy an alternative choice of local fixed network operators. Furthermore, PCCW has a universal service obligation to provide a continuous basic service, including the provision of public switched voice telephone services anywhere in Hong Kong in a reasonable period of time.

 

Hong Kong has moved quickly in providing over 75% of all households with access to broadband connectivity. This has been accompanied by rapid growth in the Internet market. Broadband Internet subscriptions had well and truly surpassed dial-up subscriptions by end-2005. There were in excess of 5.2 million Internet users in the territory, gaining either dial-up or broadband access going into 2009. The number of broadband subscribers represented about 67% of the total Internet subscriber base, supported by a large number of ISPs. By end-2008, according to OFTA, Hong Kong had 1.92 million broadband subscribers and 935,000 dial-up subscribers. Broadband ARPU levels were increasing, as operators benefited from lower churn and higher revenue due to good quality content.

 

Going into 2009 there were over 11 million mobile subscribers, representing an impressive penetration of close to 160%. This included over 2.9 million 2.5G and 3G subscribers. This penetration level puts Hong Kong in a tussle with Macau for first place in the Asian mobile market (both now well ahead of previous leader, Taiwan). This is remarkable considering that Hong Kong not only has the highest density of fixed telephone lines in the region but also that local calls on the fixed network are free. An ongoing price war cut mobile phone air-time rates to levels where operators became increasingly reliant on provision of non-voice value-added services to maintain margins. This, in turn, made 2.5G and 3G services of considerable importance.

 

Key highlights:

·         According to an OFTA benchmark survey released in October 2008, Hong Kong has the world’s most affordable prices for mobile and fixed-line voice services. In a study that compared Hong Kong with Singapore and six OECD economies, Hong Kong consumers were found to enjoy the lowest mobile and fixed-line services in all key categories. Hong Kong mobile prices were the lowest in the three categories of low, medium and high-usage and were roughly a third of the average.

·         After being awarded 15-year CDMA2000 licence in the 850MHz band in 2007, PCCW started providing CDMA2000 services in late 2008, predominantly to users roaming from the Chinese mainland.

·         In a densely packed market with over 2 million TV households, PCCW ended 2008 with nearly 930,000 video subscribers in Hong Kong with a paying base of 670,000. That passed i-Cable, which closed 2008 with around 890,000 video subscribers. Besides losing its historic market share edge, i-Cable may start shedding subscribers during 2009.

·         In May 2008, Apple added Hong Kong and Macau as the two new markets to sell its popular multimedia gadget. Hong Kong was the first market in Greater China and also one of the four Asia markets, along with Australia, Japan and New Zealand, to launch the newest version of the iPhone.

·         PCCW effectively became a private company in February 2009 after minority shareholders approved the buyout plan. The vote ended a tumultuous era in which Li, the son of Hong Kong’s richest man, acquired the city’s biggest telco at the height of the dotcom bubble. Li and China Unicom were to pay around HK$16.2 billion (US$2.2 billion) for the remaining 52% stake in PCCW and take the company private, subject to High Court approval.

·         3G subscriptions continue to grow in a competitive market and consisted of nearly 25% of total mobile subscribers going into 2009.

·         Fibre deployments continue to expand while DSL subscriptions started to drop off at end-2008. The extensive fibre infrastructure in Hong Kong has allowed IPTV services to reach over 40% of households.

 

Internet, broadband, and telecoms statistics for Hong Kong – 2002; 2008

Sector

2002

2008

Internet (million)

Internet users

3.30

5.25

Internet subscribers

2.37

2.86

Broadband (million)

DSL subscribers

0.49

1.07

Total subscribers

0.99

1.92

Subscribers to telecoms services (million)

Fixed telephones

3.84

3.73

Mobile phones

6.21

11.50

                2.5G

0.17

0.18

                3G

-

2.75

(Source: BuddeComm based on OFTA, ITU, Point Topic data)

 

For those needing high level objective analysis on Hong Kong, this report is essential reading and gives further information on:

·         OFTA’s hike in the fixed to mobile interconnection charge (FMIC) from HK4.36 to HK5.45 cents per minute which caused PCCW to lift interconnection fees by 25%.

·         OFTA’s decision to auction additional GSM mobile frequencies in the 1800MHz spectrum band to existing network operators by mid-2009. The six spectrum concessions will expire on 29 September 2021, in line with existing GSM network operating licences.

·         OFTA’s expansion of the portion of its radio spectrum devoted to wireless broadband in the 2.3GHz, 2.5GHz and 2.6GHz bands as auctioned off in January 2009. Licences will be valid for a period of 15 years under the converged Unified Carrier regulatory framework. OFTA placed no conditions on the use of the spectrum issued as part of a new Broadband Wireless Access license. The spectrum blocks though are most suitable for the currently popular version of 4G, a FDD version of LTE, which requires paired spectrum.

·         MVNO Trident Telecom’s suspension of its service after being unable to strike a deal with a network operator. The interconnection agreement with PCCW Mobile ended and its mobile service was shut down. Trident expected service to resume in early 2009.

·         The expectation that Hong Kong’s broadcasters and telecommunications operators will compete fiercely for mobile TV spectrum in the 2009 government auction. Hong Kong’s Commerce & Economic Development Bureau will sell off spectrum for mobile television services in mid-2009 and expects services to launch in 2010.

 

Data in this report is the latest available at the time of preparation and may not be for the current year.

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