2009 Hong Kong - Telecoms, Mobile and Broadband

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.

Table of Contents

  • 1. Key Statistics
  • 2. Telecommunications Market
    • 2.1 Overview of Hong Kong’s telecom market
    • 2.2 Fixed Telecommunications Network Services (FTNS)
    • 2.3 International telecommunications services
  • 3. Regulatory Environment
    • 3.1 Overview
    • 3.2 Office of the Telecommunications Authority (OFTA)
      • 3.2.1 Survey of effectiveness of competition
    • 3.3 Awarding of licences
    • 3.4 Telecommunication (Amendment) Ordinance 2000
    • 3.5 Regulatory developments in 2008
      • 3.5.1 Interconnection fees
      • 3.5.2 GSM-1800 frequencies
      • 3.5.3 Benchmark pricing
      • 3.5.4 Wireless radio spectrum
  • 4. Major Operators
    • 4.1 Pacific Century CyberWorks (PCCW)
      • 4.1.1 Sunday / PCCW
      • 4.1.2 HKT Group Holdings Ltd & PCCW
    • 4.2 City Telecom (HK) Ltd
    • 4.3 Hutchison Whampoa Ltd
      • 4.3.1 Hutchison Telecom
      • 4.3.2 Hutchison Global Communications (HGC)
    • 4.4 Wharf T&T Hong Kong (i-Cable)
    • 4.5 New World Telecommunications Ltd (formerly New World Telephone)
      • 4.5.1 CSL New World
    • 4.6 Peoples (China Resources Peoples Telephone Co Ltd)
    • 4.7 SmarTone-Vodafone
  • 5. Telecommunications Infrastructure
    • 5.1 Overview
    • 5.2 Mainland connection
    • 5.3 Full liberalisation of FTNS market
      • 5.3.1 Local and STD calls
      • 5.3.2 International calls
    • 5.4 Submarine cable networks
      • 5.4.1 Pacnet Global (formerly Asia Netcom / Asia Global Crossing)
      • 5.4.2 Hutchison Global Telecommunications (Hong Kong)
      • 5.4.3 C2C Pte Ltd / Pacnet Cable
      • 5.4.4 Telstra/PCCW
      • 5.4.5 Tricom Asia Ltd
    • 5.5 Satellite networks
      • 5.5.1 AsiaSat
      • 5.5.2 APStar
      • 5.5.3 Asia Broadcast Satellite
  • 6. Internet market
    • 6.1 Overview
      • 6.1.1 Internet statistics
    • 6.2 Internet traffic volume
    • 6.3 Domain names
    • 6.4 Wireless Internet
      • 6.4.1 Free WiFi on Hong Kong buses
  • 7. Broadband Market
    • 7.1 Overview
      • 7.1.1 Broadband statistics
    • 7.2 Cable modems
    • 7.3 Asymmetrical Digital Subscriber Line (ADSL)
    • 7.4 Regulatory issues
    • 7.5 Digital 21 IT Strategy
      • 7.5.1 Cyberport project
    • 7.6 Voice over Internet Protocol (VoIP)
    • 7.7 Major broadband operators
      • 7.7.1 i-Cable Communications (Hong Kong Cable Television Ltd)
      • 7.7.2 Hong Kong Broadband Network Services (City Telecom - CTInets)
      • 7.7.3 PCCW
      • 7.7.4 CPCNet Hong Kong (PSINet Hong Kong Ltd)
      • 7.7.5 Pacnet (Pacific Internet)
      • 7.7.6 SmarTone Broadband Services
  • 8. Convergence
    • 8.1 Triple play models
    • 8.2 Quadruple play models
    • 8.3 Television
      • 8.3.1 Overview
      • 8.3.2 Regulatory issues
      • 8.3.3 Technology platforms
      • 8.3.4 Pay TV
      • 8.3.5 Satellite TV
      • 8.3.6 Free-To-Air (FTA) broadcasting
  • 9. Mobile Communications
    • 9.1 Overview of Hong Kong’s mobile market
      • 9.1.1 Mobile statistics
    • 9.2 Regulatory issues
      • 9.2.1 Mobile Number Portability (MNP)
      • 9.2.2 Spectrum licensing
      • 9.2.3 Personal Communications Services (PCS)
    • 9.3 Handsets
      • 9.3.1 iPhone
    • 9.4 Mobile Virtual Network Operator (MVNO) services
    • 9.5 Mobile voice services
      • 9.5.1 Prepaid
    • 9.6 Mobile data services
      • 9.6.1 Short Message Service (SMS)
      • 9.6.2 Wireless Application Protocol (WAP)
      • 9.6.3 Multimedia Message Service (MMS)
      • 9.6.4 High-Speed Circuit-Switched Data (HSCSD)
      • 9.6.5 General Packet Radio Service (GPRS)
      • 9.6.6 Enhanced Data for GSM Evolution (EDGE)
      • 9.6.7 High-Speed Downlink Packet Access (HSDPA)
      • 9.6.8 CDMA2000
    • 9.7 Third Generation (3G) mobile
      • 9.7.1 3G licensing
      • 9.7.2 3G launches
    • 9.8 4G
    • 9.9 Mobile content and applications
      • 9.9.1 Mobile TV
      • 9.9.2 Mobile content access
  • 10. Glossary of Abbreviations
  • Table 1 – Country statistics Hong Kong – 2008
  • Table 2 – Telephone network statistics – November 2008
  • Table 3 – Internet user statistics – November 2008
  • Table 4 – Broadband statistics – July 2008
  • Table 5 – Mobile statistics – July 2008
  • Table 6 – National telecommunications authorities
  • Table 7 – Fixed line versus mobile subscriptions and penetration rates – 1998 - 2008
  • Table 8 – Hong Kong Telecoms sector financial indicators – 1994 - 2007
  • Table 9 – Number of telecoms licences by category – October 2008
  • Table 10 – PCCW revenue and profit – 2001 - 2007
  • Table 11 – Sunday subscribers and annual change – 1998 - 2007
  • Table 12 – Sunday net profit/loss – 2000 - 2006
  • Table 13 – PCCW mobile revenue, EBITDA and net profit – 2005 - 2007
  • Table 14 – PCCW 2G and 3G subscribers – 2005 - 2008
  • Table 15 – City Telecom revenue and profit – 2001 - 2008
  • Table 16 – Hutchison revenue and profit – 2002 - 2006
  • Table 17 – Hutchison total subscribers and annual change – 1998 - 2008
  • Table 18 – Hutchison Hong Kong 3G mobile subscribers & annual change – 2004 - 2008
  • Table 19 – HTIL Hong Kong and Macau revenue – 2002 - 2007
  • Table 20 – HGC Hong Kong revenue – 2005 - 2007
  • Table 21 – Wharf T&T revenue and profit – 2001 - 2007
  • Table 22 – Wharf T&T fixed-line, i-Cable Broadband & pay TV subscribers – 2001 - 2007
  • Table 23 – CSL New World subscribers and annual change – 1998 - 2006
  • Table 24 – New World Mobility subscribers and annual change (historical) – 1998 - 2005
  • Table 25 – CSL New World Mobility Group subscribers & annual change – 2006 - 2008
  • Table 26 – Peoples subscribers and annual change – 1998 - 2008
  • Table 27 – SmarTone subscribers and annual change – 1998 - 2008
  • Table 28 – SmarTone-Vodafone 3G subscribers – 2004 - 2008
  • Table 29 – SmarTone-Vodafone financial data – 2002 - 2008
  • Table 30 – SmarTone-Vodafone ARPU and data contribution – 2002 - 2008
  • Table 31 – Fixed-lines in service and teledensity – 1994 - 2008
  • Table 32 – External telephone traffic volume in minutes – 1997 - 2007
  • Table 33 – External telecommunications facilities capacity of Hong Kong – 2000 - 2008
  • Table 34 – AsiaSat financial data – 2005 - 2007
  • Table 35 – AsiaSat satellite utilisation – 2005 - 2008
  • Table 36 – APT Sat financial data – 2001 - 2007
  • Table 37 – APT Sat satellite utilisation – 2003 - 2007
  • Table 38 – Internet and broadband key statistics – November 2008
  • Table 39 – Internet users and subscribers – 1996 - 2008
  • Table 40 – Internet subscribers by access type – November 2008
  • Table 41 – Internet traffic volume (PSTN and broadband) – 1997 - 2008
  • Table 42 – Use of International Private Leased Circuits (IPLCs) – 2002 - 2008
  • Table 43 – Registered domain names – 2008
  • Table 44 – BWA licence winners
  • Table 45 – DSL subscribers – 1999 - 2008
  • Table 46 – Broadband Internet access subscribers – 2000 - 2008
  • Table 47 – Broadband subscribers by access type and annual change – September 2008
  • Table 48 – Broadband subscribers and households - September 2008
  • Table 49 – Broadband Internet traffic volume – 2000 - 2008
  • Table 50 – Online purchasing – June 2008
  • Table 51 – Cable modem subscribers – 2003 - 2008
  • Table 52 – i-Cable broadband & VoIP subscribers, penetration & ARPU – 2000 - 2008
  • Table 53 – i-Cable cable TV subscribers, penetration and ARPU – 1995 - 2008
  • Table 54 – HKBN triple play subscribers, ARPU and IDD traffic volume – 2003 - 2008
  • Table 55 – PCCW broadband subscribers – 2000 - 2008
  • Table 56 – PCCW NOW TV subscribers and ARPU – 2003 - 2008
  • Table 57 – Pacific Internet subscribers by access type – 2003 - 2006
  • Table 58 - Broadcasting service statistics - 2008
  • Table 59 - TV household penetration by licence type - March 2007
  • Table 60 - Hong Kong households’ TV coverage by transmission modes
  • Table 61 - Pay TV subscribers – cable, satellite and ADSL – 2001 - 2007
  • Table 62 – Mobile subscribers and annual change – 1992 - 2008
  • Table 63 – Mobile operators, technology, subscribers and annual change – June 2008
  • Table 64 – Operator market share by subscribers – 2003 - 2008
  • Table 65 – Total mobile numbers ported – 1999 - 2008
  • Table 66 – PCS subscribers and annual change – 1997 - 2008
  • Table 67 – MVNO subscribers – 2005 - 2008
  • Table 68 – Prepaid and activated SIM cards – 1997 - 2008
  • Table 69 – SMS messages sent and received – 2002 - 2008
  • Table 70 – SMS statistics for Christmas day and New Years day – 2005 - 2008
  • Table 71 – SMS statistics for Valentines and Chinese New Year day – 2006 - 2009
  • Table 72 – 2.5G subscribers – 2002 - 2008
  • Table 73 – 3G mobile subscribers – 2005 - 2008
  • Table 74 – BWA Licence winners
  • Exhibit 1 – Licensees and issue dates for FTNS licences – October 2008
  • Exhibit 2 – The ‘original’ PCCW deal
  • Exhibit 3 – Fixed Telecommunications Network Services licensees – October 2008
  • Exhibit 4 – Major submarine cables with landing points in Hong Kong - 2008
  • Exhibit 5 – External FTNS licensees – October 2008
  • Exhibit 6 – Satellite-based external FTNS licensees – October 2008
  • Exhibit 7 – Overview of TV broadcasting licences – February 2008
  • Exhibit 8 – TV services receivable by broadcasting company – October 2007
  • Exhibit 9 – Transmission modes employed by TV licensees
  • Exhibit 10 – MVNO licensees – 2008

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