2010 Hong Kong - Telecoms, Mobile, Broadband and Forecasts

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 Office of the Telecommunications Authority (OFTA), has played a major role in developing the telecom sector. The country has put in place substantial infrastructure which supports one of the world’s highest penetrations of mobile phones and telephone services.

By early 2010, the territory had just less than 3.7 million fixed-telephone lines in service, giving 100% fixed-line household penetration rate and 52.5% fixed-line population penetration rate, amongst 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 85% of all households with access to broadband connectivity. This has been accompanied by rapid growth in the Internet market. Broadband Internet subscriptions well and truly surpassed dial-up subscriptions by end-2005. There were in excess of 5.3 million Internet users in the territory, gaining access using either dial-up or broadband, going into 2010. The number of broadband subscribers represented about 67% of the total Internet subscriber base, supported by a large number of ISPs. By end 2009, according to OFTA, Hong Kong’s Internet subscriber base consisted of 2.06 million broadband subscribers and 979,000 dial-up subscribers. Broadband ARPU levels were increasing, as operators benefited from lower churn and higher revenue due to good quality content.

Going into 2010 there were over 12 million mobile subscribers, representing an impressive penetration of close to 170%. This included over 5.0 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.

Market highlights:

• In a densely packed market has over 2 million TV households, PCCW ended 2009 with over 700,000 NOW TV subscribers in Hong Kong with a network reaching over one million potential customers. i-Cable closed out 2009 with around one million video subscribers.
• Apple has added Hong Kong and Macau as markets to sell its popular multimedia phone. 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 iPhones.
• 3G subscriptions continue to grow in a competitive market and consisted of over 30% of total mobile subscribers going into 2010.
• 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 50% of households.
• By early 2010 about 46.5% of local families, or 1.06 million households, received digital-terrestrial television services, showing the penetration rate has grown more than 40% since the end of 2008.

Hong Kong – key telecom parameters – 2008 - 2009

(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:

• HKBN’s aims to be the largest ISP service provider in Hong Kong by 2016. Three years into their strategy and while still relatively small, its 400,000 customers not only pay US$13 a month for 100Mb/s synchronous broadband, they also get a money-back guarantee
• Three existing mobile network operators successfully bidding for radio spectrum in the 1800MHz frequency band.
• Pacnet’s plans to spend US$300 million over the next three years on building data centres around the region. The company is pre-selling capacity in the data centres and expects revenue from hosting services to account for 40% of revenue in four to five years, up from about 6% today.
• Operators expressing interest in the soon to be auctioned free-to-air TV licences in Hong Kong. The Hong Kong government is accepting applications for new licensees in the free TV market, which is dominated by the TVB group, with a single competitor, ATV. 

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