Press release                                                                                                            7th October, 1998

HKISPA expresses disappointment
 on the Review of Delivery Fee Arrangement by OFTA

The Hong Kong Internet Service Providers Association expresses our extreme disappointment and dissatisfaction with the Review of Delivery Fee Arrangements released by the Telecommunications Authority on September 30, 1998.

It has been the HKISPA's consistent position that effective, fair and accessible interconnection between networks is critical to ensure the benefits of competition.
As the industry body representing the community of Internet service providers in Hong Kong, we are strongly against the high level of local access charges recommended by the TA.  We find it ironic that while the TA is supposed to foster competition, its local access charge determination has all but rendered any reasonable ISR competition impossible.

Access charges should not apply to ISP providing services in Internet telephony or Voice over IP (or Frame Relay or similar emergency technology).  ISPs should be regarded and regulated as value-added service providers supplying services using the networks of other infrastructure service providers.

Local access charges will eliminate the cost savings enjoyed by consumers making Internet calls, making it impossible for Hong Kong to compete with other regional and international competitors like the U.S., Japan, Singapore and Taiwan none of which charges any local access delivery fee on IP telephony.  In fact, the U.S. Appeals Court in August upheld the Federal Communications Commission's decision that companies providing Internet services should not be required to pay access charges to local telephone companies.  We are at a loss to understand the unique wisdom of the Hong Kong telecommunications regulators.

Although we are against any local access charge on IP telephony, we are obliged to comment on the unreasonably high level of the charge in the preliminary calculation provided by the TA.  First, the complete lack of transparency to the public in the cost structure of the local fixed network dominator means ISPs must take the cost presented by the TA at granted.  Second, it is ludicrous that we should pay for metering, billing, and administrative cost of the FTNS.  When ISPs pay PNETS charges to the FTNS, we are never compensated for our billing and administrative cost.  Finally, ISPs believe that we should not contribute separately to the universal service contribution, as we already leases lines from the FTNS to provide our services and hence we have already contributed indirectly.

This local access charge determination has successfully nullified Hong Kong's opportunity to become a regional Internet hub and international exchange.  On the other hand, Hong Kong now exemplifies the maximal protection a government is willing to provide to monopolistic players, bucking the trend of telecommunications liberalization.  We rest our case if this is the direction that the Hong Kong Government has set for Hong Kong--one that has our regional competitors quietly applauding.

Therefore, we stand steadfastly against any access charges imposed to ISPs for voice, data or multimedia services.

Notes to editors:
HKISPA is the only independent and non-profit Internet Service Providers Association in Hong Kong. Its primary objective is to represent and develop the ISP industry in Hong Kong. HKISPA has a membership of 49 companies, including local and international companies.
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Media contact: Ms Kitty Chung 2180-3801