Telecommunications and Broadcasting in Hong Kong

A Hot Tip about IT and Telecommunications in Hong Kong SAR

Posted on: 22 Mar 2010

summary

The Hong Kong Government fully liberalized its local Fixed Telecommunications Network Services (FTNS) in 2003. There is no pre-set limit on the number of FTNS licenses issued. As of July 2007, 79% of residential households were able to enjoy choice of at least two alternative local fixed networks. On the mobile communications front, the market is one of the most competitive in the world. The introduction of mobile number portability service in 1999 prevents any single mobile operator from dominating the market. Of the five mobile operators running multiple networks, four operators launched Third Generation (3G) networks in 2004. Multimedia convergence through mobile phones is evolving rapidly. Technological innovation has enabled 24-hour live streaming news, mobile TV with over 20 channels and other mobile content, which is gaining in popularity. In March 2008, the market penetration of mobile phones in Hong Kong was estimated to be 154.4 percent, the highest mobile penetration rate in the world (with a population of approximately 7 million). With its high mobile penetration rate, Hong Kong is an ideal test bed for the launch of new wireless applications, products and services. Opportunities for U.S. telecom companies exist in: smart phones, content for 3G networks, wireless multimedia and security technologies.

 

Hong Kong’s telecommunications equipment imports in 2007 reached USD 22.5 billion. The United States is the 5th largest supplier, supplying USD 625 million or approximately 3% of Hong Kong’s imports, following China, Singapore, Japan, and Malaysia.

 

Broadcasting also provides opportunities for US companies providing content and digital TV technology and equipment to broadcasters. With more than 2.23 million households (100%) tuning in to television broadcasts on a regular basis, television is a significant feature of life for people in Hong Kong. There are over hundreds of domestic and regional TV channels broadcasting in a range of languages, including Free-to-Air commercial channels, pay TV channels and a variety of Free-to-Air satellite channels. In 2007, Hong Kong’s broadcasting equipment imports reached USD 18.6 billion. The United States is the 4th largest supplier, supplying USD 493 million or approximately 2.6% of Hong Kong’s imports, following China, Singapore, and Malaysia.

 

Market Demand

Fixed Line

The local fixed carrier services market was fully liberalized in 2003. As of March 2008, there were almost 3.7 million exchange lines. The telephone density is 53.2% by population, among the highest in the world. There is no pre-set limit on the number of licenses issued and deadline for applications. Furthermore, there is no specific requirement on network rollout and investment. There are currently ten wireline based Fixed Telecommunications Network Services (FTNS) licensees and one wireless based (FTNS) licensees in Hong Kong, they are:

1. PCCW-HKT Telephone Limited

2. New World Telecommunications Limited

3. Wharf T& T Limited

4. Hutchison Global Communications Limited

5. Hong Kong Broadband Network Limited

6. Towngas Telecommunications Fixed Network Limited

7. CM TEL (HK) Limited

8. TraxComm Limited

9. HKC Network Limited

10. Hong Kong Cable Television Limited

11. SmarTone Communications Limited

 

As a result of the open competition in the local fixed carrier services market, the Hong Kong fixed line market is very competitive. Fixed-line users can make unlimited number of calls within Hong Kong on payment of a fixed monthly fee.

 

Mobile / Wireless

Competition in public mobile services is vibrant. Currently, there are five mobile network service operators (Hong Kong CSL, Hutchison, PCCW, SmarTone and China Mobile Peoples) operating 14 networks. Three operators holding both GSM 900 and GSM 1800 licenses have integrated their networks and launched dual band services. Four operators (Hong Kong CSL, Hutchison, SmarTone, and PCCW) have launched 3G networks. In addition to the existing networks, OFTA (Office of the Telecommunications Authority) has granted the fifth 3G license to PCCW for the provision of CDMA2000 mobile telecommunications services, which will be available in Hong Kong in November 2008.

 

With the introduction of number portability in 1999, Hong Kong’s mobile phone market growth has accelerated. Towards the end of 1999, the number of mobile subscriptions surpassed that of fixed lines. The high penetration rate of Hong Kong’s mobile phone market is mainly due to the low prices for handsets and low rates for mobile services. In March 2008, there were 10.75 million mobile subscribers in Hong Kong, representing a market penetration rate of 154.4 percent (population size is 7.02 million), the highest mobile penetration rate in the world. Among these 10.75 million subscribers, 2.8 million were 3G/3.5G subscribers. Other than basic voice services, data services such as short messaging, mobile internet services, all sorts of download services, multimedia services, video call services and mobile TV services are commonly available and are becoming popular among consumers. With the launch of 3.5G services utilizing High Speed Downlink Packet Access (HSDPA) technology by all four 3G operators in August 2007, subscribers can easily download and upload large files including email attachments, enjoy faster and higher quality video-streaming and downloading, as well as experience high-speed webbrowsing at a speed up to 7.2Mbps.

 

Mobile Virtual Network Operator (MVNO) Services

When granting the 3G license, OFTA has stipulated that all 3G operators must reserve at least 30% of their network capacity for MVNO services, which in turn must operate their own telecom switch, thus created new market opportunities for operators. OFTA had issued seven MVNO licenses by end of 2007. The Licensees are Trident Telecom Ventures Ltd., China Motion Telecom (HK) Ltd., China Unicom International Ltd., China Hong Kong Telecom Ltd., CITIC Telecom 1616 Ltd., Telecom Digital Mobile Ltd., and IMC Networks Ltd.

 

The great demand for mobile data and multimedia services has created additional demand for network hardware and software, support services, consulting, and content services for U.S. companies.

 

Broadcasting

Broadcasting may provide more opportunities for U.S. companies providing content and digital TV technology to local channels.

 

With more than 2.23 million households (100%) tuning in to television broadcasts on a regular basis, television is a significant feature of life for people in Hong Kong. There are over hundreds of domestic and regional TV channels broadcasting in a range of languages, including Free-to-Air commercial channels, pay TV channels and a variety of Free-to-Air satellite channels. Under the Hong Kong Broadcasting Ordinance, there are 3 categories of television program services:

  • Domestic Free TV Program Services: domestic free television program services are intended or available for reception by more than 5,000 domestic premises free of charge in Hong Kong and primarily target Hong Kong. There are two licensees under the domestic free TV program services, namely TVB and ATV, each broadcasts 2 free-to-air channels. These two terrestrial TV broadcasters were required by the Hong Kong Government to launch Digital Terrestrial TV (DTT) at the end of 2007 and to achieve at least 75% digital broadcasting in 2008. With the launch of DTT broadcasting, ATV and TVB will simulcast their existing four television channels in digital format, and launch new free channels on standard television (SDTV) and high definition television (HDTV). The two operators will continue to broadcast the four existing channels in analogue format, so viewers can choose when to switch to digital broadcasting at their own pace. Subject to further market and technical studies, the Government aims to switch off analogue broadcasting in 2012.
  • Domestic Pay TV Program Services: refers to television program services, which are intended or available for reception by more than 5,000 domestic households or hotel rooms in Hong Kong on payment of a subscription and primarily target Hong Kong. Under the Pay TV Program Services License, all three existing licensees are using Internet Protocol Television (IPTV) delivered by broadband connection. The three licensees are: Hong Kong Cable Television Limited (101 channels); PCCW Media Limited (133 channels), and TVB Pay Vision Limited (44 channels).
  • Non-Domestic TV Program Services: Non-domestic television program services do not primarily target Hong Kong. Most of these licensees are using satellite broadcasting. There are 16 licensees offering hundreds of channels targeting for non-local viewers.

 

By Fanny Chau

Read the full market research report


Posted: 22 March 2010

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