Public views are being sought on Fixed-Mobile Convergence in the telecommunications industry and the proposal of phasing out the existing regulatory preference for a "Mobile Party's Network Pays" system.

The Office of the Telecommunications Authority said with dynamic market and technology advancement, the distinctions between fixed and mobile networks and services are becoming increasingly blurred. The phenomenon is often referred to as Fixed-Mobile Convergence (FMC) in the telecommunications industry.

Differential treatments

The office has identified a number of existing differential regulatory treatments to the fixed and mobile network operators that may require changes. The existing "Mobile-Party's-Network Pays" interconnection settlement arrangement between fixed and mobile network operators, in particular, is an essential one to be reviewed.

The status quo is the result of regulatory intervention put in place in the early 1980s when mobile services were introduced to the telecommunications market as a luxury product. Its continuation is not conducive to competition today, and will be a problem as FMC comes along. Rather, the operators should have the liberty to reach commercial agreements among themselve.

Currently, the interconnection payment by the mobile network operators to the fixed network operators amounts to $600 million per annum. As the factors underpinning the existing asymmetric arrangement have already changed, the office proposes to withdraw the regulatory intervention.

Proposal details

The office proposes to phase out existing regulatory preference for "Mobile Party's Network Pays" in two years. The transitional period aims to allow operators time to adjust their business plans.

It also solicits views on the merits of issuing guidelines on how the Telecommunications Authority would exercise its power, should it be called upon to make a determination on interconnection settlement arrangement under the Telecommunications Ordinance.

The office further invites views on the settlement options to be included in the guidelines. One of the options is the "Bill & Keep" model, whereby the operators may settle bilateral interconnecting traffic without payment. It stands out from a number of models because it entails low implementation and recurrent cost to the industry. It also significantly streamlines the regulatory intervention process if necessary. 

The consultation paper has been uploaded onto the office's website. Interested parties are invited to submit comments on or before October 13.