Wireless and mobile technologies have been growing at a breath-taking pace in the past decade. This is evident not only in advanced economies but more so in the developing world. According to the studies by the International Telecommunication Union, mobile phone penetration was negligible 10 years ago, but by 2004, the penetration rates had reached 19% for developing countries and 77% for developed countries.

In particular, we have witnessed significant development in China. By end 2006, the mobile phone penetration rate in Mainland China was 35%, with about 460 million mobile service subscribers, compared with 85 million in 2000 with a penetration rate of 6.7%. Every month, there are about 6 million new subscribers to the mobile service.

Major industry players like Huawei and ZTE have emerged as world-renowned manufacturers in the worldwide telecoms markets. In 2006, the sales revenue of the Chinese electronic and information industry amounted to RMB3.83 trillion, or US$491 billion, representing a growth rate of 25% as compared to that of the previous year.

On the technology side, the Central People's Government is committed to have the 3G network ready in time for the 2008 Olympics. 3G licences for TD-SCDMA standard, a homegrown technology in China, will be issued.

Mainland Internet demand booms

The Mainland market for Internet and broadband services has also experienced a rapid boom in recent years. In 2006, there were 78 million Internet subscribers, including 52 million subscribers already using broadband services, as compared with 73 million Internet subscribers in 2005 and 38 million broadband subscribers in 2005. The number of broadband subscribers is increasing by 1.2 million per month on average.

Coupled with the advancement of wireless technologies like Wi-Fi, the potential market for wireless communication products and services in China is huge and expanding every day, offering tremendous opportunities for suppliers of goods and services.

Turning back to Hong Kong, the Government published the Digital 21 Strategy in 1998, which set out the blueprint for the development of ICT in Hong Kong and our vision of developing Hong Kong into a leading digital city in the world.

We have been making good progress over the past years. For example, the number of mobile service subscribers in Hong Kong exceeded 9 million by mid-2006, a penetration rate of 130%, which is one of the highest in the world. Also over 1 million of the mobile phone subscribers use 3G service. All households and commercial buildings are covered by the broadband network. Moreover, Hong Kong has 1.7 million broadband household subscribers with a penetration rate of 70%. .

More wireless services available in HK

Hong Kong people not only enjoy high-speed Internet connection, but also free web surfing without cables. Apart from the Wireless Application Protocol (WAP) available more than five years ago, and the widespread WiFi hotspots which allow people to surf the Internet on the streets, the 3G-based High Speed Downlink Packet Access (HSDPA) technology has also been introduced recently to provide higher speed 3G data transmission service.

To facilitate public access to the Internet, the Financial Secretary has just announced in his Budget speech a new Government initiative to earmark $210 million to provide WiFi networks in all government venues accessible by the public for free use by our citizens.

Our demand for ICT services will never stop. For example, on digital terrestrial television broadcasting, the two local television services providers will start their new digital programmes by end 2007 and will reach 75% of the area of Hong Kong with their new digital network by 2008, in time for the 2008 Beijing Olympics.

We are also formulating policies on the provision of Mobile TV, an exemplar of the newest technologies which combines mobility and television, giving people the unprecedented convenience to access personalised audiovisual content anytime, anywhere.

Asia's world city ranks among top

With these achievements, Hong Kong ranks fifth in the world in ITU's Digital Opportunity Index, and the Economist Intelligence Unit ranked Hong Kong second in the Asia-Pacific region in 2006 in terms of e-readiness. To meet new challenges and to take account of the evolving needs of the community and technological advancements, we have recently conducted the latest review of the Digital 21 Strategy, and aim to publish an updated Strategy in the middle of this year. Our aim is to continue to build on our strengths and strengthen Hong Kong's position as a world digital city.

With our strategic location and excellent infrastructure, Hong Kong is the premier gateway to the Mainland and stands ready to grasp the opportunities of the ICT industry in the Mainland.

China has been the "world's factory", and many local and foreign-owned original equipment manufacturing companies operate there. For example, many iPods from Apple Computer are manufactured by OEM factories in the Mainland.

Manufacturing firms in the Mainland are striving to improve their productivity and increasing the value of their products. This results in a growing demand for technological innovation. The challenge ahead is how they could move up the value chain and grasp the new market opportunities, such as those presented by the rapid development of the wireless communication industry.

HK strives to be IT hub

Presented with the rising demand for innovation and technology in the region, Hong Kong is striving to become a technology servicing hub, providing a platform for applied R&D, technology transfer and commercialisation.

Manufacturers can use Hong Kong as a platform for developing and sourcing technologies to develop new products, while technology providers can find the right manufacturing companies to turn their technologies into successful products.

Hong Kong possesses all the ingredients of a regional technology servicing hub. Apart from the excellent communication infrastructure I mentioned before, Hong Kong is an international city with a well established legal system and robust IP protection, a business-friendly environment and free flow of information.

Local business predict trends

Our businesses have shown remarkable capability in detecting market trends and getting new products and services fast to the market, utilising the efficient manufacturing base in the Mainland. We also have distinct research capability and innovative minds.

One example to show that Hong Kong is an ideal test bed for new technologies and their applications is the successful implementation of the Octopus card system in Hong Kong. Adopting RFID technology, the Octopus card is a rechargeable stored value smart card which is used for electronic payment in on-line or off-line systems in Hong Kong.

Originally launched in September 1997 as a fare-collection system for the city's mass transit railway system, the Octopus card system has grown into a widely used electronic cash system not only for virtually all public transport in Hong Kong, but also for making payment at convenience stores, supermarkets, fast-food shops, on-street parking meters, car parks and many other point-of-sale applications (such as service stations and apparel chain stores).

The system is also used for access control to offices, schools and apartments. Octopus has become one of the world's most successful electronic cash systems, with over 14 million Octopus cards in circulation, nearly twice the population of Hong Kong, and 10 million transactions per day, with over 400 service vendors. Octopus has become a proven example for our neighbours such as Japan and Taiwan to develop their own smart card systems.

CEPA strenghtens HK's advantages

On the other hand, Hong Kong's advantages as a technology servicing hub is further strengthened by the Closer Economic Partnership Agreement, or CEPA, between Hong Kong and Mainland China. This is a free trade agreement which provides that all Hong Kong products can enjoy zero tariff in the Mainland's market.

Hong Kong service suppliers can also enjoy preferential access opportunities in various service areas, including information technology and telecommunications, in the Mainland's market.

So in Hong Kong, you can have the best of both "worlds" - the confidence and comfort of an international city, and the gateway and preferential access to the world's huge and expanding market.

To enhance our position as a regional technology servicing hub, the Government is committed to providing a conducive environment for the development of high technology, high value-added activities. We have set up the Innovation & Technology Fund to support projects that contribute to innovation and technology upgrading in industry.

Tech infrastructure enhanced

We have strengthened our technological infrastructures. In the Science Park and Cyberport, we have already built up clusters of technology companies and technology talents and professionals. We have established a Wireless Development Centre in the Cyberport to provide infrastructural support not only for the wireless application development in Hong Kong, but also for application based on the homegrown 3G standard in the Mainland, TD-SCDMA.

We have also established the Applied Science & Technology Research Institute (ASTRI) which is tasked to perform high quality applied R&D and transfer the R&D results to the industry for commercialisation with a view to elevating the technology level of our industry and stimulating the growth of technology-based industry in Hong Kong.

Building on Hong Kong's technological foundation and after an extensive research into the industry needs in the Greater Pearl River Delta region and a public consultation exercise, we have identified five technology areas for focused development and set up R&D Centres in April 2006 for the respective areas, including one specifically on ICT.

ASTRI is the host of the Hong Kong R&D Centre for ICT. It aims to develop high-value, next generation ICT products, devices and component applications that are relevant to the industries in the Mainland. ASTRI's current research foci include communications technologies, consumer electronics, IC design and Opto-electronics.

Centre helps buoy market potential

On communication technologies, the centre has been actively undertaking projects on areas like wireless home AV distribution platform, WiFi cellular system, broadband wireless access platform, where all of them are of high marketing potential.

ASTRI also hosts the Antenna Centre of Excellence which combines both world-class engineering talents with industrial-grade measurement facilities. The centre offers a wide range of antenna design and measurement services to Hong Kong and the Greater China region - ranging from small measurement services to complete antenna design from project inception to final production.

Collaboration and interactions breed innovations. We welcome more collaboration between the R&D Centres and local and overseas universities, research institutes and industries.

As a start, ASTRI has entered into agreements on research collaborations with several renowned technology enterprises, such as Telcordia, Wavecom and Semiconductor Manufacturing International Corporation.

Other Mainland and overseas universities and research institutes including Tsinghua University, University of California, University College of London, and National ICT Australia have also joined the R&D Centres as research partners.

With its unique advantages, Hong Kong is well-positioned to be the technology servicing hub in the region.

Secretary for Commerce, Industry & Technology Joseph Wong gave this address at the Wireless Communications & Networking Conference 2007 of the Institute of Electrical & Electronics Engineers.