OFTA on ip phony (HK)

8/15/2019 OFTA on ip phony (HK)

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Annex

SUMMARY OF THE SUBMISSIONS RECEIVED ON

CONSULTATION PAPER OF

REGULATION OF INTERNET PROTOCOL (IP) TELEPHONY

INTRODUCTION

On 4 October 2004, the Telecommunications Authority issued a

consultation paper on Regulation of Internet Protocol (IP) Telephony (theConsultation Paper). The Consultation Paper aimed at soliciting the views

and comments from the industry and interested party on some significant issues

related to IP Telephony services such as (a) policy and licensing, (b) numbering

resources, (c) interconnection and charge settlement and (d) consumer and

other issues. The views collected will form the basis on which the TA would

consider when formulating the policy framework and regulatory requirements

for the emerging IP Telephony service and related applications using IP

technology.

2. The consultation officially ended on 4 December 2004. A total of 38

submissions were received:

Companies

AT&T Global Network Services Hong Kong Ltd.

China Resources Peoples Telephone Company Limited

CM Tel (HK) Ltd.

e-Kong Group Limited

EasyLink Networks & Belgravia Group (Asia) Limited (ELN)

HKdotCOM Ltd.

Hong Kong Broadband Network Limited

Hong Kong Cable Television Limited

Hong Kong CSL Limited

Hutchison Global Communications Limited

Interactive Broadband Services Ltd. (iBBS)

Microsoft Corporation


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New World Telecommunications Limited

Pacific Supernet Limited

PCCW-HKT Telephone Limited

REACH Networks Hong Kong Limited

SmarTone Mobile Communications Limited

SUNDAY o/b Mandarin Communications Limited

Systech Telecom Limited

Wharf T&T Limited

Zone Limited

Organisations

The Computing Technology Industry Association (CompTIA)

Consumer Council Hong Kong Internet Registration Corporation Limited (HKIRC)

Hong Kong Internet Service Providers Association (HKISPA)

Hong Kong Wireless Technology Industry Association (WTIA)

Hong Kong Telecommunications User Group (HKTUG)

International Chamber of Commerce (ICC)

The Law Society of Hong Kong

Senior Citizen Home Safety Association (SCHSA)

The Society of Hong Kong External Telecommunications ServiceProviders

Individuals

Dr. Xu Yan

Eric Kwan

Ms. Chan

Dr. John Ure

Legislative Councillor Hon Sin Chung Kai, JP

NAC members

PCCW-HKT Telephone Limited

Wharf T&T Limited

3. The submissions have been published on the website of the Office of

the Telecommunications Authority (OFTA) at www.ofta.gov.hk.
http://www.ofta.gov.hk/http://www.ofta.gov.hk/http://www.ofta.gov.hk/


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4. The submissions are summarised in this document. .

REGULATORY ISSUES OF IP TELEPHONY

12(a) Are there any other issues in addition to those listed above that

should be considered in formulating the regulation for IP Telephony

services?

5. Dr. Xu Yan submits that as long as a user is able to connect to the IP

platform, it makes no sense for the regulator to pay a specific attention to a

specific service (e.g. VoIP) as the IP platform is supposed to support every

service. On this basis, Dr. Xu proposed the concept of universal connection,

namely every citizen shall be guaranteed to be able to connect to, or connectedby, the IP platform. Although the concept of universal connection may be a

relatively advancing and challenging target as far as this point is concerned, Dr.

Xu considers that it will help formulate a forward looking policy when

reviewing the existing universal service mechanism.

6. Hon. Sin Chung Kai shares similar view with Dr. Xu and considers

that the policy framework should not narrowly target on specific service.

Instead, we should keep our eyes on the development of IP technology and theemergence of multimedia applications to be delivered over NGN. In addition,

Hon. Sin Chung Kai has reservation towards the adoption of the Chinese term

for IP Telephony initiated by the industry and followed by usersand OFTA. In considering that broadband services always give people an

impression that it is better than existing services like broadband internet access

service is better than narrowband dial-up service, he suggests that OFTA

should officially define a correct Chinese term for IP Telephony so as not to

mislead the customers into recognizing it as a service superior to conventional

telephone. In his submission, he uses the term as the Chineseterm of IP Telephony, which is the same as the Chinese term we use. Hon.

Sin Chung Kai views IP Telephony as an Internet application only and it is not

going to substitute conventional telephone service. In this regard, Hon. Sin

Chung Kai suggests that OFTA should regularly conduct survey on user

penetration of IP Telephony service and carry out review on the regulatory

policy should the survey indicates that IP Telephony has superseded or become

a substitute of the conventional telephone service.


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7. CompTIA also has a view similar to Dr. Xu Yan and Hon. Sin Chung

Kai. It believes OFTA should recognize the significant industry convergence

which is occurring between IT and telecommunications sectors and develop a

relevant policy framework. It urges OFTA not to regulate IP-enabled services in

a piecemeal fashion since regulating a single IP-enabled application will have a

profoundly negative impact on all IP-enabled applications.

8. PCCW suggests that, with the recent and rapid introduction of VoIP

services in Hong Kong, the TAs decision-making in this important area should

serve to assist in preserving investment incentives, encourage innovation and

facilitate the continued development of new services and technology.

9. SmarTone considers that the Consultation Paper has not addressedfully the issues concerning how IP Telephony would affect the mobile market

as well as the convergence of mobile and fixed services. SmarTone opines that

IP Telephony is not only applicable to fixed services, but also to mobile

services. As such, mobile operators should be allowed to offer IP Telephony

services using the existing mobile numbers 6X and 9X if FTNS operators are

allowed to offer IP Telephony services using the existing fixed numbers.

SmarTone suggests that OFTA should look into the licensing requirements and

spectrum assignment policy for the IP-based broadband wireless solutions suchas WiFi or WiMax. CSL shares with SmarTones view and considers the

Consultation Paper does not adequately recognise or contemplate the wireless

aspects of an IP Telephony service. It strongly urges OFTA to conduct further

industry consultation on this issue and in particular suggests that a wireless

industry forum be held so that 3G mobile carriers, 2G mobile network

operators and mobile virtual network operators (MVNO) and other providers of

wireless services are provided a proper context in which to submit their views

to OFTA about this important subject.

10. ELN suggests that issues such as number transparency, connectivity,

features (call forwarding, call waiting, conferencing) and etc. should also be

addressed.

11. Consumer Council considers that the government should enhance

consumer education on IP Telephony service and make it a regulatory

requirement for the relevant operators or service providers to communicate

their service information to the consumer in a comprehensible manner so as to


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assist them in understanding the pros and cons of different modes of telephone

services. Consumer Council also suggests that OFTA should closely monitor

the marketing activities of service provider ensuring that they provide correct

information of their service to their customers. Besides, OFTA should

strengthen its capacity to handle complaints against IP telephony service. Some

sort of penalties should be imposed onto the offending service provider.

Similarly, Dr. John Ure suggests that, in the telecom environment that VoIP

will usher in, regulation will have to adapt to the fact that levels of service will

differ, and steps must be taken to keep the public informed of these issues. This

may require information obligations on service providers and safeguards,

including a requirement to offer emergency services.

12. ICC submits that the Government should ensure that VoIP services areopen to provision by all interested service providers and that where licensing

conditions exist, they are objective and non-discriminatory and the criteria for

granting authorization are transparent.

13. HKTUG considers that VoIP opens up a number of issues in exposure

of personal communication to unprotected environment and requires close

examination on the following issues:

o Security - since the caller need to authenticate himself to hisnumber for remote access, there should be a secured way to

protect his authentication pin from being exposed.

o Since the voice call conducts over a shared network, the service

provider should specify a reasonable means to protect exposure

of the conversation.

o If a VoIP service deliver over a segregated network vendor, there

is no formalities to govern end to end service level and end users

will eventually suffers. This issue will be further complicated ifthe network vendor provided similar and competitive service.

o The service providers should provide a means for the police to

track down a caller should the call originated through VoIP into

999. This issue will be complicated due to segregation between

network provider and service provider.

14. Ms. Chan suggests that issues like (a) spamming of programmed


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voice advertisement, (b) security of voice information over the packet-switched

network and (c) how to maintain a fair market for the network operators should

also be considered when formulating the policy framework. Besides, Ms. Chan

also proposes that OFTA should help shape the new technology in considering

that a majority of the general public do not have the knowledge in deciding

which technology best suit their needs and that the conduct of some of the

operators or individual staff may mislead the public and create confusion and

unhappy experience. Similarly, Dr. John Ure considers that an IP networked

telecom world will raise many potential issues such as the threat of viruses, the

need to map telephone numbers onto IPv6, the demand by consumers to use the

same number for multiple access devices and by implication the convergence

of fixed and mobile services. Dr. John Ure suggests that it would be helpful for

OFTA to map out some of these issues for industry discussion and publicinformation.

(A) Policy and licensing

Policy

18(a) Do you agree with our proposed approach that the minimum and

proportionate regulation should be applied to IP Telephony services?

15. There are 22 respondents submitting views on this question, including

NWT, CM Tel, Peoples, HKCTV, PCCW, HKBN, Pacific Supernet, iBBS,

e-Kong, Microsoft, Systech, CompTIA, ELN, Zone 1511, AT&T, HKISPA,

ETS Society, WTIA, Law Society, ICC, Hon. Sin Chung Kai and Ms. Chan. All

of them unanimously support OFTAs position of applying minimum and

proportionate regulation to IP Telephony services.

16. Specifically, Peoples indicates that regulation should beproportionate

but not necessarily be minimum and considers that "Like services should be

regulated under like conditions". ELN submits that the existing requirement on

access to emergency services should be maintained even though the policy of

minimum regulation is adopted. HKISPA opines that the minimum regulations

should be designed to remove some market or administrative barriers so as to

encourage and facilitate introduction of new services like IP Telephony. Law

Society opines that, if any regulation is to be adopted, there should be a

light-handed approach in relation to the adoption of specific regulation and


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such regulation should focus mainly on consumer protection. Any regulation of

IP Telephony services should be considered in a broader context under the

formulation of a general policy for regulating the offering of

telecommunications services to the public pursuant to section 8(1)(aa) of the

Telecommunications Ordinance (which is yet to commence operation).

18(b) Do you agree that the technology neutrality principle should

continue to be applied to IP Telephony services?

17. A total of 26 respondents including WT&T, CM Tel, Peoples, NWT,

PCCW, SUNDAY, HKBN, SmarTone, CSL, HGC, Pacific Supernet, Zone 1511,

Microsoft, e-Kong, iBBS, ETS Society, HKISPA, Consumer Council, AT&T,

ELN, WTIA, Law Society, HKTUG, ICC, Hon. Sin Chung Kai and Ms. Chanhave submitted views on this question. All, except HKISPA, support that the

technology neutrality principle should continue to be applied to IP Telephony

services. Taking into account that IP Telephony is in essence a fundamentally

different service when compared with traditional voice services and that

consumers are well aware that their IP phone would not work if their Internet

connectivity does not function, HKISPA submits that the technology neutral

concept for voice services does not apply.

18. Among the supporting respondents, both the ETS Society and Zone

1511 believes that the technology neutrality principle should continue to be

applied but it should remain subject to review when there are significant

changes or new developments in IP Telephony, such as MMS delivery and

video telephony transmission. SUNDAY submits that mobile operators should

also be permitted to provide services deploying IP-based technology under

their existing licences

18(c) Do you agree that the market should be left to manage the shape

and the pace of transition of the operating environment? What role should

the regulator play in the transition?

19. Among the 18 respondents who express views on this question, 12 of

them including NWT, PCCW, HKBN, Pacific Supernet, ELN, Zone 1511,

Microsoft, ETS Society, Consumer Council, WTIA, Law Society and Hon. Sin

Chung Kai agree that the market should be left to manage the shape and the

pace of transition of the operating environment. Regarding the first part of the


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question, Ms. Chan has a different view from the above 12 respondents. Ms.

Chan suggests the authority to manage the ultimate shape of the operating

environment rather than freeing its hand and let the market developed by itself.

She considers that, if not doing so, the ultimate shape of the market may be

determined by the industrial giant(s) who may only focus largely on monetary

gain as their ultimate goal. On the other hand, Ms. Chan is concerned that the

general public may not have the technology expertise to decide the best

technology to use. Hence, what the shape of the future telephony will be better

left to the authority to decide. However, Ms. Chan submits that pace at which

the market is transit to the ultimate shape as predicted by the authority should

be left open.

20. Eight of the respondents including NWT, PCCW, HKCTV, ELN,Zone 1511, ETS Society, WTIA and Law Society support that the regulator

should play minimum role in the transition and should not interfere with the

development of the free market unless there is clear market failure and

consumer interest, such as access to emergency or safety, is jeopardized.

Specifically, NWT considers that OFTAs role during the market transition

should be (a) to impose regulation only where there is market failure (economic

regulation) or overriding public interest in regulation to achieve certain social

objectives (social policy regulation); and (b) to ensure regulatory equivalenttreatment across technologies (technology neutrality) and among licensees.

Similar to NWT, PCCW submits that only if there is evidence of consumers

being harmed or anti-competitive practices taking place should the regulator be

justified in stepping in to address economic market failure.

21. Seven respondents including Consumer Council, HKISPA, CM Tel,

Peoples, Pacific Supernet, iBBS and Ms. Chan have some different views on

the role the TA should play in the transition. Consumer Council opines that it is

essential to have clear and unambiguous regulatory rules in order to avoid

causing confusions to consumers and operators when IP-based technology

telephone services are being adopted in the market. The HKISPA believes that

the objective of the regulation should be to enable wide availability of IP

Telephony services in the market to enable customers to make their own

choices in their own paces. In consideration of the significant impact of

telephony service to the community, CM Tel opines that the regulator should

define a set of rules correctly designed to facilitate healthy development of the

telecommunications industry and ensure that there is adequate IP-based


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operating environment. Besides, CM Tel recommends not to adopt laissez-faire

approach to avoid disorder and ill-conditioned over-competition. Peoples

suggests that OFTA should make sure that the consumers are well educated of

the pros and cons of IP Telephony so that they are allowed to make informed

choices. Pacific Supernet opines that OFTA has to set the framework for

licensing, number portability and interconnection between fixed carriers and IP

Telephony providers so that these issues will not be obstacles for IP Telephony

providers. iBBS proposes that the regulator should pay a role of monitoring

fraud or misleading behaviour of service providers. Ms. Chan suggests the

authority to manage the ultimate shape of the operating environment rather than

freeing its hand and let the market develop by itself.

Licensing framework

27(a) Do you consider that the conditions under the current licences for

fixed and mobile carriers should be fully applied to the provision of IP

Telephony services?

22. A total of 24 respondents have submitted views on this question. 9 of

them support while 14 of them do not support the proposal that the conditions

under the current licences for fixed and mobile carriers should be fully appliedto the provision of IP Telephony services. The remaining one respondent does

not provide a direct answer to the question but offer some relevant comments.

23. HGC, CM Tel, PCCW, HKBN, SmarTone, CSL, e-Kong, ICC and

Consumer Council are the 9 respondents who express their support to the

proposal. However, 5 of them consider that such licensing conditions should be

applied to those IP Telephony service provider who would act as a substitute of

the conventional telephone service provider. Specifically, CM Tel considers

that service-based operator with less commitment to the society and less service

reliability, can hardly meet with these social expectations and therefore should

not given the same carrier status.

24. WT&T, Peoples, Pacific Supernet, iBBS, Microsoft, HKISPA, ETS

Society, Zone 1511, CompTIA, ELN, WTIA, Law Society, Hon. Sin Chung

Kai and Ms. Chan are among the 14 respondents who disagree with the

proposed approach. In particular, WTIA considers that TA should create a new

class license for IP Telephony service such that only partial of the conditions


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under the current licenses for fixed and mobile carriers should be applied, like

the case of MVNO. Similarly, Peoples submits that IP Telephony services

should be treated as a different class of services and a different set of licence

conditions should be applied.

25. REACH is the only respondent who does not directly address the

question but offers some other comments. REACH considers that licensing

arrangements (or rather rights under the respective licences) should align with

the service levels provided by respective IP Telephony operators (for example,

numbering rights varying depending upon provision of access to emergency

services).

26. Regarding the TAs view given in paragraph 22 of the consultationpaper, both PCCW and the Law Society consider that it is wrong for OFTA to

suggest that applying a different set of conditions to IP telephony may not

contravene the technology neutral principle. They also opine that it is also

incorrect for OFTA to justify this departure on the basis that VoIP is a new type

of service with new functionalities (e.g. video and multimedia capabilities) not

found in conventional public telephone services. With all due respect, PCCW

considers that OFTAs argument guts the principle of technology neutral

regulation and should not be adopted. The Law Society opines that such newfunctionalities can in fact be provided using copper wires and are being so

provided by fixed carrier licensees (the conventional public telephone service

providers). The Law Society also considers that the existing licensing regime is

in fact more technology based than function based. In order to maintain a level

playing field it suggests that the same conditions should be applied to fixed

carrier licensees when they provide IP Telephony if OFTA decides to apply a

set of conditions to IP Telephony based on its functionalities.

27(b) If the answer to the above question is no, do you agree that an IP

Telephony service intended to be used as a substitute for the conventional

public telephone service should be required to meet a minimum set of

conditions?

27. There are 17 respondents submitting views on this question. 9 of them

including CM Tel, Peoples, Zone 1511, Pacific Supernet, ETS Society,

HKISPA, Consumer Council, WTIA and the Law Society are supportive of the

position that an IP Telephony service intended to be a substitute for the


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conventional public telephone service should be required to meet a minimum

set of conditions

28. While supporting the proposed approach, Consumer Council

considers that the minimum regulation should include access to emergency

service and backup power supply. Zone 1511 considers that the minimum set of

conditions should cover provision of numbers, any-to-any connection, payment

for local interconnection charge, etc. while the ETS Society recommends that

access to emergency services, number portability, directory enquiry capabilities,

and any-to-any access should be the minimum regulatory requirements.

29. WT&T, REACH, PCCW, SUNDAY, e-Kong and ELN are the 6

respondents who disagree with the proposal and share similar views thatregulatory requirements comparable to those of Fixed Carrier or FTNS licence

should be imposed to the IP Telephony service intended to be substitute for the

conventional public telephone service to protect consumers interests and avoid

consumers being misled. Specifically, REACH submits that regulation should

not unreasonably exempt services provided by one means of technology from

such obligations if similar services provided by another technology still carry

these obligations. ELN considers that the VoIP service should have to meet the

same conditions that are imposed to the FTNS operators if the service isintended to actually replace the PSTN. PCCW is of the view that the minimum

set of conditions for VoIP services intended as substitutes for conventional

public telephone services and enjoying the rights of an FTNS licence should be

the General Conditions already specified in the existing FTNS licence, the

Ordinance and TA Statements, including GC 10 (backup power facilities), GC

13 (Interconnection requirement), GC 14 (Number portability), GC 25

(Directory enquiry service) and 26 Access to emergency services)

30. Microsoft and Ms. Chan offer some other views instead of giving a

definite answer to the question. Microsoft considers that the imposition of

required features and other regulatory obligations in these circumstances would

discourage the launch of new voice services and therefore limit the choices

available to consumers. Nevertheless, Microsoft agrees with OFTAs proposal

given in paragraph 25 of the Consultation paper that it may be useful to have a

mechanism, such as a formal declaration or a recognised logo, whereby

consumers could quickly and easily tell whether a service provider has chosen

to implement a service that offers a particular set of capabilities. Ms. Chan


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considers that whether the new technology can substitute the conventional

technology should leave to the consumer market to decide and she believes that

IP Telephony cannot be a 100 % substitute to the conventional carrier. In this

regard, she does not offer any reply to the question, which has assumed that IP

Telephony service can be a substitute for the conventional telephone service.

27(c) What are the criteria for classifying an IP Telephony service as one

intended to be used a substitute for the conventional public telephone

service?

31. A total of 10 respondents offer views on the criteria for classifying an

IP Telephony service as one intended to be used a substitute for the

conventional public telephone service. They include PCCW, HKBN, NWT, CMTel, Peoples, ELN, ETS Society, HKISPA, the Law Society and Ms. Chan.

32. Specifically, PCCW considers that a VoIP service should be regarded

as qualifying for treatment as a substitute for conventional public telephone

services if, as a minimum, it offers the same level of functionality as

circuit-switched voice services and satisfies all the requirements of the FTNS

licence. In particular, all social welfare requirements stipulated under the FTNS

licence and the Ordinance must be met.

33. After consolidating the various views of the respondents, the proposed

criteria can be summed up as follows:

(1) Any-to-any connectivity,

(2) Access to emergency services,

(3) Directory enquiry services.

(4) Number portability

(5) Good, efficient and continuous service in a manner satisfactory to the TA

(6) Service agreement in place to ensure appropriate level of QoS

(7) Allocation of number blocks

(8) Local battery backup

(9) Location information

(10) Low cost terminal

(11) Voice conferencing capability

(12) Normal telephone numbers

34. The Law Society does not offer any proposal on the criteria but


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considers it is inappropriate to attempt to distinguish IP Telephony services

which are intended to be used as a substitute for conventional public telephone

services and those which are not and attempt to introduce different sets of

regulations for the following reasons: (1) Any distinction is likely to be very

controversial and will make the regulatory regime unnecessarily complex. (2)

Users choices and preferences regarding how different services are to be used

should not be pre-empted, especially as they change from time to time. (3) The

underlying assumption in the Consultation Paper that people rely on PSTN (and

therefore FTNS) as their basic telephone is gradually becoming untenable, as

more and more households cease to subscribe to FTNS and switch to mobile

services. As long as Users understand the differences between the services

they should be allowed to make an educated choice.

27(d) Do you consider that a new type of licence needs to be created for

regulating IP Telephony services which are intended to be a substitute for the

conventional public telephone service?

35. There are 11 submissions to this question. NWT, Peoples and Ms.

Chan supports that a new type of licence needs to be created for regulating IP

Telephony services which are intended to be a substitute for the conventional

public telephone service while PCCW, HKBN, CM Tel, e-Kong, ETS Society,HKISPA and ELN disagree.

36. CM Tel and e-Kong share the same view that it would be more logical

and appropriate to modify the existing FTNS/Fixed Carrier License to suit the

new operating environment so that operators who intend to adopt the new

technologies are placed in a level playing ground. Both ETS Society, HKISPA,

PCCW and ELN considers that the same regulations currently imposed to FTNS /

Fixed Carrier licensees should apply if the new service is intended to replace

the conventional public telephone service. However, HKISPA opines that IP

Telephony is a different class of service and should not be collectively treated

as substitutes for traditional voice services at the regulatory level unless it is

advertised or marketed as traditional telephony service and consumer is not

aware that it is indeed IP telephony. HKBN submits that any regulatory

arrangements should focus on the nature of services rather than on the

technology used to provide the services. HKBN believes that this would

signal a departure from the "technology neutrality" principle if a new set of

rules/license conditions be imposed just because IP technology is used by


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operators.

37. Pacific Supernet does not reply the question but simply opines that

service conditions such as number portability should be optional.

27(e) Do you agree that minimal regulation should be applied to IP

Telephony services not intended to be used as a substitute for the

conventional public telephone service?

38. Seventeen respondents including PCCW, NWT, WT&T, SmarTone,

CSL, CM Tel, Peoples, ETS Society, HKISPA, the Law Society, ICC, WTIA,

Pacific Supernet, Zone 1511, ELN, Hon. Sin Chung Kai and Ms. Chan express

their views on this issue. All the respondents except NWT, Peoples, PacificSupernet, Hon. Sin Chung Kai and Ms. Chan are supportive of the position that

minimal regulation should be applied to IP Telephony services not intended to

be used as a substitute for the conventional public telephone service.

39. While WT&T supports the proposal, it emphasizes that there must be

clear declaration in all relevant marketing or sales communication materials of

such IP Telephony services indicating the weakness and strengths of the

services so as to protect consumers interests. CM Tel believes that minimalregulation should address requirements from both sides, i.e. operating

environment and social objectives. CM Tel opposes to an IP Telephony service

that is labelled as service not intended to be used as a substitute for the

conventional public telephone service and so is allowed to escape from

fulfilling several basic requirements of a public telephone service.

40. NWT and Hon. Sin Chung Kai share the same view that IP Telephony

services should generally be not subject to regulation and let the market or

service providers to determine the quality standards, service features and price.

Hon. Sin Chung Kai opines that OFTA should request the service providers to

communicate correct information to the consumers and clearly describe the

capabilities and limitations of their service. He considers that OFTA should set

up licensing requirement to regulate the conduct of IP Telephony service

providers in marketing their services. Peoples suggests that such service can be

treated as an ordinary Internet application where the service providers cannot

enjoy the rights of FTNS operators such as allocation of number block and

any-to-any connectivity. Ms. Chan opines that regulation applied should be


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appropriate in which the regulations should not hinder the development or

enhancement of new technology while maintaining a fair and competitive

market and providing sufficient consumer protection for the public. Pacific

Supernet recommends that OFTA should amend the existing ISP PNETS

license to include IP Telephony as soon as possible and the license obligations

should be light, similar to other value added service licence such as ETS or

IVAN licenses.

Separation of service provision from network operation

34(a) Do you agree that the provision of IP Telephony service accessible

over the broadband connections provided by others should be permitted?

41. A total of 22 respondents express their views on this issue including

PCCW, HKBN, WT&T, CM Tel, Peoples, SmarTone, REACH, HKCTV,

CompTIA, ELN, Zone1511, Pacific Supernet, e-Kong, iBBS, Microsoft, AT&T,

ETS Society, HKISPA, WTIA, HKTUG, Consumer Council and Ms. Chan. In

general, all of them are supportive of the position that provision of IP

Telephony service accessible over the broadband connections provided by

others should be permitted.

42. Nevertheless, regarding the TAs view given in paragraph 31 on

whether the network operator should be allowed to levy charge on the IP

Telephony service provider, there are two camps of views. The network

operators such as PCCW, WT&T, CM Tel, Peoples, REACH and HKCTV

generally support that the IP Telephony service providers should be subject to

some conditions in the provision of their services. WT&T considers regulatory

framework must necessarily recognize the differentiation of service provision

and network operation so that service providers who do not invest in network

infrastructure do not take a free ride of others investments. Such differentiation

is also necessary so as to encourage continual investment in infrastructure.

REACH considers that some sort of charge should be levied on the IP

Telephony service provider while HKCTV submits that the TA should require a

service provider to enter into an agreement with a network operator to lease the

latters bandwidth. Furthermore, HKCTV opines that the customer of the

broadband connection has paid for the connection for selected purposes only

and the fee he has paid does not cover the service for IP telephony. Peoples


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supports the proposal on the condition that an agreement of a "managed

network" is in place to ensure an appropriate level of QoS that will satisfy

customer expectation. PCCW submits that the provision of VoIP services over

the broadband Internet service provided by another operator should be

permissible but should be subject to commercial arrangements being made

between the VoIP service provider and the broadband service provider. The

relationship between the ISP and its customer is contractual and driven by

market forces.

43. The other respondents are supportive of the proposal unconditionally.

In particular, HKBN, CompTIA and AT&T expressly supports the TAs view

that VoIP carried over existing broadband lines should not attract additional

charges as the subscriber has already paid for the bandwidth being utilized.They consider that the subscriber is merely sending additional packets of

information on the service already being subscribed to, and therefore already

paid for. CompTIA considers that all current fixed line providers will benefit

from the infrastructure improvements that will be required to ensure ubiquitous

broadband service because VoIP penetration drives broadband adoption, which

in turn promotes broadband deployment and thus achieves a win-win scenario.

34(b) How should consumer interest be protected in the provision of IPTelephony services accessible over broadband connections provided by other

operators?

44. There are 12 respondents submitting views on this issue including

PCCW, WT&T, CM Tel, Peoples, Pacific Supernet, ETS Society, HKISPA,

WTIA, Zone 1511, AT&T, ELN and Ms. Chan. The views submitted are quite

diversified.

45. WT&T indicates that IP Telephony services may be classified into

Tier-1 service type and Tier-2 service type depending on the means and forms

they are being delivered to the end customer such as endto-end managed

network or third party uncontrolled network. To promote transparency and to

avoid confusion to end customers, regulations should be formulated to provide

clear distinction between the 2 classes of IP Telephony services as identified

above. This should be achieved by requiring the IP telephony service providers

to self-declare to which tier they belong and clearly advertise the level of their

services in all their sales and marketing communications materials.


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Additionally, the TA should consider adopting a quality mark/label system for

service providers for identification purposes.

46. CM Tel, ETS Society and Zone 1511 believe that consumer interest

protection may be well addressed through education to consumer on choice of

broadband service providers. Additionally, CM Tel considers that the TA should

also request service providers (including providers of broadband connection

services and IP Telephony services) to provide customer charter to address QoS.

CM Tel considers that the consultation paper of Providing Quality of Service

Information to Consumers of Public Telecommunications Services dated 23

July 2004 is a good start.

47. Peoples, PCCW, AT&T and ELN share similar views that theconsumers should be well informed of the difference of the capabilities and

limitations of different IP Telephony services such as that provided over a

"managed network" or that provided over the Internet by "best effort". In

addition, ELN considers that guarantees of accessibility, access to emergency

services, power failure operation and etc. should all be highlighted. PCCW

suggests that penalties should be imposed if service providers are found to be

representing their VAS service as a direct substitute for conventional voice

services. Regarding its proposed 2-Tier service regime, PCCW suggests that, inrelation to Tier 2 VoIP services, consumer interests will be protected in several

ways. Firstly, distinct numbers will be allocated to these VAS suppliers of

VoIP services. Secondly, number porting will be limited to help ensure that

users are neither confused nor misled by what Tier 2 VoIP service is and is not.

Thirdly, market forces (over time) will encourage Tier 2 VoIP service providers

to improve their services to obtain Tier 1 status. Lastly, consumer interests

will be safeguarded via a comprehensive and substantial consumer education

process

48. WTIA considers that the TA should consider extending the coverage

of the Consultation Paper entitled Partial Commencement of Section 8(1)(aa)

of the Telecommunications Ordinance and Creation of a Class License to

Regulate Resale of Telecommunications Services issued on October 15 2004

so that all the Resellers and/or Distributors within HK of any local or overseas

IP Telephony services should also require a class license.

49. HKISPA considers that protection of consumer interest is not a


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concern as the consumers have got used to the separation of network

connectivity and service delivery in the IDD and dialup Internet services,

which have been proven practical and successful over the years. In the light of

such customer experience, HKISPA believes that provision of IP Telephony

service in a similar manner shall suffice to protect consumer interests. Similarly,

Pacific Supernet considers that consumer interest protection should not be an

issue as long as consumer is aware that they are using IP Telephony service

over broadband connection provided by other operators.

50. Instead of advising how to protect consumer interests, Ms. Chan

considers that (a) charging scheme, (b) QoS, (c) maintenance of a free and fair

market for the service-providers and (d) personal data privacy are customer

interests to be protected and requests the TA to consider.

Provision by service-based operators

39 Do you consider that service-based operators (i.e. PNETS licensees)

should be allowed to offer local voice telephony services using IP technology?

51. Among the 19 respondents expressing views on this question, 15 of

them including NWT, PCCW, HKBN, SUNDAY, Pacific Supernet, iBBS,e-Kong, ETS Society, HKISPA, Consumer Council, CompTIA, ELN, Zone

1511,, AT&T and Hon. Sin Chung Kai are supportive of the proposal that

service-based operators (i.e. PNETS licensees) should be allowed to offer local

voice telephony services using IP technology.

52. Although they generally support the proposal, some respondents have

further comments on the question.NWT considers that the PNETS licence can

be modified to allow non-facilities based service providers to provide IP

Telephony services in Hong Kong. ELN submits that there should be some

contribution levies in order to make the competitive landscape level and fair to all

operators. Consumer Council supports the policy of allowing service-based

Public Non-Exclusive Telecommunications Service (PNETS) Licence holders

to use IP Telephony technology to provide international call services but opined

that opening the local voice services market to these service operators at this

stage could hinder the infrastructure investment and the IP Telephony service

development, ultimately affecting the choices of consumers in the future.

Regarding paragraph 36 of the Consultation Paper, HKISPA disagrees with the


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argument that this new service is diverting revenue from fixed network

operators and discourages investment in network construction. Instead,

HKISPA believe introduction of IP Telephony and other new services through

the Internet Protocol would create demand for the local network and that is

itself an incentive for investments into the network, as evident from the revenue

volume that ISPs pay for local access provided by existing FTNS service

providers. PCCW proposes that there must be a separate class of service (i.e.

Tier 2) to those offered by FTNS licence-holders which fully satisfy the FTNS

licence requirements (i.e. Tier 1), with different rights and obligations. This

regulatory framework is somewhat the same, in principle, as the current

licensing regime for 3G mobile services, where Mobile Virtual Network

Operators are able to offer 3G services without acquiring a 3G licence.

53. CM Tel, WTIA, Peoples and Ms. Chan offer other views on this

question. CM Tel submits that the current PNETS license is not designed by its

nature for operation of local voice telephony services. CM Tel agrees that some

extent of flexibility can be allowed for IP Telephony service in the

consideration of additional and more advanced and distinctive functionalities

available on IP Telephony service such as the mobility via Internet access. To

this end, several current requirements like access to emergency services,

backup power supply, quality of service, etc. need to be reviewed to correctlyrespond to the new market situation, so as not to obstruct the adoption of new

technologies. WTIA opines that the TA should issue a new class license for IP

Telephony Services Providers and suggests that, once the PNETS licensees

offer IP Telephony services that need any local or overseas PSTN

interconnection or ordinary telephone numbers, then they should apply for this

new class license. Ms. Chan shares the same view of WTIA that we need to

have additional clause or annex or even a separate license to be issued for the

IP Telephony operators. Peoples submits that IP Telephony as a substitute for

the conventional public telephone service should only be allowed when the

service provider has established agreement for "managed network" with

network operator.

(B) Numbering Issues

Conformance to numbering plan


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50(a) Should the traditional PSTN services and IP Telephony services

which are intended to be a substitute for the conventional public telephone

service share the same number blocks?

54. The submitted views on this issue are quite diversified. Among the 25

respondents, 17 of them including PCCW, HKBN, HGC, CM Tel, SUNDAY,

SmarTone, CSL, HKISPA, ETS Society, e-Kong, Pacific Supernet, ELN, AT&T,

ICC, WTIA, HKTUG and Ms. Chan are supportive of the proposal that

traditional PSTN services and IP Telephony services intended to be a substitute

for the conventional public telephone service should share the same number

blocks. 8 respondents including NWT, WT&T, REACH, Peoples, CompTIA,

Zone 1511, Consumer Council and Hon. Sin Chung Kai disagree with the

proposal.

55. Among the respondents who do not support the proposal, the network

operators NWT, WT&T and REACH submit the only fixed network licensee

should be permitted to use 8-digit fixed line numbers for IP Telephony services

as this is consistent with the Hong Kong Numbering Plan. Peoples believes that

these two types of services should not share the same number blocks and

porting between them should not be allowed until 2-3 years later when the

consumers become fully familiar with IP Telephony. CompTIA submits that anon-geographic number may be desirable in considering that VoIP is

independent of any physical location. Hon. Sin Chung Kai, Zone 1511 and

Consumer Council submit that separate 8-digit number blocks should be

allocated to help discriminate IP Telephony from conventional telephone

service.

50(b) Should IP Telephony services which are not intended to be a

substitute for the conventional public telephone service be allocated with

special number blocks or the normal numbers for conventional local fixed

line telephone?

56. The submitted views on this issue are quite diversified. Among the 24

respondents, 9 of them are supportive of the allocation of special number

blocks (i.e. prefix + subscriber number) to IP Telephony services not intended

to be a substitute for the conventional public telephone service, 9 respondents

are supportive of allocating 8-digit telephone numbers and two suggest no

number allocation at all. The other 4 have some other comments.


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57. The 9 respondents who support special number block allocation

include PCCW, HGC, NWT, WT&T, REACH, ELN, AT&T, ETS Society and

Ms. Chan. While supporting the option of special number block allocation,

AT&T put forward another proposal of establishing a new number block (i.e.,

called non-geographic numbers in many geographically larger jurisdictions)

for IP Telephony, particularly if this will create efficiencies that improve the

ability of new IP Telephony providers to obtain and use number resources. ELN

submits that special numbers/email-addresses should be allocated if they will

be part of the current VoIP island but normal numbers should be allocated if

the IP Telephony service will be transparently accessible from the PSTN.

58. Among the 9 respondents who support 8-digit number allocation,some of them suggest that the existing 8-digit telephone numbers of prefix 2 &

3 and separate 8-digit numbering blocks in the existing numbering plan (e.g.

38XX-XXXX, 39XX-XXXX) should be allocated for the IP Telephony service

in question. Some of them such as CSL, Pacific Supernet, Consumer Council

and Hon. Sin Chung Kai opines that separate 8-digit number blocks should be

allocated to help discriminate IP Telephony from conventional telephone

service while some of them such as HKBN, SmarTone, and HKTUG consider

that the existing 8-digit numbering resources for conventional telephoneservices are more appropriate. In particular, HKTUG indicates that business

user is concerned with the potential issue of number range changes especially

quite a number of business operation and information flow rely on automated

dialer (e.g. telemarketing, banking, financial market information distribution

and etc. ) will be affected.

59. ICC and iBBS submit that both geographical and non-geographical

numbers may be appropriate for VoIP services. SUNDAY opines that IP

Telephony service providers should be allowed to apply for numbers from

OFTA or they may collaborate with fixed carriers or mobile carriers and obtain

numbers from them. This concept is analogous to MVNOs numbering

arrangements. SUNDAY considers that the number range and format as well as

number portability issues should be further discussed by the industry under the

Numbering Advisory Committee (NAC) for the purpose of settling the

implementation plans and related issues. WTIA considers that IP Telephony

services provider can allocate numbers that are not associated with a telephony

service, a provider can allocate numbers that are not associated with a


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telephony service at fixed locations such as mobile or personal numbers.

60. CM Tel and Peoples are the two respondents suggesting not to

allocate telephone numbers to the IP Telephony service provider not intended to

be a substitute for the conventional public telephone service.

50(c) If IP Telephony services are allocated with special number blocks,

should all or only certain types of IP Telephony services be allocated with the

special number blocks?

61. There are 12 respondents to this question and the views are diversified.

Three respondents including NWT, WTIA and Ms. Chan support that all types

of IP Telephony services be allocated with the special number blocks.

62. PCCW, WT&T, Peoples, ETS Society consider that only IP Telephony

service not intended to be substitute of conventional telephone service should

be allocated with special number blocks.

63. ELN opines that a normal number should be allocated if the IP phone

is callable from the PSTN. CM Tel objects allocation of special number

blocks to IP Telephony services of any kind, CM Tel considers that it is notjustifiable for those arguments of using special number blocks to distinguish IP

Telephony services from conventional public telephone service. Consumer

Council and Pacific Supernet supports the allocation of a special number block

with 8 digits to both carrier operators and IP Telephony service providers and

considers that this would facilitate number portability and make it easier for

consumers to switch to IP Telephony if they prefer. CLS submits that, before

creating a whole new category of numbers (i.e. prefixed long-form numbers)

which may cause confusion to the general public, OFTA should assess the

likely growth in IP Telephony services, whether telephone numbers longer than

8 digits are required at this point in time and if not, when that need may arise.

50(d) How should the numbering resource challenge arising from the

proliferation of IP Telephony services be tackled?

64. A total of 10 respondents have expressed their views on this question.

CM Tel submits that, at the current stage, it would be too early to worry of


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numbering resource challenge arising from the proliferation of IP Telephony

services. The consumption of numbering resource for IP Telephony services

will depend on further development of telecommunications market, which will

be affected by various factors such as economic climate, regulation design,

technology advancement, change in consumers perception, and also flow

between IP Telephony services and conventional public telephone service. CM

Tel suggests an allowance of close observation of 12 months on the usage of

existing numbers, before we can make a meaningful improvement of the

existing numbering plan. Similarly, CSL also considers that it is too early to

foresee the demand for IP Telephony services and it is premature for OFTA to

conclude that 8-digit numbers cannot be allocated to different types of IP

Telephony services. CSL adds that the role of OFTA should be to ensure there

is sufficient flexibility in the Numbering Plan to cope with growth in demandfor services and changes in consumer need. Pacific Supernet submits that,

instead of going to a new prefix with additional digits for IP Telephony, we

should allow the numbering plan to be expanded on an as required basis.

65. Peoples and WTIA share the view that number blocks should be

allocated in small range (i.e. 1000) and the applicant has to reach high

utilization (say 90%) of the allocated number blocks before new blocks are

allocated.

66. PCCW suggests that the length of the existing 8-digit telephone

number be extended to accommodate IP Telephony services, such that an

additional prefix needs to be dialed in order to reach the VoIP service subscriber.

This special prefix could also serve to earmark the service as a Tier 2 VoIP

service. ELN and ETS Society share similar view with PCCW. ELN suggests

adding digits or expanding the number space while the ETS Society considers

that the options could be (a) adding another digit to the normal number blocks;

or (b) assigning a prefix as access code for the IP Telephony services.

67. SmarTone is of the view that the pressure on numbering resource

could be relieved if both mobile number ranges and dedicated access codes are

allowed for use by Non-Substituting IP Telephony Services. The spare number

level 5X can also be used for IP Telephony services. Furthermore, the number

level 7X can also be used for IP Telephony services provided that the remaining

numbers under number level 8X can be released for mobile usage. Similarly,

WTIA also propose allocating the numbering block with prefix 7 and 8,


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which are originally allocated for public paging and personal numbering

services, for IP Telephony services as the consumer in HK already perceived

and accepted the mobility characteristic of using pager and personal numbers.

68. It is HKISPAs opinion that the introduction of new services like

ENUM and convergence of voice services with the Internet is the trend. The

potential stress on existing numbering resource by the introduction of IP

Telephony is not short term, and should be considered together with the new

and evolving communication technologies and their associated

naming/numbering plans.

Number portability

53(a) Should the requirements of number portability be applied to IP

Telephony services intended to be a substitute for the conventional public

telephone service?

69. 15 out of the 18 respondents submitting views on this question

support that the requirements of number portability should be applied to IP


telephone service. The respondents who are supportive of the position includePCCW, HKBN, REACH, CM Tel, SmarTone, CSL, Peoples, e-Kong, Pacific

Supernet, CompTIA, ELN, WTIA, ETS Society, HKISPA and Consumer

Council.

70. While supporting the proposal, HKISPA considers that OFTA should

mandate for one fixed network telephone service provider to operate as a

gateway for IP Telephony providers to facilitate full call delivery and number

portability between IP Telephony network and fixed network. Peoples suggests

that the number portability requirement should be imposed to the relevant IP

Telephony service providers after a transition period of 2-3 years. PCCW

considers that number portability is a right rather than an obligation. As such

only the VoIP service which meets all the conditions of the FTNS licence,

satisfies the requirements of the Ordinance and TA Statements, and complies

with market best practice (and hence is substitutable with the existing fixed line

voice services in terms of functionality) should be entitled to number

portability.


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71. Ms. Chan holds a different view. In considering that IP Telephony is

new to the market, Ms. Chan suggests that number portability service should

not be a mandatory requirement and thinks that this may help simplifying the

initial introduction of the new technology. iBBS considers that the IP

Telephony number issue can be addressed by ENUM implementation and urges

OFTA to speed up the process in this area instead. SUNDAY submits that

number portability issues should be further discussed by the industry under the

Numbering Advisory Committee (NAC) for the purpose of settling the

implementation plans and related issues

53(b) Is number portability necessary for IP Telephony services not

intended to be a substitute for the conventional public telephone service?

72. There are 19 respondents submitting views on this question. Four of

them including HKBN, e-Kong, Consumer Council and HKISPA support that

number portability is necessary for IP Telephony services not intended to be a

substitute for the conventional public telephone service

73. Ten respondents including PCCW, HGC, NWT, REACH, Peoples,

SmarTone, CSL, Pacific Supernet, AT&T and ELN consider that it is not

appropriate to mandate number portability requirement at this nascent stage.

74. The other respondents have different views. The ETS Society and

Zone 1511 share the view that it would be optimal for the IP Telephony service

operators to decide whether to entertain this requirement, when offering

complementary services. CM Tel considers that such services should not be

classified as public telecommunications service and therefore they are not the

subject matter of this Consultation Paper. WTIA suggest that the TA should

consider to combine the Number Portability and the Dipping Databases on

mobile and fixed networks so that number portability among different type of

services can be implemented. SUNDAY proposes that number portability

issues should be further discussed by the industry under the Numbering

Advisory Committee (NAC) for the purpose of settling the implementation

plans and related issues

(C) Interconnection and charge settlement

Any-to-any connectivity


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58(a) Should any-to-any connectivity principle be adopted for IP Telephony

services intended to be a substitute for the conventional public telephone

service?

75. There are 15 respondents submitting views on this question. 14 of

them agree that any-to-any connectivity principle should be adopted for IP


telephone service. They include PCCW, HGC, REACH, CM Tel, Peoples,

SmarTone, CSL, SUNDAY, Pacific Supernet, ELN, WTIA, ETS Society,

HKISPA and Ms. Chan.

76. iBBS is the only respondent objecting to the proposal. iBBS submitsthat OFTA should play a role in speeding up the ENUM implementation.

58(b) Is any-to-any connectivity necessary for IP Telephony services not

intended to be a substitute for the conventional public telephone service?

77. There are 14 respondents submitting views on this question. They

include PCCW, HKBN, HGC, CM Tel, REACH, Peoples, SmarTone, CSL,

ETS Society, HKISPA, ELN, iBBS, WTIA and Ms. Chan With the exception ofHKISPA and WTIA, all of them consider that any-to-any connectivity is not

necessary for IP Telephony services not intended to be a substitute for the

conventional public telephone service.

78. Specifically, REACH considers that interconnection rights should be

reserved for those FTNS operators with an obligation to enable any-to-any

interconnection until an interconnection review on network configurations and

associated charging arrangements is conducted and completed. During the

transition, non-FTNS IP Telephony operators who do not provide access to

emergency services should not enjoy interconnection rights but obtain such

interconnection through commercial negotiation. Similarly, PCCW submits that

such a requirement should be optional and the service provider concerned has

to reach a commercial agreement with a FTNS operator if it wants to have

any-to-any connectivity. The ETS Society and Ms. Chan believe that it should

be up to the IP Telephony service operators to decide on the kind of

connectivity they would like to offer to the market. HGC is concerned that,

even subject to commercial agreement, a sudden surge in the number of


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operators requesting interconnection can be very disruptive to the market and

proposes that a more efficient way of going about it would be to make it a

licence condition that the said IP Telephony service providers can only obtain

interconnection via hosting connection with one of the FTNS operators.

79. Nevertheless, HKISPA strongly advocates that any-to-any capability

should be adopted for IP telephony no matter whether it is marketed as a

substitute for traditional telephony service under the conditions of traditional

voice services or as a new class of service. HKISPA considers that this will

benefit the consumers most and offer them full flexibility. WTIA considers that

the TA should encourage innovation in the provision of any new

telecommunications services and any-to-any connectivity should be necessary

for IP Telephony services no matter whether the service is intended to be asubstitute for the conventional telephone service.

Interconnection between operators

63(a) Should we extend our existing interconnection regime to IP

Telephony services?

80. There are 17 respondents submitting views on this question. 8 of themagree that we should extend our existing interconnection regime to IP

Telephony services. They include CM Tel, ETS Society, HKISPA, AT&T, ELN,

e-Kong, WTIA and Ms. Chan.

81. Among the respondents who support the proposal, ETS Society and

HKISPA have some further views. ETS Society believes that we should extend

our existing interconnection regime to IP Telephony service if it is intended to

be a substitute for the conventional public telephone service. For IP Telephony

Services not supplied as a substitute, it should depend on commercial

circumstances and the kind of services to be introduced to decide on the

interconnection arrangements. HKISPA advocates that OFTA should mandate

one FTNS service provider to act as a gateway between PSTN and IP

Telephony for call deliveries and number portability. HKISPA considers that

this is a necessary step to enable healthy IP Telephony market competition,

shorten the time-to-market of the service and help speed up the IP Telephony

service adoption in Hong Kong, which is lagging way behind other countries.


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82. NWT, Peoples, SmarTone, HGC and iBBS are the 5 respondents who

hold opposite views. NWT opines that IP Telephony service providers do not

have rights of interconnection and should enter into commercial arrangement

with a fixed network licensee for access to the PSTN in order to terminate and

receive calls on the PSTN. Peoples considers that we should not extend our

existing interconnection regime to IP Telephony services in considering the

existing interconnection regimes has created a number of market distortions

between fixed network services, mobile network services and external

telecommunications services in the past 8 years. With the emergence of IP

Telephony service, Peoples urges the TA to carry out a thorough review of the

existing interconnection regimes. SmarTone considers that the proliferation of

IP Telephony services renders the need to review the interconnection charging

regime. And submits that it is an appropriate time to rectify the imbalance inthe fixed/mobile interconnection regime which has been strongly in favour of

the FTNS operators/fixed carriers.

83. PCCW, HKBN, SUNDAY and Pacific Supernet do not directly

address the question but offer some relevant comments. PCCW submits that

interconnection rights should be extended to VoIP service providers who are

FTNS licensees or have a carrier status while VoIP service providers offering

service under a PNETS licence should not be entitled to FTNS interconnectionrights. HKBN submits that, as long as the IP based network of each operator

may interconnect with each other directly without the need to transit through

the PSTN, it is not necessary to extend the PSTN interconnection regime to IP

Telephony for which the light-handed regulatory regime is devised.

SUNDAY submits that the interconnection principles and methodology should

be completely reformed with a view to accomplishing the objectives of (a)

establishing the calling party pays principle which is able to remove the

historically unequal and imbalanced phenomenon in the interconnection

markets and (b) setting a benchmark rate for each type of interconnection

charges so that the rates will prevail if commercial negotiation fails. Pacific

Supernet considers that the existing interconnection regime is too complex and

time consuming to new service entrants and suggests that one fixed carrier

should be mandated to act as a gateway for connection between IP Telephony

provider and the PSTN while other fixed carriers can voluntarily provide

similar services on a commercial basis.

63(b) Should we prescribe technical standards for network-to-network


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interconnection and user-to-network interface of IP-based technologies or

should we simply allow the market to evolve and determine the standards

itself?

84. Among the 15 respondents submitting view on this question, 3 of

them including CM Tel, Peoples and Ms. Chan support that OFTA should take

the role to prescribe the technical standard while 9 other respondents including

Zone 1511, ETS Society and HKISPA consider that we should simply allow the

market to evolve and determine the technical standards for network-to-network

interconnection and user-to-network interface of IP-based technologies.

Specifically, PCCW considers that it would be more efficient and appropriate

for technical standards to be defined by the market and that OFTA should not

simply mandate a standard for the industry. Nevertheless, PCCW accepts that itmay be necessary for OFTA to facilitate this process by way of industry

consultation in order to ensure that an agreed set of technical standards are

established as quickly as possible.

85. SmarTone, CSL and ELN do not directly address the question but

offer some other relevant comments. SmarTone submits that the existing

technical standards should be sufficient for the IP Telephony purpose and there

is no need for OFTA to prescribe standards. CSL opines that it is inappropriateto mandate stringent interconnection standards as IP Telephony technology is

still in its infancy. It suggests that OFTA should hold an industry consultation

on the types of standards which may be acceptable for interconnection

determination. ELN may have a different interpretation on the question and

expresses different view. It opines that standards that encourage consistency

and help guarantee universality of connectivity should be aggressively

supported while proprietary standards that favour specific products and services

should be discouraged.

63(c) Is it necessary for OFTA to play a role to facilitate the establishment

and interconnection of E.164 number/IP address databases of IP-based

networks?

86. 15 respondents have submitted views on this question. 9 of them

including CM Tel, PCCW, CSL, Pacific Supernet, HKIRC, ELN, Zone 1511,

ETS Society and Ms. Chan agree that it is necessary for OFTA to play a role to

facilitate the establishment and interconnection of E.164 number/IP address


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databases of IP-based networks. Among them, CSL suggests that OFTA should

also assist the industry to obtain government funding for the initiative. HKIRC

further opines that a standard approach like ENUM should be adopted and

considers that adoption of ENUM by all IP telephony operators will eliminate

the need for them to devise proprietary conversion schemes and number

portability becomes easier.

87. SmarTone and HGC expressly disagree with the proposal where

SmarTone considers that itis not necessary for OFTA to fix the conversion of E.164

with IP address at the moment.

88. Peoples, WTIA, iBBS and HKISPA have some different views on the

question. Peoples submits that the TA must ensure the industry to comply withinternational practice and considers that, under the EU regulatory framework,

some market offerings are excluded from regulatory control (e.g. through a

software on PC, inside a corporation). WTIA, iBBS and HKISPA believe that

OFTA should play a role to facilitate the establishment, standardization and

interconnection of ENUM. WTIA suggests the TA to initial test-bed

implementation for ENUM and co-operate with educational institutes, HKNIC

and interested telecom companies to establish ENUM testing sites in HK.

Calling Line Identification

66 Should operators providing IP Telephony service be obliged to fulfil

the requirements of sending/receiving CLI to and from other fixed network

operators/service providers?

89. Thirteen respondents including PCCW, HKBN, CM Tel, SmarTone,

CSL, Peoples, Pacific Supernet, WTIA, ELN, ETS Society, HKISPA, iBBS and

Ms. Chan have submitted views on this question. Except iBBS and Ms. Chan,

all the respondents agree that operators providing IP Telephony service should

be obliged to fulfil the requirements of sending/receiving CLI to and from other

fixed network operators/service providers

90. Among the respondents who support the proposal, SmarTone and

Pacific Supernet share the view that CLI should only be required for IP

Telephony service that is intended to substitute public telephony services while

it should be optional for IP Telephony service not intended to be substitute of


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conventional telephone service. In contrast, PCCW opines that CLI

requirement should be mandated for IP Telephony services no matter whether it

is intended to be substitute of conventional telephone service. CSL considers

that, if only IP Telephony to IP Telephony calls are being made within the IP domain,

the CLI should not be mandatory as there are currently applications which are buddy

lists, IP addresses or the URL, instead of CLI..

91. Ms. Chan considers that it should not be a mandatory requirement

since it is not the core-functionality of IP Telephony. Ms. Chan expects this

requirement to be fulfilled at a later stage of the new services as an

enhancement or refinement. iBBS may have a different understanding on the

functionality of CLI and opines that it is up to consumer to choose if his/her IP

phone can get the CLI and no obligation should be applied.

Payment of Interconnection charges, LAC and USC

71(a) Do you agree with the above approach on the interconnection

charges between IP-based networks and conventional circuit-switched

networks?

92. A total of 15 respondents have submitted views on this question.PCCW, HGC, NWT, Zone 1511, AT&T, ETS Society and ELN are the 7

respondents supporting OFTAs position on the interconnection charges

between IP-based networks and conventional circuit-switched networks while

HKBN, CM Tel, HKISPA, WTIA, e-Kong and Ms. Chan express disagreement.

The other respondents including Peoples, and Pacific Supernet express some

other views instead of providing a definite answer to the question.

93. Among the objecting respondents, HKISPA considers that the current

PNETS charge regime should not apply to the IP Telephony scenario because it

is unfair to the IP Telephony service provider to pay for calls from both

directions while the PSTN or hosting service provider, if any, is under a mutual

arrangement on interconnection charges with other PSTN operators. HKISPA is

inclined to the idea that the interconnection charge should be zero for IP

Telephony for the following reasons: (i) the nature of interconnection charge is

in the form of call settlement and statistically it should be balanced; (ii) the

interconnection charge discourages origination of calls, so if there is

interconnection charge in place for IP Telephony then users might be


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discouraged from making calls; and (iii) the telecommunications trend is

towards flat rate accounting. HKBN and CM Tel consider that the

interconnection charges in question should not be subject to commercial

agreement and believes that the existing charging principle as in Statement

No.7 should be adopted for IP Telephony services, regardless of the

transmission technology being deployed for voice services. CM Tel further

comments that, for the scenario described in paragraph 69 of the Consultation

Paper, PNETS operators which are allowed to provide IP Telephony service

should not be granted the interconnection right/obligation unless they could

fulfill the minimum regulation to preserve the attainment of certain social

objectives. e-Kong submits that OFTA should set reference rate for each type of

interconnection charges in considering that it would be difficult for the smaller

IP telephony service providers to negotiate with the big players on an equitablebasis. Similar to e-Kong, Ms. Chan suggest that, just like the PNET charge, a

fixed rate charge could be levied by the fixed carriers or the broadband

connection suppliers when the IP Telephony service provider is going to use

their network to provide service.

94. Peoples considers that Paragraph 67 is not always acceptable and

there must be an additional requirement that the IP Telephony behind the media

gateway is operated over a "managed network" if the "Carrier-to-CarrierCharging Principles" for interconnection based on the circuit-switched

technologies is to be applied.

95. In order to expedite interconnection between IP telephony providers

and fixed carriers, Pacific Supernet submits that OFTA should mandate one

fixed carrier as the default gateway between the IP Telephony providers and all

the fixed carriers and regulate the relevant charges. It also proposes that IP

Telephony should pay for traffic originating from their networks and receive

payments for traffic terminating on their networks.

71(b) Do you agree with the above approach on the interconnection

charges between IP-based networks?

96. There are 15 respondents submitting views on this question. 7 of them

including PCCW, HKBN, HGC, CM Tel, AT&T, ETS Society and Zone 1511

support the TAs proposed approach on the interconnection charges between

IP-based networks. In particular, PCCW agrees with OFTAs proposed


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approach on the interconnection charges between IP-based networks but

suggests that OFTA should not seek to regulate the level of charges applicable

to the interconnection in question. HKBN also supports the view that the TA

should not intervene in IP-based interconnection but leaving it to service

operators to conduct and strike their own commercial negotiation arrangements

where required.

97. Five respondents including Pacific Supernet, iBBS, e-Kong, HKISPA

and ELN disagree with the approach. Among these respondents, e-Kong

submits that OFTA should set reference rate for each type of interconnection

charges in considering that it would be difficult for the smaller IP telephony

service providers to negotiate with the big players on an equitable basis.

HKISPA expresses its disagreement with the same view as that given inresponse to Question 71(a) above.

98. Peoples, WTIA and Ms. Chan have some different views. Peoples

considers that the TA should issue specific guidelines under the

Telecommunications Ordinance for the interconnection charges if the

"any-to-any" principle is enforced between IP-based networks. Ms. Chan

expresses the same view as that given in response to Question 71(a) above.

WTIA does not address the question directly but agrees with the TAs viewdiscussed in paragraph 68 and welcomes the TA to intervene or give guidance

when consider necessary.

71(c) Do you agree with the above approach on the interconnection charges

between the IP Telephone service provider and the supplier of the broadband

Internet connection?

99. Among the 22 respondents who have submitted views on this question,

14 of them including HKBN, NWT, CM Tel, SmarTone, Peoples, CompTIA,

ELN, Zone 1511, Pacific Supernet, iBBS, Microsoft, WTIA, AT&T and

HKISPA agree with the TAs proposed approach on the interconnection charges

between the IP Telephone service provider and the supplier of the broadband

Internet connection.

100. Specifically, AT&T, HKISPA and CompTIA expressly support the

TAs view, as given in para. 70(c) of the Consultation Paper that (a) there is nojustification for a broadband connection supplier to ask the IP Telephony


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service provider for an additional payment of interconnection charge for the

conveyance of the IP Telephony traffic over the broadband connection and (b)

there is no justification for the broadband connection supplier to block the IP

Telephony traffic if such payment is not made. HKBN considers that IP

Telephony services operating on the application layer of the broadband

connection should be similar in nature to other Internet peer-to-peer

applications, such as BT, WinMX, ICQ, MSN, Kazaa etc. The subscriber would

have already paid the broadband connection (either the network operator

operating the broadband connection or PNETS licensee) for the access of these

applications and it is therefore not necessary for IP Telephony service providers

to pay any additional interconnection charges. Although it supports the TAs

view, Zone 1511 considers that, if an IP Telephony service provider has

preferred internet service provider and requires a special level of service from

them, there might have interconnection charges, based on the principle that the

originating party pays to the terminating party, and should be subject to

commercial negotiation and arrangement by the related parties.

101. PCCW, WT&T, HGC, HKCTV, ETS Society, HKTUG and Hon. Sin

Chung Kai are the 7 respondents disagreeing with the TAs view. In particular,

PCCW submits that whether or not the ISP acts to charge the VoIP service

provider using its network is a matter for the ISP to determine and the extent of

the usage is irrelevant to the question of whether or not the ISP should be

permitted to charge the VoIP service provider. PCCW opines that these are

purely commercial decisions driven by market forces, business plans, corporatestrategies and revenue estimates. OFTA should not intervene (i.e. engage in

economic regulation) unless an ISPs actions violate Sections 7K, 7L or 7N of

the Ordinance Sin Chung Kai considers that, in order to keep the network

operators incentive for infrastructure investment and promote effective market

competition, any kind of service providers should be subject to interconnection

charge if they are using the network of other providers to offer services. WT&T

objects to the proposal and submits that the TA should implement a user-pay

system under which all IP telephony service providers piggybacking onnetwork operators network for customer access would pay access

fees/interconnection charges to the network operators, where the quantum of

the access fees/interconnection charges should be determined by commercial

arrangements amongst the concerned parties, or failing which by TAs

determination in accordance with established proceeding. HGC considers that

the TAs view appears to contradict the view of the TA in respect of the

interconnection charging arrangements applicable to the International Call

Forwarding Services (ICFS) in which an ICFS provider is required to pay an

access charge to an MNO for making use of the call forwarding service of the


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MNO in the circumstances where the relevant customer of the MNO has,

arguably, already paid for the same call forwarding services. HKCTV submits

that the TA should require a service provider to enter into an agreement with a

network operator to lease the latters bandwidth. Furthermore, HKCTV opines

that the customer of the broadband connection has paid for the connection for

selected purposes only and the fee he has paid does not cover the service for IP

telephony

102. Ms. Chan offers a different view. She suggests that, just like the PNET

charge, a fixed rate charge could be levied by the fixed carriers or the

broadband connection suppliers when the IP Telephony service provider is

going to use their network to provide service.

LAC

78(a) Do you agree that the existing charging principles of LAC should be

continued for interconnection between IP Telephony and circuit-switched

networks?

103. The views on the question are quite diversified. Among the 19

respondents, 7 of them including PCCW, HGC, CM Tel, CSL, ELN, HKTUGand Hon. Sin Chung Kai support the proposed approach that the existing

charging principles of LAC should be continued for interconnection between IP

Telephony and circuit-switched networks.

104. Nine respondents including SmarTone, Peoples, Pacific Supernet,

Zone 1511, ETS Society, iBBS, WTIA, HKDotCom and Ms. Chan disagree

with the proposal. Both Zone1511 and ETS Society share the same view that

LAC is applied to the delivery of external traffic to and from customers in

Hong Kong and IP Telephony services are provided through a local IP network

only. On this basis, they submit that interconnection charge should be applied

instead of LAC. WTIA submits that the charging principle should only be

applied to ETS operators who are using IP technology to deliver international

traffic. WITA further submits that IP Telephony service providers that are

permitted to use telephone numbers with prefix 2, 3 and 8 should be

entitled to levy interconnection charge at the same level as being collected by

FTNS operators and that IP Telephony service providers that are allowed to use

mobile phone numbers of prefix 6 and 9 should be entitled to levy


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interconnection charge at the same level as being collected by MVNO. Pacific

Supernet share the view of WTIA and agrees that IP Telephony provider should

be eligible to receive incoming LAC payment as the IP Telephony provider has

invested money in renting broadband access, buying equipment to provide

traffic termination for its customers

105. As for the other 3 respondents, they do not provide a clear-cut answer

to the question but offer some other relevant comments for our consideration.

NWT considers that OFTA needs to examine LAC arrangements to ensure that

local fixed network operators are adequately compensated for use of the local

loop by IP Telephony service providers. HKISPA believes that IP Telephony

service provider is providing the delivery service on behalf of their customers

and therefore financially and legally entitled to any benefits generated by usingthe circuits they lease from the network operator including receiving LAC

payments from ETS operators. The HKISPA is inclined towards the idea that IP

Telephony service providers should not be subject to any LAC, if consensus

cannot be reached on this point. HKBN believes that, under the technology

neutra

OFTA on ip phony (HK)

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