Infrastructure Sharing in Hong Kong

The Telecommunications industry in Hong Kong can be characterized as very

conducive to the entry of players as new entrants are able to launch their services
and extend service coverage in a shorter time than if they have to roll out their own
networks. The open network requirement facilitates competition at the content
and service level.
Management of shared network infrastructure in Hong Kong are decided by the
sharing operators through negotiation. For fixed network infrastructure, it is totally
up to the operators concerned to agree at an approach in managing the shared
infrastructure elements. Usually, it is managed by the owners of the shared network
facilities. As for mobile network, a site manager is assigned by the TA to manage
and maintain the common facilities such as antenna, cablings, and poles installed at
the shared base station site. All the mobile network operators concerned share the
cost of using common facilities and maintenance fees.
While infrastructure sharing is not generally mandated and each operator is allowed
to build or lease the use of the infrastructure it requires, the regulator may direct
operators to share infrastructure where it is deemed to be in the public interest.
Since Hong Kong has space limitations and complex planning requirements, mobile
network operators share passive network equipment such as towers, equipment
rooms, and power. Under this scheme, operators are able to maintain full control of
their own active network assets while still being able to differentiate offering based
on service and network performance.
Hong Kongs Competition Policy, Telecommunications Ordinance, and
Telecommunications Authority
The Hong Kong Competition Ordinance was signed in 2012 and is expected to take
full effect in mid-2015. In the interim, the Competition Commission and the
Competition Tribunal will be established. Prior to the enactment of the Competition
Ordinance, there was no economy-wide competition law. However, a limited sectoral
competition law regime did exist under the Telecommunications Ordinance and the
Broadcasting Ordinance. With the passage of the Competition Ordinance, there will
be a transitional period before the eventual repeal of the competition provisions of
the Telecommunications Ordinance and all of the competition provisions of the
Broadcasting Ordinance.
The Competition Ordinance envisages that the Commission and the
Communications Authority will have concurrent jurisdiction over conduct of
undertakings in the telecommunications and broadcasting sectors.
The Telecommunications Ordinance adequately empowers the Telecommunications
Authority (TA) to direct the licensees to share use of facilities where it is in the
public interest to do so.

Under section 36AA (Sharing of use of Facilities) of the Telecommunications

Ordinance1, the TA is empowered to determine public interest to share a facility
after taking into consideration the following:

Whether the facility is a bottleneck facility;

Whether the facility can be reasonably duplicated or substituted;
The existence of technical alternatives;
Whether the facility is critical to the supply of service by the licensees;
Whether the facility has available capacity having regard to the current and
reasonable future needs of the licensee or person to whom the facility
belongs;
Whether joint use of the facility encourages the effective and efficient use of
telecommunications infrastructure; and

The costs, time, penalties, and inconvenience to the licensees and the public of the
alternatives to shared provision and use of the facility.
In cases when another licensee requests to share a facility, the licensee shall
endeavour to come to an agreement with the requesting party on the conditions
including, but not limited to, providing for fair compensation to the licensee for the
provision, use, or sharing of the facility.
If the parties do not reach an agreement within a reasonable time and the TA
requires shared use of the facility, the TA may determine the terms and conditions
for the shared use of the facility (compensation payable using its own costing
methods).
Advantages of Infrastructure Sharing to Operators and Consumers
Infrastructure sharing provides opportunities for operators in terms of the following:

significant reduction in investments (capital expenditure) to operators;

reduction in market entry barriers; and
clear cost savings on yearly site capital expenditure (due to less investment
duplications).

Consumers on the other hand are benefitted by:

increased availability of telephony service;

accelerated pace of network rollout;
increased consumer choice; and
to some extent, reduced cost of services.

1
http://www.legislation.gov.hk/blis_pdf.nsf/6799165D2FEE3FA94825755E0033E532/6
5248D243340F9BD482575EE0039F763/$FILE/CAP_106_e_b5.pdf

Competition is also stimulated by lowering the entry barriers for new entrants thus
increasing the possibility of new players coming into the sector. One of the major
barriers to entry in the sector is the cost of network deployment which sharing
addresses. For dominant operators, competition is shifted from coverage towards
service. Consumers, in this manner, benefit immensely from increased quality and
service choices.
Sharing also spreads the risk across all sharing parties which has a strong bearing
on capital costs. The substantial reduction in the total number of masts in a given
geographical area, sharing of power and air conditioning equipment also
substantially reduce the total power consumed in every site thereby reducing utility
as well as pollution.