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Host / Sponsor: European Chamber of Commerce in Hong Kong
Event Time: Mon 13-Dec-2010 8:15 AM To 11:45 AM
Venue: The Executive Centre, 5/F, Two Exchange Square, Central
View Flyer/Attachment: ICT Business Council Position Paper_FINAL

This morning, on the 13th of December, the European Chamber of Commercethanks to the European Union Business Information Programme (EUBIP)held a Breakfast Seminar on the topic of Information Communication and Technology (ICT). The premise was to illuminate the audience on the recent regulatory and technological developments in the ICT sector. The audience consisted of industry representatives, government officials, and legal counsels. There was good turnout, given the seminar was held just shy of two weeks before Christmas Eve.

To open the stage for the first speaker, Ms.Maria Castillo gave the opening remarks. As the official representative of the Office of the European Union in Hong Kong and Macao, Ms. Castillo expressed her delight and pleasure of working with the European Chamber on the ICT Position Paper (2011). The mandate of the EU Office is to urge for problem solving and finding solutions. With that last comment, Ms. Castillo opened the floor to the first speaker, Dr. John Ure, Director of the Telecommunications Research Project (TRP) at the University of Hong Kong.

The main issues posed by Dr. Ure were the issues of regulation of the ICT sector – what are the challenges facing regulators, and how should regulation be established in the ICT industry, without having adverse effects to what is already established and operational. A very relevant perspective is the “before iPhone and after iPhone” – this poses a complete reforming and transformation of the communication industry. Integrated and converged media are aimed at the access and consumption levels, and the iPhone theorem is one example of this, indicative of a fundamental shift in the direction of ICT trends.



Convergence ≠ Business Synergy

In ICT terminology, Convergence does not equate Business Synergy. Because the sector had not yet been fully liberalized, many companies in economies experiencing yet-to liberalize ICT sectors underwent big losses since the system had not yet adjusted to the openness. Industry was moving faster than regulation could follow. Aptly describing the situation, much of the convergence and integration occurs in the “cloud” platform, the blurring of where industry regulations and practices meet. Not only in regulation is there little or no consistency, as neither in the programming rules regarding ownership or consumer rights. The regulation is only in its infancy yet it must catch up to a daily changing field of technology.


Converged Regulation

Dr. Ure has been completely convinced by the urgency of a converged regulation, however, a convergence in institutions is not necessitated. He posits that it is difficult to converge institutions, and especially when such institutions are of such diverse and sometimes contradictory concentration. However, the perspective of the consumer does not support this view. For the consumer, the convergence of institutions and regulation is the solution to many hours of customer service and complaints calling, and this becomes a ‘one-stop shop’ for customers as they dial in with complaints or queries regarding their service package.

Regarding more specifics, Mr Rene Summer, Media Regulation Specialist at Ericsson provided his view on the issue. Convergence is a merge of the Information Technology (the IT) with Communication (the C), making ICT. Again taking up the iPhone example, this device has a large network because of its variety and multi-level usages. (The iPhone is apparently also notorious for creating a lot of traffic).

The ‘digitalization of society’ is taking place. As people, ultimately users and consumers, develop their habits and ways, so will trends follow. This is not an intention to enter into “chicken or egg” philosophical debates, nevertheless, what can be concluded is ICT is undergoing fundamental changes. A movie shown by Mr. Summer gave an insight into the ways and means into the productivity levels of the next generation. Digitalization of media and IT are creating a new mode of productivity. People become actors and initiators and increase their social networking skills and exposure. And this is something the industry and regulators must take into consideration as they tackle the changing landscape before them. It is imperative, according to Mr. Summer, that the ICT sector should develop a broader perspective rather than narrowly prodding along behind the trendsetters.

There are key changes in technology: the way it is distributed and the way it is consumed. This has fundamental impact on the way business is done. For instance, Skype has successfully diverted the monopoly of telephone usage away from the conventional device of mobile phones, and this has had profound effect on the profits and market shares of telephone companies.


Content Availability

This falls under what platform is used for each device. However, in the pre-convergence era, silos dominated the technological scene, as regulators and service providers done visors and stare blindly down the shaft. Convergence, once in place, will mean that there will not be any silo for each technology. Issues that Mr. Summer calls to attention are 1) the distortion of competition, which lowers growth and service suffers; 2) the urgency to curve arbitrage in the industry, 3) regulatory effectiveness is on the decline as we move into a less regulated area, and lastly, 4) regulation is not static, and in fact it should advance with the changing times. Rules and regulations do not always determine the trajectory of trends and most often. How regulations manage the changing times most often reflects the manner in which institutions perceive the necessity and urgency to relinquish some of their authority into the hands of industrial and non-state actors.

Further on the issue of regulation, Dr. Andrew Simpson, Director of Certari Consulting Ltd, raised the important and relevant point that the central question is not how to regulate convergence but how convergence should change in the transformation of new economies and trends. The objective is to facilitateand not to control. In a period of technological convergence, institutional convergence will also be spurred. As long as there is a development and evolution of trends, there will be a change and ultimately even convergence of institutions as they morph and transform to follow the changing flow of things.

Hong Kong’s regulation stands in the forward movement towards a fair playing field. Several items that the regulatory body, the Office of the Telecommunications Authority [or OFTA] is committed to further study on spectrum trading, though this is still awaiting consultation. Another area of focus is the differential treatment experienced by the fixed and mobile telephone companies. The silos of technology must be razed in order for a full comprehensive and concise development of regulatory demands to occur, with full view and in accordance with the changes in the ICT environment. Treatment of carriers is another area that Dr. Simpson raised concerning the actors involved in ICT. Carriers should have one set of regulations that they can all respond to and act in accordance with. Extending the principle of one set of regulations, this should also come into effect regarding treatment of telecommunications managers.

The reality of a merger between Telecommunications and Broadcasting Authority [TA and BA, respectively] will bring about challenges but also opportunities. The challenges will be institutional streamlining and unifying leadership at the top of BA and TA.

Since its inauguration, the Competition Bill has raised fears amongst the SMEs and other small players that they will lose more than gain with this Bill. In fact what this Bill sets out to do is to curb collusive arrangements between companies, providers, distributers and the like. However, those engaged in these collusive arrangements are often SMEs themselves, in their attempt to overcome costs and red-tape. However, Dr. Simpson maintains that SMEs will come to gain more because of the modifications they will have to make to their business and in the long run reap more gain as their business model becomes more sustainable. SMEs should consider the Competition Bill their ‘ally’ in servicing clients.

Media in the future will come to differ immensely from the circumstances today. At the Panel, Mr. Lo Sun Lai, Corporate Affairs Director at City Telecom (HK) Ltd, ascertained that in regards to telephone use, his company is looking much more into internet now than before. However, since there is still a large proportion of society that relies on television, television will not be abandoned but will remain a vital aspect in the understanding of today’s ICT development. The internet naturally offers more context for development and usage, cites Mr. Lo from the Office of Technology Transition [OTT]. And in cases of congestion where most see a crisis, this should be a place where new choices can be developed as inroads into the congested areas, giving consumers and service providers more choice to choose from.

Convergence media is blurring to the extent that broadcasters using telecom networks have difficulty seeing the lasting differences and attributes between the various authorities of BA and TA, said Mr. Alan Siu, Deputy Secretary of Commerce and Economic Development (Information and Technology Development), Commerce and Economic Development Bureau. Ironically, to ensure institutional convergence, a Unified Regulated Authority has been established to serve as an umbrella over the diverse yet related ICT bodies. Telecommunication regulation is built up of a committee structure, and as aforementioned, much of this committee will consist of non-governmental representatives and many will originate from the industry. However, the extremes of state and non-state will not be a fruitful enterprise and end if there is no balanced approach. Mr. Siu proposes to the audience that balance in policies and deregulation of legislation hold the key to this development of ICT.

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