HONG KONG (02/02/2000) - Long-distance cable companies have committed to expanding Hong Kong's telecommunications network capacity by more than ten times over the next three years in license agreements with the territory's government, the government announced yesterday.
The Office of the Telecommunications Authority (OFTA) has issued letters of intent to 13 submarine and overland cable companies for External Fixed Telecommunications Network Services (EFTNS) licenses, the agency said in a statement.
Investments by the companies, which OFTA said totaled more than HK$9 billion (US$1.16 billion), are likely to pay significant dividends as Hong Kong attempts to make itself into an Internet and electronic-commerce hub for Asia over the next several years, according to OFTA and industry observers.
OFTA intends to issue service licenses to the 13 companies when the vendors have obtained approvals in other countries and posted bonds to guarantee their investments, the statement said. The companies, some of which will work together in a consortium, plan a total of seven new submarine cables and four new overland cables.
Analysts said boosting network capacity, both within Asia and between Asia and other parts of the world, will be critical in creating regional hubs for e-commerce, multimedia, and other services.
The new Internet-based services that companies in Hong Kong and around the region are scrambling to build today may leave consumers disappointed unless bandwidth expands rapidly, said Stephen Leung, assistant research manager at Daiwa Securities in Hong Kong.
"Although the increase is substantial, the demand will increase even faster," Leung said. "A lot of people want to deliver full-length movies over the Internet, so it's difficult to predict what sort of bandwidth will be needed in three years' time."
EFTNS licensing is one of several steps Hong Kong is taking to open up its telecommunications market and encourage competition and investment. Since the beginning of this year, the government also has licensed service providers for broadband cable, wireless fixed broadband, and satellite-based long-distance telephony services.
After requesting applications last May, OFTA received 19 proposals and sent letters of intent to the 13 intended licensees.
The companies that received letters of intent for submarine cables were Asia Global Crossing Hong Kong Ltd., AT&T Asia/Pacific Group Ltd., British Telecom (Hong Kong) Ltd., CTI International Ltd., Far East Gateway Ltd., Flag Telecom Asia Ltd., Global One Communications Ltd., Level 3 Communications Ltd., MCI WorldCom Asia Pacific Ltd., NTT Com Asia Ltd. and PSINet Hong Kong Ltd.
CLP Telecommunications Ltd., Far East Gateway Ltd. and Unicom International (HK) Ltd., meanwhile, were issued letters of intent for overland cables.
OFTA can be reached on the Web at http://www.ofta.gov.hk.