Local telephony in Hong Kong : a study of production structure and natural monopoly issue

Abstract

Hong Kong lies at the hub of Asia Pacific's telecommunications infrastructure, with excellent global communications by means of submarine cable, satellite links and other sophisticate means of transmission. She has retained its position as one of the major telecommunications centres in the region in the last decade. Many advanced communication technologies have been developed and well assimilated. Hong Kong has one of the highest penetrations of telephone lines in Asia with over three million lines, more than one line for every two people in the territory. There has been a world-wide trend for the opening up of the telecommunications sector. Prior to the 1980s, telecommunications industry in most countries was structured on the basis of a state-owned monopoly. The rationale for such type of market structure was based on the idea that the natural monopoly characteristics prevailed over the entire industry. During the period between the 1 980s through the I 990s, there has been a general trend in niany countries towards liberalising the telecommunications industry. The common practice involved a move towards removing monopoly restrictions on the provision of telecommunications services and regulatory reform. Although the speed and method of liberalisation has varied between countries, the general trend has been towards deregulation of the markets and introduction of competition into all sectors of the industry.