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Dual-Band Operation and Domestic Roamingfor Public Mobile Radiotelephone Services in the 800/900 MHz Band and

Personal Communications Services in the 1.8 GHz Band

Statement bythe Telecommunications Authority, Hong Kong

28 August 1998

Introduction

On 21 May 1998, the Telecommunications Authority (TA) issueda consultation paper entitled "Consultation Paper on Dual Band Operation andDomestic Roaming for Public Mobile Radiotelephone Services (PMRS) in the800/900 MHz band and the Personal Communications Services (PCS) in the 1.8GHz band" (hereinafter called the “Consultation Paper”). The objective of theconsultation is to seek the views from the industry on issues related to dual bandservices and domestic roaming between GSM 900 networks and GSM 1800networks.

2. By the end of the consultation, the TA received 9 submissions frommobile operators and interested parties. A summary of the views and commentsreceived is in the Annex. This paper gives the considered views and decisions ofthe TA on the introduction of dual-band services and domestic roaming betweenGSM 900 and GSM 1800 networks.

How Should Dual-band Services be Regulated?

3. All commenters are generally supportive of the TA’s view that theintroduction of dual band services is to the benefits of the consumers. Many ofthem highlight a number of advantages of dual band operation. The introductionof dual band services is a natural evolution of technological advancement whichenables greater cost-efficiencies, improves productivity, allows servicedifferentiation, provides better grades of service and maximizes availablespectral resource to improve service quality and lower the price. It also allowsconsumers to have wider choice on operators and broader range of innovativeservices.

4. As regards views on how to regulate dual band services, thePMRS/PCS operators consider that the introduction of the dual-band services is acommercial decision and it should be left to market forces. There is no need forthe TA to impose any regulatory measures such as setting a moratorium torestrict operators to deploy better and more efficient technology which willultimately bring significant benefits to consumers. Shun Hung Kai Properties

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Ltd. comments that the TA should not create any regulatory barriers to preventoperators from improving efficiency and capacity through better usage ofresources. Shun Hing Technologies Co. Ltd. suggests that the TA needs not beinvolved in the regulation and let the operators settle among themselves.

5. The standalone PCS operators consider that the introduction ofdual band services affords the PMRS/PCS operators a network that hassubstantially more spectrum than is available for the standalone PCS operators.The advantages of this additional spectrum include better trunking efficiency andthe ability to increase service quality, through co-location and targeting currentcapacity hot-spots, at a faster rate than is feasible for the standalone PCSoperators. To ensure a level playing field, they propose that the TA shouldintroduce a one-year moratorium for the use of dual band services and to ensurethat all the conditions of the PMRS and PCS licences are fully upheld. They alsorequest the TA to allocate, or assure that additional spectrum is allocated, to eachstandalone PCS operator and take an active role in ensuring that all operators areallowed to gain access to critical sites.

6. As explained in the Consultation Paper, the TA considers thatdual-band technology enables PMRS/PCS operators to use the spectrumresources more efficiently and to improve network coverage and service quality.By sharing the resources between the GSM 900 and GSM 1800 networks, thePMRS/PCS operators could reduce both the network operating costs andadministrative costs in the long run. Thus, the deployment of this new andimproved technology will give consumers significant benefits in terms ofcompetitive pricing, improved network coverage, enhanced quality of serviceand other service innovation. Concerning the argument that the PMRS/PCSoperators will have significant advantages over the standalone PCS operators interms of coverage, the TA has explained in the Consultation Paper that, initially,a network with dual band services would inevitably have better coveragecompared with a standalone PCS, but the difference would be diminishing overtime and would in around one year’s time become insignificant to a largeproportion of customers. In fact, two standalone operators point out in theirsubmissions that their PCS networks would become fully competitive by mid-1999. This affirms the TA’s view that the difference in network coveragebetween GSM 900 and GSM 1800 networks would diminish in around oneyear’s time. Furthermore, with the introduction of mobile number portability inearly 1999, the TA believes that it would help, to a certain extent, to increasecompetition and ensure a level playing field for the operators.

7. In line with the light-handed regulation and technology neutralapproach adopted in regulating mobile services, the TA maintains his view thatthere is no need to impose any special regulatory restriction on dual-bandoperation. The development of dual-band services is hinged on technologicaldevelopment and the timing of its introduction should be left to the market forces.

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Imposing a moratorium on the launch of dual-band service will unnecessarilyinterfere with commercial operation and unduly impede the technologicaldevelopment of mobile services in Hong Kong. This would not serve the interestof the public and the mobile industry.

8. In their submissions, the standalone PCS operators request foradditional spectrum for equalizing the imbalance between the PMRS/PCS andstandalone operators. The TA considers that there is currently spare PCSspectrum in the 1.8 GHz band and any PCS operators including the standalonePCS operators could apply for use of the spare spectrum at any time if they meetthe established criteria such as the efficient use of spectrum and traffic demand.Spectrum requirements for new services that depend on the availability of morespectrum would also be considered by the TA. If the standalone PCS operatorshave justifications to prove that their competitive position would be eroded afterthe introduction of dual band services or they have difficulties in planning theirnetwork coverage or capacity due to the insufficiency of spectrum, they mayapply to the TA, together with their justifications, for the allocation of additionalspectrum.

9. After consideration of the submitted views and comments, the TAreaffirms his position that the introduction of dual band services should bepermitted as long as such services are introduced in a manner that fully complieswith the licensing conditions.

10. The introduction of dual band services requires the allocation ofthe same Mobile Network Code (MNC) to networks in the 800/900 MHz bandand 1.8 GHz band operated by the same operator. As the policy of permittingdual band operation without restrictions has been adopted, the TA sees no reasonnot to approve application for using the same MNC for networks in the differentbands to facilitate dual band services.

11. The TA re-iterates that the PMRS/PCS operators will not be able toevade the licence commitments by providing the dual-band services. ThePMRS/PCS operators are required to fulfill their milestone commitments underthe PCS licences in full by implementing the required PCS facilities, not to bereplaced by PMRS facilities. In order to help mobile operators to expedite thedevelopment of their network coverage, the TA will continue to provideassistance to all mobile operators in accessing confined areas such as shoppingmalls and tunnels, and to share use bottleneck facilities on an equitable basis,such as the establishment of common antenna facilities in Country Parks.

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Domestic Roaming

12. In the Consultation Paper, the TA has proposed that domesticroaming could enable the standalone PCS operators to make use of the well-established GSM 900 network facilities so as to enhance their PCS networkcoverage. The TA is of the view that domestic roaming between GSM 900networks and GSM 1800 networks is useful in promoting fair and effectivecompetition between PMRS/PCS operators and standalone PCS operators.However the submitters do not seem to support the idea of domestic roaming.

13. Two standalone PCS operators are of the view that domesticroaming is not the best options they would strive for owing to a number ofshortcomings. Seamless call handover would not be possible which would beperceived by subscribers as a degradation of service quality. The service qualitywill be dependent on the roaming network and it is hard to predict and control.Operators will need to make substantial investment in modifying their billing andadministrative and supporting systems in order to incorporate roaming chargesin to the customers bills and to settle the charges amongst operators. The serviceoffered by domestic roaming is restricted to basic voice service only, and othervalue-added and proprietary services offered by the home mobile network couldnot be retained.

14. The PMRS/PCS operators object to the imposition of mandatorydomestic roaming. They consider that PMRS/PCS operators would face problemin planning their GSM 900 network capacity as the increased traffic arising fromthe PCS roaming subscribers could not be predicted. As a result, the quality ofservice offered to both their own GSM subscribers and PCS roaming subscriberswould be compromised. If the market demand warrants the use of domesticroaming, mobile operators would have the commercial incentive to enter intoreciprocal domestic roaming agreements amongst themselves.

15. The TA is aware that there are some inherent deficiencies indomestic roaming and the service quality achievable by this functionality couldnot match with that offered by dual-band services. Domestic roaming might alsoincrease the operating and administrative costs of network operators. However,as pointed out in the Consultative Paper, domestic roaming between networksoperated by different operators would be useful in overcoming some existingcoverage problems. For example, coverage for one network may not be availablewithin certain indoor areas or at certain locations in the Country Parks. It maynot be possible, due to physical, economical or other constraints, to extend thecoverage of all networks to all areas. Domestic roaming between networksoperating in the same band, or different bands, would help improve customerswhich would otherwise be deficient in coverage.

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16. Two PMRS/PCS operators are of the view that domestic roamingdoes not constitute “interconnection” of telecommunications systems or servicesbecause roaming will not require the passing of calls between the networks.Roaming simply involves a signalling interface between the networks. They areof the view that roaming does not fall within the jurisdiction of the TA undersection 36A of the Telecommunication Ordinance. 17. The TA does not agree with the narrow interpretation of section36A as suggested by the two PMRS/PCS operators. According to section36A(3)(a), the type of interconnection referred to in this section is anarrangement for interconnection to and between telecommunication systems orservices licensed, or exempted from licensing, under the TelecommunicationOrdinance. The policy objective of section 36A is to prevent telecommunicationsystems or services from being operated as isolated services. Theinterconnection is to allow customers of one system or service to have access tocustomers connected to, or services provided by, another system or service.Domestic roaming is to enable customers of one mobile network to gain access tothe services provided by another mobile network. There are at least two types ofinterconnection involved in a domestic roaming arrangement. The first isinterconnection between the mobile networks to enable customer verificationdata to pass. The second is interconnection through circuits established by radiobetween the customer’s mobile station (which itself is a telecommunicationsystem exempted from licensing under the Telecommunication Ordinance) andmobile network providing the roaming service.

18. Notwithstanding the TA’s belief that powers exist under section36A of the Telecommunication Ordinance for him to determine the terms andconditions of the interconnection arrangement to implement domestic roaming,the TA notes that even the standalone PCS operators are not fully supportive ofthe domestic roaming arrangement. Taking into consideration the views from theindustry and the fact that some standalone PCS operators have almost completedtheir network rollouts, the provision of domestic roaming will have marginaleffect on improving their PCS network coverage, the TA decides that he wouldnot mandate the provision of domestic roaming at this point in time. Theprovision of domestic roaming will be subject to bilateral agreement betweenmobile operators. If mobile operators cannot agree on the terms and conditionsof interconnection and charging arrangements for domestic roaming agreement,the TA will make a determination under section 36(A) of the TelecommunicationOrdinance.

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Conclusion

19. The TA concludes that the introduction of dual band services bymobile network operators should be allowed as long as they would fully complywith the licence conditions. The TA would not mandate the provision ofdomestic roaming, but he would consider making a determination of the termsand conditions for domestic roaming under section 36A of theTelecommunication Ordinance if he receives requests from mobile networkoperators for him to do so.

20. Any enquiries on this Statement should be addressed to theTelecommunications Authority at the following address:-

Office of the Telecommunications Authority29/F, Wu Chung House213, Queen’s Road EastWanchaiHong Kong

[Attn: Senior Telecommunications Engineer (Technical Support 2)Telephone no. 2961 6778Fax no. 2803 5112]

Office of the Telecommunications Authority28 August 1998

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Annex

Summary of Comments and Views from Respondents onConsultation Paper - Dual Band Operation and Domestic Roamingfor PMRS in the 800/900 MHz Band and PCS in the 1.8 GHz Band

The Office of the Telecommunications Authority (OFTA) receivedaltogether 9 submissions from the industry and interested parties on the consultationpaper. Their major views and comments are summarised in the tables below :

How should dual band services be regulated in Hong Kong?

Hong Kong Telecom CSLLtd. (CSL)

CSL supports the TA's preliminary view that the introductionof dual band services should be permitted. It considers that a“temporary moratorium” has no sustainable merits and it notin the public interest to delay the offer of dual band servicessimply to favour particular mobile operators by protectingthem from the dynamic effects of competition throughinnovation.

CSL is of the view that dual band service aims to ease thecapacity issues of the GSM 900 network, the enhancement ofthe incumbent networks should not be considered as a threatnor disadvantage to the standalone PCS operators. Consumerbenefit and public interest should far outweigh the alleged“unfair advantages”. In addition, there will be a sufficient leadtime between now and full commercial ubiquity of dual bandhandsets by which time the coverage of the standalone PCSnetworks will have been significantly improved if each of thePCS operators chooses to commit sufficient effort to theroll-out of its network.

CSL agrees with the TA that there should be no moratorium,either temporary or permanent, imposed on the provision ofdual band services.

HutchisonTelecommunications(Hong Kong) Ltd.(Hutchison)

Hutchison is encouraged to note the TA's support for theprovision of a dual band services and the TA'sacknowledgment that such services are in the interests of theconsumer. Dual band services should be made available assoon as possible. To hold up the launch of dual band servicesand thus deprive consumers of the benefit of the technologicaladvance that such services offer would be grossly unfair. Anyquestion of a moratorium, temporary or otherwise, is bothtotally unacceptable and beyond the power of the TA.Dual band services should simply require compliance with

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both the relevant operators’ PCS and GSM licences and nonew regulatory approval is required for dual band services.

MandarinCommunications Ltd.(SUNDAY)

SUNDAY agrees that the introduction of dual band servicesis to the advantage of the Hong Kong consumers. Howeverthe advantages gained by PMRS/PCS operators over thestandalone PCS operators by the immediate introduction ofdual band networks, if left unaccounted for, only serve tohinder SUNDAY’s ability to be competitive. The timing ofthe introduction of dual band services is therefore ofimportance to the commercial viability of the standalone PCSoperators.

The introduction of dual band network affords thePMRS/PCS operators a network that has substantially morespectrum than is available for the standalone PCS operators.The advantages of this additional spectrum for the efficiencyof the network are well established. Deployment efficienciesare advantageous to the PMRS/PCS operators who will havethe ability to increase service quality, through collocation andtargeting current capacity hot-spots, at a faster rate that isfeasible for the standalone PCS operators.

SUNDAY therefore proposes that OFTA -

• introduces a one year moratorium of the use of dual bandnetworks and services.

• ensures that all the conditions of all licences are fullyupheld

• allocates additional spectrum to each standalone PCSoperator

• takes an active role in ensuring that all operators areallowed access to critical sites.

New World PCS Ltd.(NWPCS)

NWPCS proposes that dual band operation should be allowedonly when standalone PCS operators are given sufficient timeto negotiate for and conclude roaming agreement with GSMoperators. Only when integrated and standalone PCSoperators are able to implement domestic roaming, should theTA mandate commencement of dual band implementation.

Peoples Telephone Co.Ltd. (Peoples Phone)

Peoples Phone accepts and supports the view that theintroduction of dual band integration be allowed. HoweverOFTA should ensure that any benefits gained by the consumer

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through allowing dual band integration are not reduced orminimised by a reduction in the competitive environment.

Shun Hing TechnologiesCompany Ltd.(Shun Hing)

Shun Hing welcomes the proposal of permitting dual bandservices in Hong Kong and has the suggestion that OFTAneeds not be involved in the regulation and let the servicesoperators settle among themselves.

SmarTone MobileCommunications Ltd.(SmarTone)

SmarTone agrees with the TA that dual band services shouldbe permitted and urges the TA allow immediatecommencement of these services.

SmarTone comments that dual band technology enablesgreater cost-efficiencies, improves productivity, allowsservice differentiation, provides better grades of service,maximise available spectral resource to improve servicequality and lower the price.

Considering that dual band services are part of the naturaltechnological evolution for service enhancement and bringinggreater benefits to consumers as well as continuallycontributing to the eminence of telecommunications in HongKong, SmarTone recommends that dual band services bepermitted immediately.

Sun Hung Kai PropertiesLtd. (SHK)

SHK comments that given the tremendous benefits of dualband operation to consumers on enhanced network coverage,enhanced quality of service, wider choice on operators andbroader range of innovative services, the imminence of thecommercial availability of dual mode handsets as well as therapid development of technology, the TA should allow dualband operation as soon as possible.

Dual band operation would enable PMRS/PCS operators tooperate more efficiently and expand their capacity byimproving the trunking efficiency of GSM 900 and GSM1800 frequencies to achieve more cost efficient operations.

Mr. Alex Tsui (Interestedpersonnel)

Mr. Tsui agrees on the OFTA's view of GSM 900/DCS 1800dual-band operation.

Domestic Roaming Issues

Hong Kong Telecom CSLLtd.(CSL)

CSL does not support the introduction of mandatorydomestic roaming. The issue of domestic roaming should bedealt with by commercial arrangement if it proves technically

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feasible and commercially viable between mobile operators.

CSL considers that any domestic intercarrier roaming serviceprovider in Hong Kong would experience severe difficultiesto maintain its service quality, both in the provision ofnetwork services to its own customers, and in the provision ofnetwork services to its roaming customers, due to the majortechnical difficulties in providing overlapping coverage withina dense area such as Hong Kong. Mandating domesticroaming would immediately create the potential for major andunpredictable network congestion.

In terms of the complexity of the issue, the effort andadditional capital investment spent by the domestic roamingservice provider in various aspects would result in long lead-time and high provision cost.

CSL does not consider that domestic roaming couldeffectively alleviate the problem of indoor and other coverageconstraints currently faced by the industry. There are manyunresolved issues including service quality, network identity,network capacity, call drop due to non-seamless handover,re-registration at home network, etc. which make thisarrangement unattractive to mobile operators for dealing withconstrained coverage issues. To promote competition in themarket, CSL considers that the standalone PCS operatorsshould be encouraged to build their own network rather thanusing others to provide the service. By mandating theimposition of domestic intercarrier roaming OFTA wouldreduce the incentives for the standalone PCS operators tocomplete any significant network rollout in areas other thanthose high teledensity areas that would allow them to engagein “cream skimming”.

CSL submits that a domestic intercarrier roaming service isnot the interconnection of telecommunications systems orservices because roaming will not require the passing of callsbetween the networks. Roaming, both internationally anddomestically, simply involves a signalling interface betweenthe networks. Accordingly, CSL considers that under thecurrent legislation and regulatory regime there is no powervested in the TA to mandate domestic intercarrier roaming onthe PRS licensees.

HutichisonTelecommunications(Hong Kong) Ltd.(Hutchison)

Hutchison disagrees with TA's intention of involving himselfin mandating domestic roaming and setting the relevantcharges. These matters should be left to commercialarrangements and beyond the power of the TA to mandate.

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Hutchison considers that domestic roaming would result inPCS customers experiencing service quality difficulties andlimitation problems and existing GSM customers beingsubjected to deterioration of service quality. The lack ofseamless roaming as between networks with different mobilenetwork codes is a serious problem which will adverselyimpact service quality and thus the reputation of the industryin general. A PCS subscriber roaming onto a GSM networkwill remain on the relevant GSM network until that GSMcoverage is lost or manual re-selection of PCS coverage ismade. This will inevitably result in PCS subscribers makingcalls via GSM roaming arrangements which could have beenmade on their home PCS network. This will give rise tounexpectedly high bills arising out of the relevant roamingcharges and inevitable customer complaints. Domesticroaming service would inevitably be restricted to basic voiceservices and would not allow access to normal value addedservices. GSM networks are already operating at near fullcapacity and cannot accommodate additional requirements ofother operators. An influx of PCS subscribers roaming intoGSM freely would overload those GSM networks andseriously undetermined quality of service leading to callcongestion and lower transmission quality.

Hutchison is of the view that PCS operators should build theirown networks to provide the required coverage. When PCSlicence bids were submitted there was no entitlement to GSMroaming. To force GSM operators to allow PCS subscribersto roam onto their networks would amount to appropriationof the GSM operators’ assets.

To force domestic roaming on the industry would discourageinvestment by PCS operators. A reduction or lack of PCSinvestment will result in PCS customers in the longer termsuffering from service limitation and higher call chargesarising from resultant excessive roaming onto GSMnetworks. The cutting back of investment will result in lowerservice standards and lower returns. This will start a viciouscircle that will ultimately result in cost cutting and closure orconsolidation of networks, all leading to the reduction ofemployment opportunities and employee redundancy.

Hutchison is of the opinion that the TA has no jurisdiction tomandate domestic roaming under section 36A of theTelecommunication Ordinance or otherwise. Roaming isquite different in concept to interconnection and falls outsidethe scope of section 36(A) of the Ordinance. Domesticroaming does not constitute “interconnection”. It involves

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the origination of a call on one network and its termination onanother. It is essentially a carrier to carrier relationship. Totreat roaming as interconnection would entail treating allarrangements between owner of handsets and networkoperators.

MandarinCommunications Ltd.(SUNDAY)

SUNDAY believes that domestic roaming with a GSM900 operator does not offer an equivalent dual band servicefor the standalone PCS operators. Networks that aredomestically roaming cannot hand off calls and therefore thecall drops. Dropped calls give the impression to thesubscriber that they are using an inferior network. Therequirement to use another network only serves to underlinethe superiority of that network's coverage, therebyundermining the position of the original network. Revenuewill be lost for calls that are continued on the GSM 900network even when back in an area covered by GSM 1800due to the need to pay roaming fees rather than collectstandard air time fees. There is a very short window ofopportunity to recover the administration and logistic costs ifdomestic roaming would not be required by SUNDAY afterhaving a fully competitive network in mid 1999.

Domestic roaming is not a feasible operational or commercialsolution for matching the supremacy afforded the PMRS/PCSoperators by dual band service. SUNDAY does not seedomestic roaming as useful in promoting fair and effectivecompetition but rather believes that it clearly serves tounderline the differences in the networks and thereby directlyhinders SUNDAY's ability to be competitive.

New World PCS Ltd.(NWPCS)

There is an inherent risk that GSM operators will grantfavouritism to their affiliates while discriminating otherstandalone PCS operators, which are literally competitors ofthemselves.

NWPCS proposes that PCS calls roam to GSM networkshould have the roamed calls separately identified incustomer's bill and roaming calls should be considered aspremium rate service which should be separately chargeableand should not be covered under the standard service plan.GSM operators offering domestic roaming should offer thesame roaming rate to all PCS operators.The TA should actively involve in commercial discussionbetween mobile operators on roaming arrangement to ensureonly relevant cost are recovered. The TA should alsointervene if necessary to ensure the implementation of

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domestic roaming will not be unnecessarily delayed to giveadvantageous headstart by PMRS/PCS operators.

Peoples Telephone Co.Ltd. (Peoples Phone)

Peoples Phone is of the view that the introduction of domesticroaming is not the best option. Domestic roaming is onlyadvocated as a necessary entry condition of PCS entrantswhere there is a sparse population but not Hong Kong.Taking into consideration its network rollout, Peoples Phoneenvisages that domestic roaming would be useful for a periodof six months and it would not be commercially viable for thethree standalone operators to do so as it would involve amajor investment in terms of money.Other reasons for not supporting domestic roaming areservice quality will depend on its competitors’ standards,ability to provide Value Added Services may be complicatedthrough a non-proprietary network, the display of customer’sterminal will show the name of its competitor’s network,handovers between its network and that of its competitors areimpossible, less revenue will be gained from call minutes as itwill be charged for domestic roaming minutes, and significantinvestments may have to be made to allow its billing systemsto accept call detail records that are generated from switchesin other networks.

Peoples Phone believes that the imposition of domesticroaming would not adequately compensate the threestandalone operators for the significant advantages to begained by allowing PMRS/PCS operators to integrate theirnetworks. These advantages include dual band operators cangradually increase spectrum in line with demand by puttingPCS-transmitters in areas first where congestion is a problemand may balance between GSM and PCS, and thereforecreates a more efficient and cheaper network than any of thestandalone PCS operators could provide. Dual bandoperation immediately relieves the PMRS/PCS operators’capacity requirements in hot spot areas, thereby upgradingtheir overall service quality in only a few months. PMRS/PCSoperators will be able to sell dual band phones from the firstday, providing full coverage almost instantly. Combining thecell sites may allow the PMRS/PCS operators to roll out theirPCS network at considerably higher speed than any of thethree standalone PCS competitors. However if OFTA makes decision to sanction domesticroaming as a form of compromise, then Peoples Phone wouldadvocate that:

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• Dual band network operations should not be permitteduntil domestic roaming agreements with the threestandalone PCS are in place;

• OFTA will ensure that the introduction of domesticroaming will be subject to fair compensation throughroaming charges and that the fair setting ofinterconnection charges are applied which are based onthe reasonable relevant costs. Peoples Phone would alsoencourage OFTA's involvement in determining a fairinterconnection charge;

• OFTA will set up a one year moratorium of all PCSoperators starting from the date of approval for the use ofdual band network integration;

• Assurance should be given from OFTA that thestandalone PCS operators be allocated frequency inaddition to the 10 MHz already reserved for them; and

• Assurance from OFTA that dual band network operatorsmust adhere to the advertising code of practice and notpromote their network be denigrating the single bandnetwork operators.

SmarTone MobileCommunications Ltd.(SmarTone)

SmarTone is seriously concerned that if domestic roaming ismandated, the quality of services being provided to theconsumers could be jeopardised both during normaloperations and in emergency situation. Domestic roaming would introduce the significant risk ofleading to an "avalanche effect" in a crisis situation such thatthere could be a significant and unexpected surge in trafficthat might overload a second network. Of critical importance,is the fact that access to emergency services is threatened bythe introduction of domestic roaming.

Commercial negotiation will alleviate concerns regarding thepotential for "cream skimming" by operators.

SmarTone believes that domestic roaming does not contributeto the betterment of mobile communications services in HongKong and on the contrary, would significantly threaten mobileservice quality and, more specifically, access to emergencyservices. Therefore, SmarTone would urge the TA to relyupon commercial processes and market forces.

Sun Hung Kai PropertiesLtd. (SHK)

SHK comments that the TA should leave to the market toreach any domestic roaming arrangement and the setting ofinterconnection charges between operators throughcommercial negotiations among operators. Domestic roamingcould enhance the coverage of operators and facilitate the

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development of fair and effective competition in the market.Shortcomings of domestic roaming include mandatorydomestic roaming forces PMRS/PCS operators to acceptsubstantial investment risk; service quality of PMRS/PCSoperators would be impaired since additional traffic fromstandalone PCS operators could cause serious congestion intheir networks; infrastructure investment would besubstantially reduced to sub-optimal level as operators wouldhave no incentive to invest further to improve theirinfrastructure; and "cream-skimming" of standalone PCSoperators is encouraged such that they only invest in areaswhich are economically viable and rely on domestic roamingin other areas. PMRS/PCS operators would be forced tosubsidise the rollout of standalone PCS operators.

Mr. Alex Tsui (Interestedpersonnel)

Mr. Tsui agrees on the OFTA's view of domestic roaming. Heforesees some technical difficulties in domestic roaming andmulti-band handover including "timer for return to HPLMN"as the phase 1 SIM does not contain this timer; the mobilemight not camp to the most suitable cell before user initiates acall and that will reduce the call setup successful rate, andincrease the call drop rate; inter-PLMN handover istechnically feasible to certain extend, the mobile has noknowledge that it is being handed over to a different PLMN.Once the call ends, the mobile should search and probablycamp to the PCS network as VPLMN if the HPLMN is notfound.