Hong Kong ISP Group Upset Over HK Telecom Move

Hongkong Telecom IMS’s upcoming acquisition of Star Internet is provoking condemnation from other members of the Internet community in Hong Kong.

The Hong Kong Internet Service Providers Association (HKISPA) has criticized the move and called on the Hong Kong Government to reject the IMS bid for Star.

“Hongkong Telecom has engaged in anti-competitive tactics,” said Lee Kheng Joo, executive committee member of the HKISPA and chief operating officer of Hong Kong SuperNet Ltd. “It could hurt Hong Kong’s dream of becoming an Internet hub.”

According to Lee, the real danger is in the telecom’s business practices across Hong Kong’s communications industry.

“Such anti-competitive tactics include cross bundling of cellular phone, IDD, Internet, and future broad band services,” said Lee.

Representing 51 of the 130 providers in Hong Kong, the HKISPA today urged the Office of the Telecommunications Authority in a written submission to turn down the transaction.

Reportedly, the acquisition of Star Internet would give IMS 50 to 70 percent of the domestic ISP market, some 400,000 users.

The HKISPA and other critics of Hongkong Telecom believe that the takeover would adversely affect competition in the mass Internet market, thus reducing the choices for consumers, content providers and companies engaged in e-commerce.

The chief executive officer of Hongkong Telecom IMS, Allen Ma, admitted that his company “will enjoy a market share of just over 50 percent in the dial-up market.”

“Nevertheless, we do not think it is likely for any ISP to dominate the market as there are over 100 ISP’s providing the service now,” continued Ma. “There is no regulatory limit on the number licenses in Hong Kong and fierce competition in the industry is believed to be the situation in the future.”

“What is more important is that by its very nature, boundary-less, Internet competition will be at the global scale and perspective,” said Ma. “To overly focus on competitions among Hong Kong based ISP’s runs the risk of losing sight of the bigger picture.”

Currently, the Telecom Authority and a committee of the Hong Kong Legislative Council are still deliberating over the buyout issue.

However, according to Lee Kheng Joo, “members of the association feel that all content and e-commerce projects, whether government or commercial, are moving to this merger”

Lee cited Hongkong Telecom’s success in acquiring projects such as the Airport Express online link and the government’s Electronic Service Delivery, a service that will allow citizens to pay fines, taxes or renew driver’s licenses online.

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