Honkers says mobile carriers acted in collusion

The Hong Kong Government yesterday announced it found that mobile phone operators in the territory violated competition when they simultaneously modified rates earlier this month.

The Office of the Telecommunications Authority (OFTA) said in a report that the way tariff changes were made on January 2 violated competition requirements in their licences. All six of the territory's mobile carriers announced similar price changes at the same time, with rate hikes of $HK20 ($1.70) per month on some types of offerings and reductions of $HK50 on others.

One carrier, Cable & Wireless HKT CSL (CWHKT), the Hong Kong division of Cable and Wireless, raised tariffs only $HK10 per month, OFTA said.

But CWHKT yesterday denied the charges made by OFTA. Not only did the company not rise prices, it in fact lowered them, CWHKT said in a statement.

Meanwhile, OFTA reported that all the carriers had agreed to rescind the price changes. It did not issue a proposed directive that would have demanded the changes be dropped, but did release a warning to the carriers to make sure they comply with their licence obligations in the future.

The fact that the changes were similar and had been announced at the same time had raised suspicion at the agency, OFTA said. A subsequent investigation found evidence that executives had held discussions before the rate changes that "could remove in advance uncertainty as to the behaviour of other carriers", the report said.

The revelations of price-fixing caused a sensation in one of the world's hottest mobile communications markets. There were more than 3.6 million mobile handsets for the territory's approximately 6.7 million residents in October 1999, according to OFTA. That reflects nearly 800,000 new handsets since December 1998, the agency reported.

While Hong Kong's fixed-line phone market is still dominated by the incumbent carrier, CWHKT, the mobile market is hotly contested. Competition for fixed-line voice services as well as data services is expected to heat up after six new broadband licensees launch their services in the coming months.

The six licensed operators of mobile-phone networks are CWHKT, Hutchison Telephone, Mandarin Communications (operator of the Sunday service), New World, Peoples Telephone, and SmarTone Mobile Communications.

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