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Applications for domestic free television programme service licences(Oral Question)
2012-10-17

Following is a question by the Hon Charles Peter Mok and a reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (October 17):

Question:

The former Secretary for Commerce and Economic Development (SCED) told this Council on January 6, 2010 that it had been the Government’s established policy to encourage competition and investment as well as the adoption of innovative technologies by the broadcasting industry, and interested parties were welcomed to apply for domestic free television programme service licences (free TV licences). In reply to a question from a Member of this Council on May 30 this year, the incumbent SCED confirmed that the former Broadcasting Authority (former BA) had already completed its assessment of the three free TV licence applications and made its recommendations to the Chief Executive in Council, and the Executive Council was vetting the applications. Nonetheless, the authorities have not yet announced the outcome. Earlier on, there were media reports that as the SAR Government took into consideration the political worries of the Central People’s Government on opening up the local television market, it might need to consider the political stance of individual applicants when processing the three applications, hence affecting the progress of vetting the applications. In this connection, will the Government inform this Council:

(a) whether the Government’s broadcasting policy has remained unchanged; if so, of the concrete measures the Government has in place to implement the said policy in order to achieve the objectives of encouraging competition and investment as well as the adoption of innovative technologies by the broadcasting industry;

(b) given that the former BA had already made its recommendations on the aforesaid applications, of the factors the authorities consider at this stage in deciding whether a licence will be granted to individual applicants, and whether their political stance is a factor of consideration; whether the Government will respond to the aforesaid media reports so as to avoid undermining public confidence in the TV licensing system and to safeguard the high degree of autonomy of the SAR as well as “One Country, Two Systems”; and

(c) of the latest progress in the vetting of the aforesaid free TV licence applications; and the expected time by which the outcome could be announced?

Reply:

President,

My reply to the three-part question is as follows:

(a) It has been the Government’s established broadcasting policy to promote the sustainable development of the local broadcasting industry and encourage fair competition, investment and the adoption of innovative technologies by the industry, thereby leading to the provision of more choices of quality programmes to the public. The Government’s broadcasting policy has remained unchanged. Following a review of the television policy in 1998, the Broadcasting Ordinance (BO) (Chapter 562) was enacted in 2000. Under the technology-neutral regime enshrined in the BO, licensees are free to adopt their own transmission means to deliver the television services. Under the BO, there is no pre-set limit on the number of free television programme service licences to be issued. Any interested and eligible organisations may make applications to the Communications Authority (CA) for such licences. The CA will assess all applications in accordance with the BO and established procedures as set out in the Guidance Note for Those Interested in Applying for Domestic Free Television Programme Service Licences in Hong Kong (Guidance Note), and then submit its recommendations to the Chief Executive (CE) in Council.

As in other developed areas, the CA adopts a regulatory approach on the television market which encourages competition among broadcasting service providers. First, the regulatory regime under the BO is technology-neutral. Television programme services are regulated according to their characteristics and pervasiveness rather than their transmission mode. A television programme service provider may hire any transmission network operator to transmit its service instead of investing in transmission infrastructure itself. This facilitates market entry and encourages competition. Second, there are provisions in the BO to deal with anti-competitive conduct in the broadcasting industry. Section 13 of the BO stipulates that a licensee shall not engage in conduct which, in the opinion of the CA, has the purpose or effect of preventing, distorting or substantially restricting competition in a television programme service market. Under section 14 of the BO, a licensee in a dominant position in a television programme service market shall not abuse its position. The CA may investigate any complaints about anti-competitive conduct, and may impose a fine or other penalties on a licensee found to have contravened the relevant provisions. Moreover, any person sustaining loss from a breach of the relevant provisions may bring an action for damages under section 15 of the BO against the licensee who is in breach.

In 2004, the Government promulgated the Implementation Framework for Digital Terrestrial Television (DTT) Broadcasting, providing a concrete blueprint for the industry to roll out the digital transmission network and introduce new television services using advanced technology. Subsequently, two domestic free television programme service licensees invested resources into building and testing the digital broadcasting network, and formally launched their DTT broadcasting services at the end of 2007. With the introduction of DTT broadcasting, the number of free television programme channels has increased from four to ten, bringing a wider variety of television content to the viewing public. At present, DTT coverage reaches more than 96% of the population in Hong Kong, with about 73.5% (around 1.73 million) Hong Kong households receiving DTT services via set-top boxes, integrated digital television sets or computers.

(b) As we have explained on various occasions, the CA assesses applications for domestic free television licences in accordance with the BO and established procedures, taking into account a number of relevant factors. Such factors include the statutory requirements, assessment criteria set out in the CA’s Guidance Note and public opinions. The assessment criteria set out in the Guidance Note include the applicant’s financial soundness and commitment to investment; the applicant’s managerial and technical expertise; the variety, quantity and quality of programmes to be provided; the technical soundness and quality of the proposed service; the speed of service roll-out; the impact on members of the public by any construction works associated with the proposed service; the benefit to the local broadcasting industry and the economy as a whole; and the applicant’s internal quality monitoring mechanism.

As for the three applications for free television programme service licences, the former Broadcasting Authority (former BA; the predecessor of the CA) completed the assessment in accordance with the BO and established procedures, and submitted its recommendations to the CE in Council. The CE in Council will also take into account the above-mentioned relevant factors in deciding whether to grant a domestic free television programme service licence. The Administration is now processing the applications in a prudent manner and will announce the outcome as soon as possible after a decision is made by the CE in Council. As we have clearly explained to the public the necessary procedures for processing the applications, we will not comment on the speculative reports by individual media organisations.

(c) Since the outcome of the applications will have profound impact on the domestic free television programme service market, the Government has been processing the recommendations submitted by the former BA expeditiously and prudently in accordance with the statutory requirements and established procedures. The outcome will be announced after the CE in Council makes a decision. It is inappropriate for us to predict or speculate on when such a decision will be made.

Ends

Office Of Hon. Charles Mok, Legislative Councillor (IT)