Telecommunications regulatory landscape in Hong Kong

In Hong Kong SAR, the licensing and control of telecommunications services are primarily regulated under the Telecommunications Ordinance (TO) (Cap.106) by the Communications Authority (CA). 

What are the main types of licenses?

Under the TO, companies should always obtain the appropriate licence from the CA if they wish to operate any public telecommunications networks or services in Hong Kong SAR. The CA regulates four major types of licences depending on the facility operated and the services provided by the operator:

• carrier licences such as unified carrier licence issued to facility-based operators (FBOs);
• services-based operator licences issued to services-based operators (SBOs);
• public radiocommunications service licences issued to operators who provide radiocommunications services; and
• class licences which regulate the provision of other telecommunications services to the general public such as the offer of telecommunications services and provision of public WiFi services on private premises.

Network providers and other telecommunications companies should seek advice on the licence requirements if they operate or provide services in Hong Kong SAR. This is important because offering telecommunications service without a licence is an offence under the TO and is punishable by a fine of up to HK$100,000 (approx. US$12,782) and imprisonment for up to five years on indictment.

The aim of the licensing regime under TO is not to regulate all services that have a “telecommunications” element. Apart from some designated categories, the aim is largely to regulate companies that are FBOs or SBOs.

What are the differences between facility-based and service-based operators?

FBOs and SBOs operate in different ways.

A properly licensed FBO provides public telecommunications services by establishing and maintaining telecommunications networks and facilities which may cross unleased government or public land. 

However, if a licensed SBO wishes to provide telecommunications services to the public, it can only do so by making use of the networks and facilities established by licensed FBOs.  SBOs are allowed to provide the licensed services such as international value-added network services, external telecommunication services or internal telecommunication services.

A SBO licence is a single licensing vehicle for licensing and regulation of all types of SBO services. In other words, an applicant may apply to provide multiple services under a single SBO licence. 

What is a class licence?

Companies that provide telecommunications services should also consider whether the services they provide will be subject to the class licensing framework.

The class licensing framework is a separate framework which does not require any licence applications. Companies that meet specified eligibility criteria and conditions will automatically become class licensees. Currently, there are 10 types of class licences in Hong Kong SAR, and licensees are required to comply with conditions set out in their respective class licences.

For example, companies that aim to offer telecommunications services to the public without establishment, operation or maintenance of any means of telecommunications will require the appropriate class licence for offer of telecommunications services (CLOTS). Companies that require such a licence are usually resellers of telecommunications services. Even though these companies do not have to actively apply for a licence, CLOTS licensees meeting certain thresholds – for example, having a large amount of subscribers – are required to register with the CA.

Co-written by Sara Chan of Pinsent Masons.