Transition to competition in Hong Kong's local telephone industry

The local telephone industry in Hong Kong has been expanding rapidly since the 1970s. Technology in the industry has advanced greatly and the industry itself has undergone several regulatory reforms, The industry has moved from rate-of-return regulation to price-cap regulation, and is now moving to yet another regulatory system, Franchised oligopoly is replacing the old system of franchised monopoly in the local telephone industry, This paper describes the evolution of the local telephone industry in Hong Kong. Our focus is on the regulatory environment of the industry. The industry has been subject to a special form of rate-of-return regulation, called the Scheme of Control. Features of the Scheme of Control and its effect are discussed, Several regulatory issues arising in the transition of the industry to a new competitive structure are outlined, based on the experiences of the USA and UK markets. Copyright (C) 1996 Elsevier Science Ltd.