HKBN wins partial victory on interconnect

Robert Clark
08 Jun 2010

Hong Kong Broadband Network (HKBN) has won a partial victory in its effort to win interest on unpaid interconnection fees from Hong Kong mobile operators over the past eight years.

In a landmark decision by Ofta, the regulator has settled a long-running interconnection dispute between the broadband operator and four mobile firms – Hutchison, CSL, SmarTone and China Mobile HK.

Noting that commercial negotiations between HKBN and the operators “have not gone smoothly,” Ofta set fixed-mobile interconnection fees ranging from 2.26 HK cents a minute to 2.84 HK cents for the period 2004-2009.

But it said the cellcos only need pay HKBN for interest owed for certain periods.

It excluded 15 months in 2006-2007 because of the “failure of HKBN to provide accurate information” to the regulator.

It also excluded a number of other periods for the mobile operators, depending on the specific dealings each had had with HKBN, but excised details of the ruling claiming they were commercially sensitive.

Ofta set the interest payable at HSBC’s base lending rate (BLR) plus 2% per annum.

The dispute goes back to 2004, when HKBN unsuccessfully sought a commercial interconnect agreement with China Mobile HK and took the case to Ofta, which made a ruling in 2007.

But Hong Kong’s other cellcos said they did not consider that the decision applied to them, so HKBN applied for a comprehensive ruling from Ofta for the period from September 1, 2004.

CSL and Smartone had argued that they owed no interest because they were not subject to any formal interconnection agreement.

The share price of City Telecom – HKBN’s parent – fell from 5.01 cents to 4.94 cents yesterday following the release of the Ofta decision.

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