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Hong Kong: Business Environment

Internet and E-Commerce Facilities

The Internet access business in Hong Kong is highly competitive, with almost 200 providers, with many of them being substantial and well-financed operations. Internet access is available throughout the SAR.

With a sophisticated telecommunications infrastructure, Hong Kong offers access to broadband connectivity to more than 90% of all households. The take up of broadband services got off to a slow start, but a boom in broadband access took off in 2003. According to government statistics, Hong Kong has an online population of 4.3 million with the penetration rate standing at 85%.

A study released by the Asia Pacific Carriers' Coalition (APCC) on June 14, 2010, affirm the position of Hong Kong as the premier telecommunications hub in the region andsaid that Hong Kong provides the region's most economical local broadband access services.

The Office of the Telecommunications Authority (OFTA) welcomed the findings of the APCC Study: "According to the Study findings, the prices of broadband leased lines in Hong Kong at transmission speed of 1.5 Mbps, 2 Mbps, 45 Mbps and 155 Mbps are the lowest amongst the 14 economies covered in the Study. In terms of Ethernet access facilities, Hong Kong's prices are the lowest at transmission speed of 10 Mbps and 1 Gbps. The price for symmetric digital subscriber line (DSL) in Hong Kong is likewise the most competitive. The Study also shows that the prices of the various categories of local leased lines in Hong Kong have fallen on average by 30% to 50% between 2006 and 2009," said an OFTA spokesperson.

"An excellent telecommunications infrastructure with cost-effective international telecommunications connections and associated local access facilities underpin the premier position of Hong Kong as a regional financial and trading hub and as the preferred city for regional headquarters of multinational corporations. The confluence of key information technology segments, such as data centre operators and content service providers, also rely on competitively-priced and reliable telecommunications connections within the region and beyond," continued the spokesperson.

"The Study confirms once again the success of our facility-based competition and market-driven approach, which began with the liberalisation of the local fixed market in 1995 followed by the liberalisation of the external facility market in 2000. While there are 12 local wireline-based fixed carriers in Hong Kong providing local access services, 29 cable-based external carriers are also operating here. These external carriers may make use of the local access services provided by the local fixed carriers, or they may choose to build their own backhaul facilities after acquiring the appropriate telecommunications licence from this office," added the spokesperson.

The APCC commissioned the consultant TRPC to conduct the local access price benchmarking study for the Asia Pacific region in 2009. The Study compares the prices of local leased lines, Ethernet access facilities and DSL respectively in 14 economies, including Australia, China, Hong Kong, Indonesia, India, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.


PCCW's Cyberport set out to transform Hong Kong's Internet infrastructure. The Cyberport's goal was to provide the office and residential space for high tech ventures and their employees; the government provided one of the last undeveloped parcels of land on the Hong Kong island for the Cyberport in return for a share in the venture. However, the Cyberport was unlucky with its timing, and when the first phase opened in 2002 only 80% of it quickly let, to five tenants including Microsoft.

However, in December 2010, Hong Kong Cyberport Management Company Ltd. announced that was planning a HKD100 million investment in Hong Kong’s information and communications technology (ICT) industries over three years.

This investment, says Paul Chow, Cyberport's chairman, demonstrates the company's confidence in the potential of the local industry to grow and contribute to the overall economy in Hong Kong.

"We will especially place our focus on facilitating ICT start-ups and SMEs in Hong Kong to grow and take advantage of the growing market trend such as Web 3.0. This can be achieved by Cyberport’s continued funding and reciprocal network support given to the visionary market players, as part of the HKD100 million investment we announced today," said Chow.

"The importance of ICT’s role in economic growth is becoming more and more apparent worldwide. On behalf of the board, I am excited to take up this new position and look forward to helping Cyberport become a leading hub for the Asia-Pacific ICT industries," he added.

.hk Domain

In December, 2003, website owners in Hong Kong expressed outrage at plans unveiled by the Hong Kong Domain Name Registration Company to launch a .hk domain in 2004. With domain name designations in Hong Kong including .com.hk, .edu.hk, and .org.hk, many website and business owners argued that they were happy with these categories, and resented being forced to pay again to protect their brand.

Jim Morgan, founder and chief technology officer of security firm Datalude, suggested that the move would "create anarchy", as businesses rush to register domain names with the Hong Kong local authority. "The resulting legal disputes and unfairness would go down in folklore. The other outcome would be that a large amount of money would find its way into Hong Kong Domain's coffers," he predicted.

Mr Morgan also observed that: "I see no real need for the .hk namespace. We already have a .com.hk which conforms, more or less, to accepted international standards."

The Hong Kong Internet Registration Corporation Limited (‘HKIRC') and its wholly owned subsidiary Hong Kong Domain Name Registration Company Limited (‘HKDNR') jointly announced the launch of the Second Level ‘.hk' Domain Name on 31 May 2004.

By February 2006, 100,000 .hk domain names had been registered with the HKIRC.

In March 2007, the HKIRC announced the official launch of the new ‘.hk’ Chinese Domain Name (CDN). Christopher To, Chairman of HKDNR, endorsing the adoption of the ‘.hk’ CDN, said: “Leveraging on technology and market readiness in Hong Kong, the launch of the new ‘.hk’ Chinese Domain Name will strengthen the social and business networking potential of the Internet for the Chinese community all over the world. HKDNR is fully confident that the ‘.hk’ Chinese Domain Name will gain momentum in Hong Kong very quickly as it meets the needs of both the Hong Kong business and social communities.”

“We received overwhelming response from the community, with 6,862 applications during the soft launch period. These positive results testify to both the need and the great support for ‘.hk’ Chinese Domain Names as shown by users in different sectors,” added Jonathan Shea, Chief Executive Officer of HKDNR.

Many of the early applications were from luxury brands, consumer brands, banks and financial institutions, shopping arcades, office and residential complexes, educational institutions, public utilities and government departments and programs such as Brand Hong Kong, reflecting the importance of brand awareness and visibility on the Internet for a diverse range of industries and organizations. During the third phase, registration right was opened to the public. Applicants included a wide array of individuals from all walks of life, including some celebrities.

In June 2010, the HKIRC announced that it had received ICANN’s approval to delegate the Chinese equivalent of the ‘.hk’ Top Level Domain using Chinese characters. According to a recent survey, at the end of 2009, over 75% of web users in China used the Chinese language to surf the Internet and 23% used both Chinese and English, reflecting the use of the native Chinese language by the vast majority of Chinese web users when browsing websites.



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