Kiwi helps keep HK years ahead

Anyone who has ever been to Hong Kong knows there probably isn't a place in the world more diametrically different from New Zealand.

Endless skyscrapers, hordes of people, stifling pollution - Hong Kong could well be our complete antithesis.

It's especially true in the area of telecommunications. With four fixed-line and six mobile providers, Hong Kongers are spoiled for choice and as such have some of the lowest phone and internet charges in the world.

Ironically, the man in charge of ensuring it stays that way is a Kiwi.

Wellington native Bernard Hill is the head of competition affairs at Hong Kong's Telecommunications Authority.

Before being invited to do the job two years ago, Hill spent 25 years here in competition law, including a stint in the 80s as director of special duties for New Zealand Trade and Enterprise.

These days, he's responsible for overseeing mergers and acquisitions within Hong Kong's busy telecommunications sector, as well as analysing the commercial impact of regulatory policies.

Also ironic, he says, is that Hong Kong isn't very different from New Zealand - at least in a regulatory sense.

"It's actually based on the light-handed Australian/New Zealand model," Hill says.

Hong Kong's first director general of telecommunications - who implemented deregulation in the mid 90s - was in fact an Australian.

But despite similar regulatory approaches, the outcomes - with New Zealanders having some of the slowest and expensive telecommunications - couldn't have been more different.

The simple answer for that isn't necessarily market size, Hill says. With only seven million people, Hong Kong isn't much bigger than New Zealand.

It's got everything to do with density. With the tightest living conditions in the world, where up to 40,000 people live in one apartment complex, it has been incredibly efficient to roll out networks. With a very small geographic area - Hong Kong's land mass isn't even 1 per cent of New Zealand's - fixed operators effectively get more bang for their buck.

"The focus has therefore been on encouraging infrastructure competition," Hill says.

Although that efficiency certainly isn't the case in New Zealand, where the population is spread over a much larger area, Hill says infrastructure-based competition is still the way to go here.

Opening up Telecom's network to competitors through simple local loop unbundling, as numerous industry analysts here are urging, may not be the long-term answer to the country's woeful broadband uptake.

"It's difficult to see how the pace of development can improve in NZ without a fundamental change of heart by Government on industrial policy. Fine tuning competition policy from light to heavy handed won't do it," he says. "That's because unbundling a broadband network to a lot of new resellers will only create virtual competition and the result will still be a virtual broadband infrastructure."

Instead, Hill suggests an unbundling scheme where Telecom's competitors must also guarantee infrastructure investment.

"If you unbundle in favour of people who are actually going to build infrastructure, that might be something.

"But if you're just going to invite other resellers into the market, you're not achieving very much," he says.

In Hong Kong, the Government instituted unbundling coupled with infrastructure investment clauses, and thus saw that real competition develop. The region is now in the midst of phasing out unbundling, which is no longer necessary.

New Zealand, Hill says, needs to revisit what it did during other critical turning points in its history, such as when the Government invested in railways, electricity and air transport.

"In 2006, internet access is another crucial point where without investment now, the economy could get left behind forever," he says.

While Telecom may grumble about it, the best action the Government could take is to either pour in its own cold, hard cash, or grant tax incentives for infrastructure investors.

"Anything else will just be window dressing. The only way you're going to improve the level of service is with options."

The current regulatory challenges for Hill in Hong Kong, meanwhile, centre on fixed and mobile phone convergence - or the merging of cell phones and landlines.

It's very close to happening, he says, and again the differences between Hong Kong and New Zealand don't seem that great. Vodafone recently applied to the Commerce Commission to introduce just such a service here.

Hill says he often gets into scraps with operators, "just like in New Zealand".

BERNARD HILL

* Favourite gadget: "That must be my mobile phone. The mobile penetration rate in Hong Kong is 126 per cent."

* Next big thing in tech: "It's all about the internet, really. It's about the personal connectivity the internet gives you."

* Spare time: Hiking and sailing.

* Alternative career: Professional rugby player.

* Favourite sci-fi movie: The very first Star Wars.