Towards a Hong Kong Information Infrastructure
- Setting the Proper Institutional Context for the Information Infrastructure Advisory Committee

A paper by the Hong Kong Coalition of Service Industries

July 1997

The organisational context

1. The development of a national information infrastructure (NII) for Hong Kong has long been identified by the Hong Kong Coalition of Service Industries as a key subject of concern for the service industries and for Hong Kong generally. A position paper has been published by the Coalition on NII in November 1996. The importance of a strategy for NII has also been highlighted in the Coalition's submission to the Financial Secretary in December 1995 (" Towards Service Excellence" ) and again in its first submission to the Services Promotion Strategy Group ("Some ideas on Setting the Agenda for the Services Promotion Strategy Group") in April 1997. This paper is to follow up on how the discussion on NII has progressed and to focus in particular on the way the efforts of the various sectors and stakeholders involved in the "information revolution" have been organised.
   
   
2. Over the past few months the Legislative Council Information Panel has convened a number of hearings to examine the development of the information superhighway and Internet in Hong Kong. The HKCSI participated in most of these meetings along with a large number of interested organisations from the government, academic and business sectors. From these hearings it has been clear to us and to other participants that there is a great deal of interest and enthusiasm from the various sectors of Hong Kong in advancing an NII for Hong Kong. Although participants have come from diversely different angles, there has been a remarkable similarity of views over the key issues to be tackled, including a concensus that the development of Hong Kong's NII should be a joint effort among service providers, infrastructure builders, users and consumers, content producers, and government and regulators, and that government from the highest levels should be closely involved.
   
   
3. We pay tribute to the Legislative Council for initiating the discussion and for providing a platform for different interests to converge. Although LegCo is not the body to develop the NII it has a crucial role in relating NII to the legislative and regulatory framework, a role which the LegCo Information Panel has performed admirably well.
   
   
4. LegCo having initiated the discussion and drawn different parties together, the substantive discussion is now being followed up through the establishment of the Information Infrastructure Advisory Committee (IIAC) by the Office of Telecommunications Authority (OFTA). The Coalition applauds OFTA's initiative in taking on a most important task for Hong Kong.
   
   
5. In the three months since the first meeting of the IIAC on 21 March 1997, a lot of substantive issues have been discussed and debated and the HKCSI has taken an active part in these discussions. Despite the good progress, however, we are not comfortable with the direction in which the whole process is heading. We have doubts as to whether the discussion is taking place in the right organisational context. Specifically, we are not sure if OFTA is the right party or has the right authority to coordinate this effort. In our view, the discussion has advanced to the stage where the institutional and organisational context must be set right if the IIAC is to genuinely bear fruit.
   
   
6. Our key recommendation in this paper is for government to reconsider its policy structure in relation to Hong Kong's NII. However, before this position is developed, we feel that there is a need to first address the more fundamental question as to why government effort is needed in the first place.
   
   

Need for NII

7. An oft-cited reason for non-action by government is that an information infrastructure already exists, that Hong Kong already enjoys the most sophisticated telecommunications services and is the leading economy in the region in terms of optical fibre mileage and Internet penetration rate. While the facts of the matter are not disputed, to conclude therefore that there is no further need for an NII is to take too narrow a view of information infrastructure.
   
   
8. We do not disagree that the most advanced hardware is available in Hong Kong. However, this does not mean the information infrastructure is already highly developed. Unlike physical infrastructure such as, for example, transport, the key to the success of information infrastructure is that it is effectively applied across the board. By its nature the concept of effective infrastructure is implied in any assessment over the success of NII. Indeed, the most advanced hardware would be of little use if practitioners did not know how to harness its potential, the business environment did not encourage applications, and the regulatory regime was anachronistic.
   
   
9. Hong Kong will only have an effective NII when service providers, industry, users and consumers capitalise on the potential and develop NII applications in the areas of, for example, financial services, distribution, healthcare and trade. On the latter point we note that a distinguished book published recently has concluded that Hong Kong's effort in developing electronic data interchange has been half-hearted and that "the lack of a strong EDI system is a disadvantage to Hong Kong's trading firms." ("The Hong Kong Advantage" by Michael Enright et al, p. 103). This is good reason enough for Hong Kong not to be complacent over the development of NII.
   
   
10. Government has been devoting a great deal of energy in its discussion over Hong Kong's industrial policy. In our view, if there were to be an industrial policy, the development of the NII should be an integral part of that policy.
    
    

The IIAC structure

11. In only three months the IIAC has created an elaborate structure of committees. Three task forces have been established on regulatory framework, technical standards and applications respectively. Under the Technical Standards Task Force there are three working groups while the Applications Task Force has five. All of the working groups under the Technical Standards Task Force have further "expert groups". Together they form a complex structure as follows:

Information Infrastructure Advisory Committee (25 members)

　

Task Force on Regulatory Framework (23 members)

　

Task Force on Technical Standards (16 members)

Working Group 1: Networks and Interfaces (20 members)

Expert Group 1A: Standardisation Process

Expert Group 1B: Broadband Network Standards

Expert Group 1C: Network Inventory and Scenarios Development

Working Group 2: Services and Information (18 members)

Expert Group 2A: Chinese Coding

Expert Group 2B: EDI and Security

Expert Group 2C: Document Format and Compression

Expert Group 2D: Protocols and Service Elements

Working Group 3: Applications and Enforcement (19 members)

Expert Group 3A: Education/Library and Healthcare

Expert Group 3B: Video On Demand and Broadcasting

Expert Group 3C: Electronic Commerce & Home Banking/ Shopping

Expert Group 3D: Smartcards and Data Capture

Task Force on Applications (30 members)

Working Group on Method of Analysis (7 members)

Working Group on Business (10 members)

Working Group on Education (6 members)

Working Group on Government Infrastructure (8 members)

Working Group on Community, Environmental & Personal Services (10)

Working Group 1: Networks and Interfaces (20 members)

12. The IIAC main committee, task forces and working groups together hold almost 200 members. Even allowing for some overlapping of membership, a total of some 160 people are involved, and this has not yet included the members of the 11 "expert groups". Such a complicated structure begs the question of whether the IIAC is getting out of hand, whether instead of moving things forward the IIAC will become a bureaucratic structure that dissipates interests and prevents things from happening. Having participated in the IIAC and having taken an active part in many of the committees, the HKCSI believes this IIAC structure is well justified. Its value is evidenced by the large number of senior and experienced industry and academic practitioners who contribute their time and effort voluntarily. However, we do not think the existing structure of the IIAC as an advisory committee to OFTA has enabled the full potential of the IIAC to be exploited.
    
    
13. The key problem is that most of the subjects discussed by the IIAC are well beyond the remit of OFTA. Although telecommunications is an important constituent - some may suggest the most important - of the NII, it is not the only part. The IIAC discussion inevitably gets into areas of application and standards which are outside OFTA's scope. The discussion on telebanking inevitably relates to policies under the responsibility of Financial Services Branch and possibly also the Hong Kong Monetary Authority. Broadcasting Cuture and Sports Branch will naturally have to be drawn into the debate over content provision. Trade and Industry Branch will surely have an interest in the development of electronic commerce. Indeed, the sheer diversity of parties involved in the IIAC is illustrative. Besides the HKCSI, IIAC participants include:
    
    

    All four fixed telecom network services (FTNS) operators

    Television broadcast

    Cable television

    Interactive multimedia services

    Mobile service operators

    Internet service providers

    Telecom User Group

    Computer Society

    Information Technology Federation

    Institution of Engineers

    Article Numbering Association

    Computer vendor and service provider

    Telecom equipment manufacturer

    Jockey Club

    Hospital Authority

    IT Magazine

    Consumer Council

    Privacy Commissioner

    Hong Kong Productivity Council

    Academics in various fields

14. It is rare when such a wide spectrum of experts are gathered together in the pursuit of an objective which is so crucial to Hong Kong’ s future. The vast amount of wisdom and experience resident in the IIAC structure should be made full use of. The IIAC subcommittees will be deliberating on the wide range of NII-related issues with dedication and professionalism. Yet there is currently no certainty that the result of their work will be related to a proper forum for discussion. It would be a pity if such an uncertainty were to impede the enthusiasm and contribution of the IIAC participants. Although some departments such as Broadcasting Culture and Sports Branch, Information Technology Services Department and Education Department are indeed present in some IIAC meetings as observers, it is doubtful to many participants of the IIAC whether the issues discussed in the respective areas would receive the right level of attention, given the highly integrated nature of NII issues and by contrast the sporadic and ad hoc nature of the participation by these government departments.
    
    
15. It was reported in the press recently that government would be setting up a new office on information infrastructure to coordinate the practical application of NII among government departments. We welcome this and look forward to hearing more about the new unit. With the creation of this new body, it has become all the more important to ensure that the IIAC operates within the proper institutional context within government.
    
    
16. Before setting out our recommendation, we would emphasise that this paper is not a criticism of OFTA. On the contrary, it is a compliment to the good work and initiative of OFTA which has achieved a near-impossible task of coordinating a broad spectrum of highly qualified policymakers and practitioners to deliberate on an issue of critical importance to Hong Kong.
    
    

Recommendation

17. Our proposal is that government should recognise the importance of NII to Hong Kong and should position the IIAC within a proper structural context within government. We suggest that the Financial Secretary give his personal attention and blessing to the IIAC thereby raising the authority and relevance of the IIAC among different government branches and departments. Thus the IIAC should be administered by a secretariat which has a direct link to the Financial Secretary and which has the authority to coordinate among the various government agencies related to the NII and to drive the policy development forward. This secretariat does not have to be permanent nor does it have to be large. Indeed, it could very well be built upon the ad hoc group which is currently conducting the Telecommunications Review within Economic Services Bureau.
    
    
18. Another possibility is to place this secretariat within the new coordination office on information infrastructure reportedly to be formed by government soon. This would appear to be the most logical route.
    
    
19. A third possibility is to vest responsibility for IIAC within the Business and Services Promotion Unit of the Financial Secretary’ s Office. This will call for perhaps a slight expansion in manpower of the unit, possibly also requiring experts to be seconded from OFTA or Economic Services Branch.
    
    
20. Another option is to continue to ask OFTA to administer the IIAC but to strengthen the link between OFTA and other branches and departments on IIAC matters. This can be achieved through a number of measures:

• Related departments (e.g. Industry Department) could be asked to send a representative at an appropriately senior level to IIAC meetings on a mandatory basis.
• OFTA should be mandated to make periodic reports direct to the Financial Secretary specifically on the work of the IIAC, in addition to regular reports to Economic Services Branch. This is so as to ensure that where a non-telecom policy needs to be examined, the appropriate branch would be requested under proper authority to deliberate on the matter.
• The work of the IIAC could also be made a regular item of discussion at the Services Promotion Strategy Group.