Services-based Operator Licences
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Hong Kong Services-Based Operator Licences
In Hong Kong, the provision of telecommunications services by services-based operators (SBOs) is regulated by the Office of the Communications Authority (OFCA), which is the executive arm of the Communications Authority (CA).
What is a Services-Based Operator?
A services-based operator (SBO) is a telecommunications service provider that, unlike a facility-based operator, does not necessarily own or establish its own network infrastructure. Instead, SBOs typically rely on leasing network elements and reselling telecommunications services from other licensed carriers.
Types of SBO Licences
The SBO licensing regime in Hong Kong is categorized by the type of services offered. The main classes of SBO licences are:
Class 1 & Class 2 Services: These licences are for providing local voice telephony services for communications within Hong Kong.
Class 3 Services: This category covers a wide range of telecommunications services, including:
External Telecommunications Services (ETS): Services for communications between Hong Kong and a point outside Hong Kong, such as international direct dialing (IDD).
International Value-Added Network Services (IVANS): Includes services like Internet Access Services (IAS), non-real-time facsimile communications, electronic messaging, and data services.
Mobile Virtual Network Operator (MVNO) Services: The provision of public radiocommunications services to customers by leasing network capacity from a licensed mobile network operator (MNO).
Private Payphone Services: Providing payphone services on private property.
Public Radio Communications Relay Services: Extending the radio coverage of licensed mobile services.
Security and Fire Alarm Signals Transmission Services: Transmitting security and fire alarm signals from a customer's premises to a service centre.
Teleconferencing Services: Providing audio or video conferencing services.
Mobile Communications Service on Board an Aircraft (MCA): Providing mobile services to passengers on an aircraft.
Application for an SBO Licence
To apply for an SBO licence in Hong Kong, you must be a company registered under the Companies Ordinance. Applications are submitted to the Office of the Communications Authority (OFCA).
The application process generally involves:
Completing the Application Form: Applicants must provide detailed information about the proposed services, company structure, financial information, and a description of the proposed system.
Submitting Supporting Documents: This includes a copy of the company's Certificate of Incorporation and Business Registration Certificate. If the company is incorporated outside of Hong Kong, a Certificate of Registration of a Non-Hong Kong Company is required.
Review and Processing: OFCA reviews the application and may request additional information. The processing time for an SBO licence application is typically around three months.
Licence Fees: Upon the grant of the licence, an annual licence fee is payable. The fee structure varies depending on the class of service provided.
Key Points to Note
No Foreign Ownership Restrictions: There are no restrictions on foreign ownership of a company applying for a telecommunications licence in Hong Kong.
No Exclusive Rights: The SBO licence does not grant exclusive rights to provide a specific service.
Licence Validity: The validity period of an SBO licence is two years, with the possibility of renewal.
Regulation: SBO licensees must comply with the Telecommunications Ordinance and all relevant guidelines and codes of practice issued by the Communications Authority.
Licence Fees
The licence fees for Services-Based Operator (SBO) licences in Hong Kong are determined by the Office of the Communications Authority (OFCA) and are structured based on the type of services provided. The fee regime was updated to reflect changes in the telecommunications market and to simplify the licensing framework.
Here is a breakdown of the typical fee structure, as outlined in a circular letter from OFCA:
Fixed Annual Fees
Class 1 and/or Class 2 Services: For services like local voice telephony, the fixed annual fee is HK$25,000.
Class 3 Services: The fixed fee for Class 3 services, which includes a wide range of services like External Telecommunications Services (ETS), International Value-Added Network Services (IVANS), and others, is charged per service type.
For services such as ETS, IVANS, Private Payphone Services (PPS), Security and Fire Alarm Signals Transmission (ALARM) Services, and Teleconferencing (TELECON) Services, the fee is HK$1,500 for each type of service, payable biennially.
For specific Class 3 services like Mobile Virtual Network Operator (MVNO) Services, Public Radio Communications Relay (RELAY) Services, and Mobile Communications Service on board an Aircraft (MCA), the fixed fee is HK$750 for each type of service, payable annually.
Variable Fees
In addition to the fixed fees, some licences may be subject to variable fees, which are based on specific operational metrics. These can include:
Subscriber Number Fees: For some services, a variable fee is charged per subscriber number allocated to the licensee.
Base Station Fees: For SBOs that establish, maintain, or use base or fixed stations, there may be a sliding scale of fees depending on the number of stations. For example, a higher per-station fee might be charged for the first 50 stations, with the rate decreasing for subsequent stations.
IoT Device Fees: For services that involve Wireless IoT (WIoT) devices, there may be a fee based on the number of devices used by customers.
Important Notes
Biennial vs. Annual Payments: Some fees are payable annually, while others, particularly for certain Class 3 services, are paid on a biennial basis.
Combined Licences: If a licensee provides a combination of different services (e.g., Class 1/2 and Class 3), the licence fee structure will be a combination of the respective fees.
Fee Waivers and Reductions: The government and OFCA may, from time to time, implement fee waivers or reductions as part of broader policy initiatives to support the telecommunications sector.
Official Information: The most accurate and up-to-date fee information is available directly from the OFCA website and official circular letters. It is important to consult these sources or contact OFCA directly for the precise fees applicable to a specific service.
Professional Fee
To give you a clearer idea, here is a provisional breakdown of what different levels of service might cost.
1. Basic Application Service (Range: US$2,000 - US$5,000)
Target Client: An established company with an in-house legal team that has already done most of the groundwork.
Services Included:
Review of the client's prepared application documents.
Submission of the application to the Office of the Communications Authority (OFCA).
Acting as the official local liaison for routine communications with OFCA.
Exclusions:
Company incorporation or corporate secretarial services.
Drafting of the business plan, technical documentation, or legal agreements.
Complex legal advice on telecommunications regulations.
Handling of major queries or objections from OFCA.
2. Standard Application Service (Range: US$5,000 - US$15,000)
Target Client: A company that needs assistance with the full application process, but the service type is relatively straightforward (e.g., an IVANS or Teleconferencing Licence).
Services Included:
Initial consultation to determine the best licence type.
Assistance with the full application forms.
Drafting or refining the required business plan and system diagrams.
Reviewing and advising on legal compliance and regulatory requirements.
Full liaison with OFCA from submission to approval.
Basic follow-up advice after the licence is granted.
Exclusions:
Company incorporation fees (though this might be an optional add-on).
Complex legal agreements (e.g., for interconnection or wholesale services).
3. Comprehensive/Complex Application Service (Range: US$15,000 - US$50,000+)
Target Client: A foreign company entering the Hong Kong market or a company applying for a highly complex licence (e.g., an MVNO licence).
Services Included:
All services from the "Standard" package.
Full company incorporation and corporate secretarial services.
Extensive drafting of the business plan, financial projections, and technical architecture.
Assistance with negotiating and drafting wholesale agreements with local carriers.
Ongoing legal and regulatory compliance advice.
Handling complex queries, objections, or requests for information from OFCA.
Management of all legal and administrative aspects until the licence is issued.
Important Note on Quotes
When you contact Bestar, always ask for a clear and itemized fee proposal. This will help you understand exactly what you are paying for. Our proposal will specify:
Fixed Fees: For defined tasks like preparing and submitting the application.
Hourly Rates: For any additional work outside the scope, such as responding to complex queries from OFCA.
Disbursements: Any out-of-pocket expenses, such as courier fees or government document fees.
How Bestar can Help
Hiring Bestar to assist with a Hong Kong Services-Based Operator (SBO) licence application can be a significant advantage, especially for companies that are not familiar with the local regulatory landscape. While the application process may seem straightforward, Bestar can provide valuable expertise and streamline the entire process.
Here's a breakdown of how a professional firm (such as Bestar) can help:
1. Expert Guidance on Licence Classification
The SBO licensing regime has different classes and sub-categories (e.g., Class 1, Class 2, and various Class 3 services like IVANS, ETS, and MVNO). Bestar can assess your business model and services to determine the most appropriate licence type. This is crucial because applying for the wrong licence can lead to delays or outright rejection.
2. Efficient Preparation of Application Documents
The application requires a significant amount of detailed documentation. Bestar can:
Draft the Business Plan: OFCA requires a comprehensive business plan outlining your service offerings, market strategy, and operational details. Bestar can help you draft a clear and compelling plan that meets the authority's expectations.
Prepare Corporate Documents: We can assist with preparing and certifying corporate documents, such as your Certificate of Incorporation and Business Registration Certificate, especially for foreign companies.
3. Liaison and Communication with OFCA
The application process often involves back-and-forth communication with OFCA. Bestar can:
Act as a Single Point of Contact: We can manage all correspondence with the authorities, which is particularly helpful for overseas applicants.
Address Queries and Requests: We are experienced in understanding and responding to any queries or requests for further information from OFCA in a timely and appropriate manner. This can prevent unnecessary delays.
Navigate Regulatory Nuances: We are familiar with the specific language and procedures of the regulator, which can help ensure your application is processed as smoothly as possible.
4. Ensuring Compliance and Risk Management
Bestar can provide professional advice and ensure your business operations comply with Hong Kong's telecommunications regulations. This includes:\
Licence Conditions: We can help you understand and adhere to the specific conditions of your SBO licence.
Competition Law: We can provide advice on competition issues, especially if your services interact with those of other licensees.
Data Protection: We can advise on compliance with data privacy and security laws, which are crucial for any telecommunications service provider.
5. Streamlining the Overall Process
The time and effort required for an SBO licence application can be substantial. By engaging Bestar, you can:
Save Time: We can handle the administrative burden of the application, allowing you to focus on your core business.
Minimize Delays: Our expertise and knowledge of the process can help you avoid common pitfalls and mistakes that could lead to delays.
Increase Success Rate: By ensuring all documents are correctly prepared and submitted, Bestar can significantly increase the likelihood of a successful application.
In summary, while it is possible to apply for an SBO licence on your own, hiring Bestar provides a distinct advantage in terms of efficiency, compliance, and peace of mind.
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