The Impact of Deregulation on the Quality of IDD Services: The Case of Hong Kong

Abstract

The introduction of deregulation in IDD service with effect from January 1999 triggered a round of extremely fierce competition in Hong Kong’s IDD market. In response, both the incumbent operator and the new entrants had to adopt aggressive strategies to defend or gain market share. This chapter reports on an intensive experiment of the quality of IDD services provided by the major IDD operators in Hong Kong. An innovative research methodology was designed and 240 members of the public participated in the controlled experiment. Based on 1,790 successful IDD calls to the 10 most popular destinations from Hong Kong, the IDD quality of the major operators was benchmarked. To the best of our knowledge, this was the first large-scale experiment of its kind that had ever been conducted. The experiment revealed some interesting findings. First, the monopoly control of the international gateway by the incumbent operator puts pressure on the other IDD operators to devise an appropriate strategy balancing tariffs against the quality of the IDD line. Second, when competition becomes mature, all IDD operators must place more emphasis on quality. Finally, the full benefits of quality improvement in telecommunications service in a specific region are also subject to the level of development of telecommunications infrastructure in its counterpart economies.