Wharf Cable Ltd v. Attorney General

1995 No. MP 1493

H E A D N O T E

Wharf was granted a licence under the Television Ordinance to provide Cable T.V. for an exclusive period of 3 years from June 1st 1993. In July 1995, H.K. Telephones (TELCO) begun trials for Video-on-Demand. Wharf claimed that TELCO required a similar licence under the Television Ordinance. The Government maintained that it did not. On an application for Judicial Review of the decision by the Government to allow TELCO to conduct VOD trials without a licence.

HELD

1. Although Wharf conceded that, as the trials were completed, the 1995 decision was no longer challenged, the continued maintained stance of the Government that VOD was not within the Television Ordinance, was justiciable and declaratory relief could be given. Rediffusion (Hong Kong) Ltd. v. A.G. of Hong Kong [1970] AC 1136, Ealing London Borough Council v. Race Relations Board [1972] AC 342, O'Reilly v. Mackman [1983] 2 AC 237 and R. v. Secretary of State for Employment, ex parte E.O.C. [1995] AC 1.

2. As such words were technical and outside the expertise of the Court, expert guidance as the meaning of these words was admissible Holt v. Collyer [1881] 16 Ch. D. 718 & Maunsell v. Olins [1975] AC 373.

3. A rule of construction was not what the words were meant to say but what is the meaning of what was said Schuler AG v. Wickham Machinery Ltd [1974] AC 235.

4. A construction should be given which was "contextually apposite and also was reasonable.". Walker v. Leeds City Council [1978] AC 403.

5. A statement by the Secretary introducing the Television Bill of 1993 did not fall within the ambit of Pepper v. Hart [1993] AC 593.

6. VOD was not "broadcasting" within the general words of S2.

7. Nor was it the transmission of a programme "on a point-to-point basis".

8. Application for declaration that the Provision of VOD was within the Television Ordinance refused.

1995 No. MP 1493

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram : The Hon. Mr. Justice Sears in Court

Dates of Hearing : 5th - 9th, 12th - 16th, 26th - 29th February, 1st, 4th and 6th March 1996

Date of Delivery of Judgment : 25th March 1996

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J U D G M E N T

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INTRODUCTION

1. This has been a most unusual application for Judicial Review. It has taken some 17 days to try, has involved the Court in examining several thousand pages of affidavits, numerous authorities and technical publications. Four expert witnesses gave oral evidence and were subjected to detailed cross-examination. A vast quantity of technical matters in the field of the television and telecommunications industry, past, present and future was analysed. The task facing the Court, when presented with this plethora of unfamiliar technology, was daunting. I have, however, had the benefit of experienced and skilful counsel who have sought to ease my task by presenting helpful written submissions and explanations on a variety of topics. I paid tribute at the conclusion of the argument to the solicitors involved. They have not only researched all issues which support their point of view, but have presented the results in a most admirable way. Any information which I sought was produced quickly and accurately. Great assistance has also been given by the shorthand "live-note" which has allowed references to be found and the record of anything said to be checked. Hopefully, this will be the standard form of reporting in the future.

THE PARTIES

2. Wharf Cable Limited (Wharf) is a subsidiary of the well known Wharf Group. By virtue of a licence, granted by Governor in Council in May 1993, Wharf was empowered to provide subscription television broadcasting (STV) in Hong Kong from 1st June 1993 for a period of 12 years. The Television Ordinance (Cap. 52), under which the licence was granted, and the licence itself, gave Wharf a period of 3 years during which no other STV licence would be granted. Section 8B calls it a "restricted period" and referred to in argument as the "exclusivity period". Until 1st June 1996 no other person can provide STV broadcasting.

3. The Attorney-General is the respondent and is responsible through the various government bodies for the licensing of television and telecommunication services by virtue of the Telecommunications (Cap. 106) and Television Ordinances.

4. Hong Kong Telephone Company Limited (Telco), as their name implies, provide the Hong Kong telephone services. These now cover other aspects such as fax, transmission of data, video-net and video-link.

5. Telco had a monopoly on the provision of such services - telephone services by virtue of the Telephone Ordinance (Cap. 269) and other services by virtue of an extension order under the Telecommunications Ordinance. On 1st July 1995, new licences were granted to Telco, Hutchison Communication, New World Telephone and New World T & T (a Wharf Group Subsidiary). These are called Fixed Telecommunication Network Services (FTNS) Licences, granted under the Telecommunications Ordinance and it is by virtue of this licence that Telco now provides its services.

EVENTS IN 1995

6. On March 3rd the Telecommunications Authority announced its decision to approve Telco to conduct commercial trials for the provision of Video-On-Demand (VOD) services. It issued a statement saying that approval had been given for the trial subject to certain conditions. The trial period was for 6 months and it was approved without prejudice to the authority's consideration on future proposals on further trials, or the actual introduction of a commercial VOD service. Wharf protested about these trials which were being conducted during their exclusivity period, as they took the view that these were in direct competition to the service which they were providing.

7. The Chief Secretary, in answer to a letter from Mr. Ng, the Chairman of Wharf, said that VOD did not infringe Wharf's exclusive licence and Telco was permitted under the Exemption Order granted to it under the Telecommunications Ordinance to provide non-telephonic services.

8. On June 1st, Wharf made an application for Judicial Review of the decision to permit the trials and on June 16th Jerome Chan J. granted leave. On September 15th Telco's commercial trial ended.

THE DECISION AND CHALLENGE

9. In the Notice of Application and affidavit supporting the application for leave, the decision in respect of which relief was sought was said to be

"The decision of the Telecommunications Authority made on 3 March 1995 as described in paragraph 22 of the attached statement."

10. This statement set out the history of the grant of Wharf's licence and the announcement of the VOD trials.

11. The basic complaint and the underlying fear was that this new VOD service was within the exclusivity period granted to Wharf and that their subscription television network would no longer be commercially viable. It is clear from the submissions made when a stay was granted and from the opening of Mr. Griffiths Q.C. for Wharf that that decision is as he described, "water under the bridge".

12. What is now sought is a declaration that the provision of VOD requires a licence under the Television Ordinance as it is subscription television broadcasting. On February 13th, the seventh day of this hearing, the Executive Council announced that the Government proposed to amend the Television Ordinance and said

"We propose to introduce a new category of programme service licence under the Television Ordinance applicable to VOD programme services, and to invite the Broadcasting Authority to draw up Codes of Practice similar to those which apply to pay TV. Many of the conditions applying to programme service licensees would be similar to those applying to licensees under the Television Ordinance. The Television and Entertainment Licensing Authority would be responsible for monitoring the performance of programme service licensees to ensure compliance with the Television Ordinance and the terms of their licences."

13. On February 26th, leave was sought by the Applicants to amend their Notice and grounds and rely on "the Government's exhibited intention to act unlawfully", as the decision. I refused leave in a ruling I gave. I did not consider it right that the Government's statement on February 13th and statements from Secretaries were the subject of the instant challenge.

14. On February 28th, I heard submissions from Mr. Huggins Q.C. for the Government and Mr. Warren Chan Q.C. for Telco that I should dismiss the application as there was no decision which was justiciable and that the issue to be decided was hypothetical, or academic.

15. They both submitted that the Government had only made a proposal to alter the law, that no decision had been made to permit Telco to participate in subscription television broadcasting, that the declaration sought was "in vacuo" - unrelated to any specific and identified decision. If, as the Applicants conceded, the commercial trials had finished and no challenge was now made to the legality of them, the Court should not embark on a hypothetical exercise as to meaning of s.2 and Schedule I of the Television Ordinance. There was considerable force in those submissions and they were attractive, as the Court would be relieved from examining the mass of technical evidence presented.

16. Mr. Griffiths Q.C. submitted that the Government's original statement in 1995 that VOD did not require a licence under the Television Ordinance, and the continued maintenance of the position that as a matter of law the provision of VOD was outside the ambit of the Television Ordinance affected Wharf's legal rights. Telco could provide VOD unlicensed and unregulated, this was unfair competition as Wharf had to obtain a licence which was subject to stringent conditions and regulation.

17. He cited Rediffusion (Hong Kong) Ltd. v. Attorney-General of Hong Kong [1970] AC 1136, where at p. 1157 Lord Diplock said

" Their Lordships can deal very briefly with the alternative ground upon which it was contended before them that the court had no jurisdiction to entertain the action, viz., that it seeks a declaration as to hypothetical and future questions. The evidence showed a clear intention on the part of the Government of Hong Kong, which, with the aid of the Governor's casting vote, commands a majority in the Legislative Council, to seek from the Secretary of State in the United Kingdom an Order in Council in the terms of the draft order referred to in the writ and to enact an Ordinance in the terms of the draft bill. Such a bill, if enacted, would, as previously mentioned, seriously affect the plaintiffs' existing legal rights. All questions involved in quia timet proceedings are hypothetical and future. To exclude the jurisdiction of the court to inquire into them in order to decide whether to exercise its discretion to grant relief, the defendants would have to show that the questions were purely abstract questions the answers to which were incapable of affecting any existing or future legal rights of the plaintiffs. This they have not done."

18. In Ealing London Borough Council v. Race Relations Board [1972] AC 342, Viscount Dilhorne said, at p. 357, about the grant of declaratory relief

"Whether any of the declarations sought should be made is a matter of discretion. A borough council, accused by the board of having acted unlawfully in the administration of its housing scheme, may well seek to have the allegation disposed of one way or the other at the earliest possible moment. If they do not do so, and have to wait to see whether the board decides to institute proceedings, they may be left in doubt about how to deal with applicants for houses. If the respondents are right, it is only if the board starts proceedings that the council can clear itself of the imputation cast upon its conduct.

Where, as in this case, there is no dispute as to the facts and where the legality of the council's action depends and solely depends on the construction of the Act, the issue of an originating summons is a convenient procedure for determining the question of construction."

19. In the well known decision of O'Reilly v. Mackman [1983] 2 AC 237 at p. 283 Lord Diplock said

" Nevertheless, there may still be cases where it turns out in the course of proceedings to challenge a decision of a statutory authority that a declaration of rights rather than certiorari is the appropriate remedy. Pyx Granite Co. Ltd. v. Ministry of Housing and Local Government [1960] A.C. 260 provides an example of such a case.

So Order 53 since 1977 has provided a procedure by which every type of remedy for infringement of the rights of individuals that are entitled to protection in public law can be obtained in one and the same proceeding by way of an application for judicial review, and whichever remedy is found to be the most appropriate in the light of what has emerged upon the hearing of the application, can be granted to him."

20. In the recent decision of the House of Lords in R. v. Secretary of State For Employment Ex p. E.O.C. [1995] 1 AC 1, there was no decision and Lord Keith at p. 26 said

"It is argued for the Secretary of State that Ord. 53, r. 1(2), which gives the court power to make declarations in judicial review proceedings, is only applicable where one of the prerogative orders would be available under rule 1(1), and that if there is no decision in respect of which one of these writs might be issued a declaration cannot be made. I consider that to be too narrow an interpretation of the court's powers."

21. In my judgment, the justiciable issue in this case is the Government's stated and continuously held view of the law that the provision of VOD does not require a licence under the Television Ordinance. If this view of the law is wrong, then Wharf's legal rights would be infringed.

22. The appropriate remedy is a declaration that the stance of the Government is unlawful. I therefore rejected the submissions on this point by Mr. Huggins and Mr. Chan.

23. Wharf's case falls into two parts - the construction of the Ordinance, and what is called "Legitimate Expectation" - it is said that representations were made prior to the issue of the initial STV licence which entitle Wharf to further declarations, or damages. The parties have agreed that this second part should be decided at a later time. As it involves substantial evidence and documents, and is a separate matter, this Judgment only decides the issue of construction.

THE ISSUE

24. By virtue of the limited scope of the challenge, the only issue I must decide, on this part of the case, is whether the provision of a VOD service is "broadcasting" within the meaning of s.2(1)(b) and para. 2 of Schedule I of the Television Ordinance, and therefore requires a STV licence similar to the one held by Wharf. In order to answer this question it is first necessary to describe the service provided by Wharf and what is contemplated in Telco's VOD service.

WHARF'S SUBSCRIPTION CABLE TELEVISION (CABLE T.V.)

25. Whereas in the early days of television, the signal was sent by radiowaves, new technology allowed the development of a transmission over cables. The method by which the signal reaches the homes and the extent of the service provided is well described by Mr. Ng in a long affidavit.

"30. The subscription TV service began transmission in October 1993 with eight channels, provided as a basic service. (In return for a basic monthly subscription, all the basic channels are made available to Wharf Cable subscribers.) Three channels were added in May 1994 and a further five channels in October and November 1994, making a total of 16 channels. Four extra channels were added on 1 June 1995, making the current total of 20 channels. Of these, four are Pay-Per-View (PPV) Channels for which a supplementary payment is made, as described below. There are channels for news, entertainment, movies, sports, children, learning, etc. Live programmes are produced in Wharf Cable's studios in Wharf Cable Tower or at their district studios and are supplemented with outside production and broadcast facilities and overseas programmes.

31. During the first phase of subscription television, Wharf Cable is using a multi-point microwave distribution service (MMDS). Fourteen transmitters are located around Hong Kong to feed television signals to small roof top receivers mounted on apartment blocks, from where they are distributed by coaxial cable to as many as 5,000 homes on the same estate or adjoining buildings. The service arrives at the customer's home through the same wall socket as existing television services. Subscribers receive a basic package for which they pay a monthly subscription fee, and then for additional services the subscriber pays on a per-view or per-channel basis.

32. Wharf Cable has started to use optical fibre (to supercede the MMDS) to convey its services to estates and apartment blocks. A fibre truck network has already been built in MTR tunnels providing a fibre optic backbone. This optical fibre distribution network will allow the delivery of hundreds of television channels as well as other services. Estates and apartment blocks comprising 15,000 homes has been connected by optical fibre and Wharf Cable is making available to these homes additional pay television services.

33. Wharf Cable currently operates four PPV channels, each a movie channel showing a different movie at any one time. A customer selects a movie or other programme from Wharf Cable's programme guide, dials a telephone number (to Wharf Cable) to identify himself, the movie he wishes to view and the time in which he wishes to view the movie, following which Wharf Cable arranges for remote enablement of his set-top decoder, under instruction from the network control computer, so as to decode the PPV channel. It can then be viewed on his television at the time specified. In due course, he will be invoiced for a fee (for the specific movie or programme ordered) over and above his standard monthly subscription service fee.

34. The technology for sending the movie to the Wharf Cable customer when ordered through its PPV service is the same as for Wharf Cable's basic service, as described at paragraph 32 above. The movie is available to all homes connected to wharf Cable's network, but can only be viewed by those customers who have ordered it and whose set-top boxes have been enabled to decode the signal.

35. Wharf Cable announced to the press on 24 April 1995 the launch of ITV 500, made possible by the connection of the optical fibre network to a number of housing estates. This enables Wharf Cable to provide interactive television, with a potential network capacity of up to 500 channels and beyond. Eventually, ITV 500 will offer news information, education, shopping, banking, investments, games and other interactive multimedia services. The first step of ITV 500 is "Super Cineplex". This is a service by which repeat showings of a movie at 15-minute intervals allow customers repeated opportunities to catch the movie from the beginning. Each customer can buy the movie in question simply by pressing a button on his decoder remote control unit."

26. Their service therefore ranges from straightforward television to Super Cineplex which has been described as Near Video-on-Demand (NVOD).

27. It can be readily understood how simple television approaches close to VOD which I will describe next.

VIDEO-ON-DEMAND

28. Although this new media service was known in 1993, it was not then commercially viable. The technology has developed.

29. Mr. Hadfield is a Senior Manager in Telco responsible for developing the "IMS Network". He describes Telco's proposed services - (para. 5, 1st Affidavit)

"Interactive Multimedia Services

The interactive multimedia services ("IMS") provided by HKTC will, in due course, include video on demand ("VOD"), home shopping, home banking, distance learning, interactive advertising, on-line information and other interactive services. All of these services are "interactive" in the sense that the user may, through the IMS Network, exercise control over the timing and operation of the service. Each supply of an IMS service is "personal" in that each transmission is only supplied to one place at one time and is under the control of the user, in a manner similar to standard telephone services."

and its operation (Paras. 7.1 - 7.7, 2nd Affidavit).

"7.1 Multimedia services are those involving at least two information types. These information types may be voice, image, data or video. The IMS now being planned by HKTC will involve all of these information types. VOD, which is the first of these services to be introduced, will primarily involve video, together with associated audio, however image and data information types will also be present. Subsequent services will include varying amounts of each information type. That is, each service represents a particular mix of video, audio, image and data. It is important to appreciate this concept as VOD is simply one IMS with a particular mix of information types and must be understood in the context of the other IMS. The best manner of describing the similarities between the services and how they operate together is to describe how they appear from the customer's perspective.

7.2 To access the HKTC IMS a customer simply tunes his or her television set to the audio visual channel and presses the on\off button on the set top box ("STB"). This act is sufficient for the STB itself to carry out the dialing procedure and connection request (ie. there is no need for the customer to manually dial the media server). The network then establishes the necessary connection allowing two way communication between the STB and the media server. Once assigned a connection to the media server the customer will be required to enter a personal identification number ("PIN"). The PIN is a security measure similar to that used by banks for automatic teller machines to ensure that the service is not accessed by an unauthorised person. The customer uses a touchpad on the control to key in the PIN and presses the "enter" button to transmit the PIN. The media server will confirm the PIN and only then will allow access to the services hosted on the server.

7.3 Following confirmation of the PIN a main services menu screen will appear. The menu screen is a static image which is sent from the media server to the STB as a data signal (it is carried on the network using TCP/IP protocol and not a video signal). If, subsequent to the network connection being granted, the customer does not make any further request, nothing will be sent from the server and after some time the network connection will automatically drop.

7.4 In using the IMS the customer may navigate through many of these static screens in the manner outlined below. A true copy of a selection of the currently planned screens is now produced and shown to me marked "MGH-5". The proposed IMS menu screen will contain icons titled "Video Store" (for VOD), "Shopping Plaza" (for home shopping), "Bank" (for home banking), "Food Court" (home shopping for food), "Community" (for community applications), "Distance Learning" (for education applications" and icons for other services (see "MGH-5"). Before the launch of other IMS the first screen will be the initial VOD service screen. The customer will be able to use arrows on the hand held control to move around the screen and to highlight the icon for the particular service that he or she requires. The interface screen is similar to the type of "point and click" screens used to interact with personal computer (although it is not as precise as a "mouse" used for a personal computer because of the less precise nature of the remote control device).

7.5 Having highlighted a particular service the customer then presses the enter button to request that particular service. For example if the customer requests access to HKTC's "Video Store" or VOD service the STB will signal that request to the media server which will then transmit a second interface screen with icons titled "Promotions", "Movies" and "Children". Under the "Movies" heading will be the additional selections of "Drama", "Comedy", "Action" and "Special". These icons represent the categories of films that the customer may request. Access to the films represented by each icon may also be restricted by the PIN to ensure parental control. If the customer highlights "Drama" and enters that selection there will be a further request transmitted to the media server which will transmit another static screen with icons containing the title of each film in that category. The customer may then scroll through these icons to review the available selection of films in the "Drama" category.

7.6 If the customer is interested in a particular film he or she wishes to preview then the customer may select the relevant icon and press "enter" on the control to make the selection. The customer is then able to view another screen that indicates the length of the film and the price and which allows the customer to watch a short preview or to receive information about the film (including its running time and the names of the director and the actors) (see "MGH-5").

7.7 Having made a final decision the customer is then able to request the film by pressing the "play" button on the control. The transmission of the film then commences. The television programmes comprised in the transmission are made available on the television screen through the STB. Throughout the film the customer is able to control its play functions by pressing the "pause", "rewind" or "forward" buttons on the hand held control. Each time the customer does so the STB signals the media server and the media server will either pause, rewind or fast forward the film."

30. It will be necessary when construing the words of s. 2 and Schedule 1 to examine further the technology of the VOD service.

SWITCHING

31. Before examining the legislation, it is necessary to understand a basic aspect of telecommunications.

32. Mr. Melvyn Sears, formerly Managing Director of Rediffusion (Hong Kong) Ltd. and General Manager of Hutchison Cable Vision, describes the original concept and development of switching.

"Switching

6. The invention of telephones permitted conversation over wires strung directly between those wishing to talk to one another. However, it soon became clear that it would be hopelessly inefficient to connect all subscribers directly to each other so switching was developed to provide all subscribers access when required to all others who were also connected to the network. Through the use of switching, which is the same in principle today, subscribers were connected to a central switch which provided a means of connecting subscribers one to another. The switch sets up a connection between two points only when required for communication. The first switches were manual switchboards where operators set up each call. Each subscriber was allocated a small socket (or "jack") in the switchboard and the operator would link by the use of cords the two jacks of subscribers who wanted to talk to each other. Through the use of the switchboard, cords and jacks, operators working in tandem could set up local, long-distance and international calls between any two points connected to the world's telephone networks. The switching system has developed substantially since then but the general principle remains the same.

7. The telephone company's central office (or "exchange") provides the automatic equipment (originally electro-mechanical but now electronic) used to switch telephone calls. The numbers that are dialled or keyed by the telephone user are transmitted over the local telephone line to the central office switching system. The first few digits dialled identify countries or regions, followed by digits specifying a local exchange area in which the called customer is located. The last few digits dialled indicate a specific telephone number connected to the switch. An international call, therefore, is likely to travel through and be switched by several exchanges acting in tandem, all operating according to the destination instructions given by the calling subscriber. Modern day telephone systems have come a long way from their origin of the direct links by wire. Switching has been fundamental to this development."

33. Dr. Troughton, called by Wharf, so describes it.

"E. Switching

51. A switch makes temporary connections on demand between two sets of links. Typically, one set will be larger, and have lower utilisation, and the other consist of a small number of highly utilised links. This is the case with a local telephone exchange - a large number of subscribers' lines, which are rarely used, make up one set, and a smaller number of trunks, which hence have much higher traffic, the other. The connection between an individual subscriber line and a trunk is made only for the duration of the call. Once the call is finished, the trunk is free for use by other subscribers.

52. Telephone switching equipment used to consist literally of switches : mechanical devices which physically connected electrical circuits. Modern switches, however, are basically computers that manipulate data streams - there is no electrical connection or mechanical switch. Instead of representing speech, as in the local exchange, the data can represent video signals, as in VOD systems. So, the only way to define a switch is in terms of its functionality, as above. This is independent of the transmission medium and could, but not necessarily, involve other devices such as servers, multiplexers, de-multiplexers, splitters, couplers etc many of which, if configured suitably can provide a switching function.

53. In the case of a VOD system, connections are made between a large number of the subscriber links and a smaller number of media server ports. This reduces the number of media server ports required by taking advantage of the fact that it is unlikely that all subscribers will try to use the service at once."

34. An interesting description of early switching is found in the case dealing with the invention of the telephone - see Attorney General v. Edison Telephone Company (1880) 6 Exchequer Division 244.

35. As Dr. Troughton explained, VOD is a switched service. The broad band network is analogous to a telephone call over the normal public telephone system. In the IMS network, described by Mr. Hadfield, the "media server" is the "VOD server", described by Dr. Troughton.

36. Mr. Hadfield says (para. 14, 1st affidavit)

"In the IMS Network the source of the movie content that is offered as part of the VOD service will be a media server. The media server is a computing facility that consists of a large amount of computer disk storage containing separate movies held in a digital form. The media server has many connection "ports" into the IMS Network. When the user requests a movie the network will assign a private point to point transmission path from one of the media server's ports to the user's television set. When the service is not being supplied that point to point transmission path is no longer assigned to the supply of a service to that user and will be available to other users. Accordingly, the HKTC VOD service involves the establishment of a private and independent connection between the media server and the user only during the period of the supply of the VOD service to each user."

37. Dr. Troughton graphically describes the network operation for the VOD switched service and VOD switches in the server in P2. This diagram is also important for demonstrating his evidence on the construction of the Ordinance.

P2 illustrates a call going :

(i) from Customer A to Customer B through the Public Switched Telephone Network (PSTN) - the path is coloured yellow and shows how the call goes to the Local Telephone Exchange - is switched - goes through the trunk line into the Distant Telephone Exchange - is switched to Customer B.

(ii) from Customer A into the PSTN - switched - into the VOD Server - switched - and back to Customer A.

Other matters to note on P2 are

(i) Trunk lines between exchanges, are a permanent, dedicated, unswitched line or circuit capable of carrying many individual messages.

(ii) Exchanges, where switching takes place; when customer A dials, the digits identify where he wishes the call to be routed (eg 44 = UK) and the switching automatically routes the call to the desired destination.

(iii) Local Loops, being connections from local exchanges into customer's premises, usually by twin copper wires, but now, where a greater bandwidth is desired for modern applications, often in fibre-optic cable (in which the message is transmitted not in electronic pulses but by pulses of light). The rapidity of pulses of light can be many millions of times per second.

38. The other major technological development in a transmission system is the change from analogue to digital.

(i) Human speech is analogue i.e. has varying pitch and volume which can be recorded as wavy lines representing the levels of pitch and volume. Originally telephone equipment measured and recorded the voice, converted it into electronic impulses, transmitted them in analogue form, and on receipt turned them into speech.

(ii) Nowadays digital messages are carried : the voice is sampled (say 8000 times/sec), its pitch and volume converted into binary numbers (0 and 1), the 0/1 measurements transmitted as a digital message, and on receipt decoded back to speech..

(iii) The digital message may be carried electronically down wires or by fibre optic (light on = 0; off = 1).

THE LEGISLATION

(a) The Television Ordinance was enacted in 1964 to licence companies to broadcast television. S.2 defined "broadcasting" as transmitting wireless television. Some amendments came over the years, but in 1993 the Television Bill made substantial amendments to the Ordinance.

The long title became:

"To make provision for the licensing of companies to broadcast commercial television and subscription television and for purposes connected therewith."

In s.2(1) the definition of "broadcasting" became :

" "broadcasting" means -

(a) in relation to commercial television broadcasting, the transmission by terrestrial radiocommunication of television programmes that are readily accessible to, and are made available free of charge to, the general public but does not include any immediate re-transmission or relay, without variation or alteration of contents, of broadcasting service licensed under this Ordinance;

(b) in relation to subscription television broadcasting, the transmission by terrestrial telecommunication of television programmes that are made available to 2 or more residential or commercial premises simultaneously or the general public on payment of a subscription (whether periodical or otherwise), but does not include any transmission that is specified in Schedule 1,

and "broadcast" shall be construed accordingly;".

Schedule I was added :

"SCHEDULE 1

TRANSMISSION THAT IS NOT REGARDED AS
TRANSMISSION IN RELATION TO
A SUBSCRIPTION TELEVISION
BROADCASTING SERVICE

1. Transmission in respect of services covered by the following licences granted under regulation 2 of the Telecommunication Regulations (Cap. 106 sub. leg.) -

(a) Broadcast Relay Station Licence;
(b) Closed Circuit Television Licence;
(c) Hotel Television Services Licence.

2. Transmission of television programmes that is made available only to persons making a request for the programmes on a point-to-point basis.

3. Transmission, without variation or alteration of contents, of a subscription television broadcasting service licensed under this Ordinance over a telecommunication network in pursuance of an interconnection agreement between the subscription television broadcasting licensee and the owner or operator of the telecommunication network.

4. Transmission of television programmes that is exclusively between points specified by the persons transmitting or receiving programmes and not made available to any other person."

39. Other substantial amendments were made. Many related to the conditions imposed on a STV licence and the strict regulation of its operation. These amendments were brought about because of discussions between Wharf and the Government as to the setting up of subscription television. There is no doubt that the Government was keen to have Wharf operate its service and gave them the 3 year exclusivity period. Wharf expended some 5 billion dollars on the development and establishment of its cable T.V. service.

(b) The Telecommunication Ordinance. This was enacted in 1963 and has also been amended. Although the word is used by the Government to seek to distinguish between broadcasting (television) and a telecommunication service, the definition of telecommunication (s.2) is :

"any transmission, emission or reception of signs, signals, writing, images, sounds or intelligence of any nature by visual means or by wire or radio waves or any other electromagnetic system."

40. This definition is wide enough to cover the transmission of a television programme, as well as VOD.

41. However, s.8(3) of the Television Ordinance says :

" A licence granted under this section shall for the purpose of section 8 of the Telecommunication Ordinance (Cap. 106) be deemed to be a licence granted by the Governor in Council under that Ordinance for the purposes of establishing and operating a television broadcasting service and such associated telecommunication services ancillary thereto as may be authorized by the Telecommunications Authority and to authorize the possession or use of any apparatus referred to in section 8(1)(b) of the Telecommunication Ordinance (Cap. 106) which is used for or in connection with the operation by the licensee of such broadcasting or other service. (Amended 7 of 1973 s.6; 72 of 1988 s.5)"

42. The definition of "telecommunication" in 1963, before the Television Ordinance, was meant, in my judgment, not to be broadcasting which was the subject of the Television Ordinance. It is clear from s.8(3) that a licence for television of whatever sort, permits "... such associated telecommunication services ancillary thereto ...". In my judgment, on a fair reading of both of these Ordinances, the legislature has intended to distinguish between telecommunication including sound broadcasting and television broadcasting. This conclusion does not give an answer to the instant problem, but does provide an explanation of the Government's desire to separate the control over these two matters.

CONSTRUCTION OF THE TELEVISION ORDINANCE

I. APPROACH

(i) The "mischief" rule is incorporated into legislation, by virtue of s.19 of the Interpretation and General Clauses Ordinance (Cap. 1)

"An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit."

(ii) The Ordinance as a whole should be read in its entire context.

(iii) "The rule of construction is "to intend the Legislature to have meant what they have actually expressed" : R v. Banbury (Inhabitants) (1834) 1 A&C 136, per Parker J at p.142. The object of all interpretation is to discover the intention of Parliament, "but the intention of Parliament must be deduced from the language used" (Capper v. Baldwin [1965] 2 QB 53 per Lord Parker C J at p.65), for "it is well accepted that beliefs and assumptions of those who frame Acts of Parliament cannot make the law : David Jenkins & Co Ltd v. Davies [1967] 2 WLR 1139, per Lord Morris of Borth-y-Gest; FRC v. Dowdall, O'Mahony & Co [1952] AC 401 per Lord Reid." "

(iv) "... the question to be answered always is, "what is the meaning of what the parties have said?" Not "what did the parties mean to say?", it being a presumption juris et de jure ... that the parties intended to say what they have said."

Schuler AG v. Wickham Machinery Ltd [1974] AC 235, per Lord Simon of Glaisdale."

(v) If a statute is expressed in language which, fairly construed, embraces a concept or matter not within contemplation at the time the statute was enacted then the later innovation is nonetheless subject to the enactment :

The Edison Telephone Company of London (Ltd) (Supra) and Attorney General's Reference (No.5 of 1980) [1981] 1 W.L.R. 88.

(vi) Technical phrases have to be given their technical meaning. All Counsel cited Holt v. Collyer (1881) 16 Ch. D 718 where Fry J. said that a technical term is to be construed "according to that which is its primary meaning, namely its technical and scientific meaning."

43. I drew to Counsels' attention a more modern rule of construction in Maunsell v. Olins [1975] AC 373 where at p.391 Lord Simon said

"Statutory language, like all language, is capable of an almost infinite gradation of "register" - i.e., it will be used at the semantic level appropriate to the subject matter and to the audience addressed (the man in the street, lawyers, merchants, etc.). It is the duty of a court of construction to tune in to such register and so to interpret the statutory language as to give to it the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, anomaly, absurdity or contradiction). In other words, statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances."

(vii) In the case of ambiguity, a construction should be given which is more "contextually apposite and also more reasonable" - per Lord Wilberforce in Walker v. Leeds City Council [1978] AC 403.

(viii) Clear statements by a Minister dealing with the issue facing the Court may be relied upon as an aid to construction of ambiguous or obscure words - Pepper v. Hart [1993] AC 593.

(ix) Views and beliefs of those who drafted, or helped draft, the legislation are irrelevant.

II. CONSTRUCTION OF S.2(1) "BROADCASTING"

44. The first important matter to notice is the wording and contrast between sub-paras. (a) and (b). Any words used in (a) should have the same meaning in (b).

45. In (a), ordinary television, or "free-to-air television", as it has been called, the programmes are made available free of charge to the general public. That means simply that the programmes can be seen by anyone who has a television set and switches it on. They are "made available" because the transmitter transmits the signals by radio communication.

46. In (b), the programmes are made available on payment of a subscription. If you do not pay the money, you cannot see the programmes. However, the transmission of the programmes is still occurring.

47. The availability of the programmes is, under sub-para (a), because the television transmission occurs and no charge is made; under (b) a charge is made.

48. Under (a) the transmission is by radio waves, under (b) it is by "telecommunication" (which means "... by wire, or radio waves, or any other electromagnetic system").

49. The second important matter is that under (a) the transmission of programmes is to the general public. In (b), however, a licence is required if the transmission goes to "2 or more residential or commercial premises simultaneously" - this to catch a broadcast, for example, in a minority language, or to an area. Otherwise the operator could argue that his transmission was not to the general public.

50. The question which falls for my decision is whether VOD, as proposed, comes within the words of sub-para (b).

51. I have set out above the general principles of construction. The words of (b) contain some technicalities, but the general words are simple English. The operation of VOD and its technology are, however, outside the expertise of the Court and therefore I am entitled to have expert evidence as to its operation and technology. Mr. Hadfield has described (supra) various attributes of VOD, and he also says at paras 7 and 8 of his 1st affidavit.

"7. ... Pay television, as a distributive service, is very similar to the free to air broadcasting services available to consumers in Hong Kong. In the case of free to air or pay television programme supply the broadcaster transmits a constant stream of programming downstream to the user's reception equipment. The content and format of the television channels that are transmitted in this way have been determined wholly by the broadcaster. The user is a passive receiver of television programmes and must work to the programming timetable of the broadcaster by either watching or recording the programme at a predetermined time. The predominant difference between a pay television channel and a free to air channel is that users must pay to watch the pay television channel. To ensure that this occurs the signal is often encrypted and scrambled and only able to be viewed after the user has paid for the service.

8. VOD, on the other hand, is an interactive service as it is only provided on the request of the user. For example, a user may decide that he or she wishes to watch a particular feature length movie at 6:00pm. The user will then dial-up a media server in the IMS Network and will be able to review a menu of movies. Having made a final choice the user will select the desired movie through his or her set top box remote control. The movie will then begin to play on the television screen and the user may "pause" or "rewind" the film using the remote control (in a similar manner to using a remote control device to control a video recorder). The transmission of that movie to that user and the user's control of its play functions will occur independently of any other transmission over the IMS Network."

52. The technology of the VOD server is described by Dr. Troughton in his first affidavit. There is no doubt that there is a fundamental difference between television (whether free or not) and VOD. In the former the television programmes are transmitted simultaneously. House A cannot get different programmes from House B. In VOD, House A can receive different programmes at the same time from House B. Dr. Troughton says at para 10.4 (4th affidavit)

"In my view, the user in each case (whether VOD or any other television service) is using the service in fundamentally the same way. In the comfort of his own home, he is able to view television programmes chosen by him and transmitted to him remotely."

but the user cannot choose a different programme from his neighbour with television. He may have a selection of channels, but all the programmes are the same. When then I look at the words, both in sub-paras (a) and (b), "general public", this means the transmission of programmes simultaneously. This word is used specifically in sub-para (b) for the limited area or class of persons, but "to the general public" means that the signals are going to the general public at the same time. This is a fundamental concept of television. Both in standard and cable television the transmission of programmes is occurring at fixed, predetermined times. In VOD the transmission is not predetermined - it only occurs when the customer requests his programme and it is transmitted to him.

53. Dr. Morse (Wharf) accepted that broadcasting in the context of television denotes the dissemination of messages from a transmitting station, or stations, to a number of receiving viewers simultaneously. Mr. Huggins asked :

" Q : It follows, does it not, that the phrase 'broadcasting to the general public' would be understood in the industry as meaning : one, transmission of messages from a transmitter to a number of receivers - that is the first component I put to you ?

A : Yes.

Q : And secondly, transmission of the message to them simultaneously ?

A : Yes."

54. There does not appear to be any dispute on the essential nature of television - free or not. It is a simultaneous transmission to a number of receivers.

55. Mr. Griffiths submitted that the word "simultaneously" does not apply to "the general public", because it is placed before those words. In my judgment, the words "general public" mean the same in (a) and (b). VOD does not fall within the words of sub-para (b). Although I accept that some aspects of cable TV, such as the "Super Cineplex" films, broadcast every 15 minutes, are close to VOD (and that is why they are called NVOD), this in no way affects the simple fact that VOD is not transmitted simultaneously to the general public. Further, Mr. Griffiths submits that if there is a popular film available on VOD and a large number of persons request it at the same time, then it is similar to Cable Television. I do not agree. The evidence, on which there is no dispute, is that each VOD transmission coming from the server is separate and distinct, even though there are only seconds, or milliseconds between each.

56. Mr. Griffiths submitted that the opening words of s.2 "... unless the context otherwise requires" permit me to construe "broadcasting" to include VOD, because ss.7(1), 10 and Part III of the Ordinance prohibit companies, such as Telco, from obtaining a licence to broadcast television, whether free-to-air or subscription. This is a circular argument, because if VOD is not television broadcasting, no licence is required.

57. I can find nothing in the context of the Ordinance which permits me to place a different meaning on the words of s.2.

58. Although, therefore, there has been a vast amount of technical evidence, on a simple construction of s.2(1)(b) VOD is not broadcasting, which Cable Television is. Each may provide similar entertainment and television programmes, and VOD may be a substantial competitor to Wharf, but in my judgment the provision of VOD does not require a licence under the Television Ordinance.

59. Although, therefore, this conclusion justifies me in dismissing the application, I must also consider Schedule 1.

III. CONSTRUCTION OF SCHEDULE I

60. The last words of s.2(1)(b) are

"... but does not include any transmission that is specified in Schedule I."

61. The bulk of the evidence has focused on the meaning to be given to the words of para. 2 of this Schedule.

"Transmission of television programmes that is made available only to persons making a request for the programmes on a point-to-point basis."

62. What does "on a point-to-point basis" mean? Although these are apparently simple English words meaning from one point to another point (The Shorter Oxford Dictionary's only definition is "an amateur steeplechase"), in the context of this Ordinance, they must bear a technical meaning, as I do not know how to request a programme on a point-to-point basis. Expert evidence therefore has been properly admitted to explain what they do mean in the context of this Television Ordinance.

"It is I think legitimate in construing a statute relating to a particular industry to give the words used a special technical meaning if it can be established that at the date of the passing of the statute such special meaning was well understood and accepted by those conversant with the industry."

(my emphasis), per Lord Jowitt LC in LNW Railway v. Berriman [1946] AC 278 at 289.

A. THE RIVAL CONTENTIONS

63. Wharf submits that the words "point-to-point" mean that the transmission goes on a link which is dedicated and unswitched. P2 shows two examples. The Red line and the Black line between Customers A & B. Both of these are unswitched. The Government and Telco submit that the words have a simple, non-technological meaning. Mr. Huggins neatly puts his case when he submits

"(i) Transmission on a point-to-point basis is not a description of the communication circuit nor of the physical technological connection. It is simply a description of a transmission between only two points. It describes the number of points involved in (a) the transmission of information on the one hand and (b) the receipt of information on the other.

(ii) The term "point-to-point" therefore means transmission from one single point to one other single point, as distinct from one point to more than one point ("point-to-multi-point"). The technical configuration or concatenation of circuitry involved and the method by which the message is transmitted is irrelevant.

and

(iii) In particular "Switching" is irrelevant. A point-to-point transmission may be either switched or unswitched."

B. THE EXPERTS

64. It is somewhat invidious for a non-technically trained Judge to assess the relative professional opinions on an issue where an abundance of technological expertise has been displayed. All witnesses were, I am sure, doing their honest best to support their opinions, but I must find a meaning which is both reasonable and contextually apposite and would in 1993 have been recognised by the industry as the more correct.

65. In other words, would a company embarking on the provision of a new method of transmitting television programmes as defined (i.e. material which is not predominantly text, data or computer graphics - s.2 Television Ordinance) have recognised that the transmission must be on an unswitched network, or would they have recognised that the network must be one where, although switched, the transmission was from one point to one other point, in contra-distinction to one point to more than one point. In either case no STV licence would be required.

DR. TROUGHTON (WHARF)

66. He has an impressive background. From an apprentice in the British Post Office at the age of 16, he obtained high academic qualifications, became Managing Director of British Telecom Enterprise, Chief Executive of the state-owned telephone company in New Zealand and in 1992 was voted Chief Executive of the year. He is obviously a man with considerable practical experience in the telecommunications industry. He held firmly to his opinion that the words "point-to-point" always connote an unswitched transmission.

67. His evidence, albeit over several days, is summed up in his first affidavit paras 54 - 57.

"54. A point to point connection is one that, once installed, transmits signals only between two fixed locations. Any routing or multiplexing is set up when it is installed, then not changed for the days, months or years for which the customer requires it. There is no switch. The link is private in that the signals transmitted along it cannot be switched through the public exchange so as to be received by anybody else. Point to point connections are also known as 'leased lines'.

55. Examples of point to point, high bandwidth connections include video links for outside broadcasts or from studios to transmitters, and connections between computer networks and between PABXs.

56. One to one calls made over a telephone network are not made on a point-to-point basis. Connections are formed through switching for individual calls. At the end of the call, the link is broken and the trunk capacity freed for other users.

57. Transmission of video programmes via a VOD system is not on a point-to-point basis because the connection between the viewer and the media server is not formed for a fixed and predetermined period; it is only formed for as long as a programme is being supplied."

68. He thought that the contrary view put forward by the Government was "unusual and extraordinary". He accepted at Day 9 (p.27), when cross-examined by Mr. Chan

" Q : Thank you for your opinion, but in terms of your actual knowledge, your personal knowledge, you are unable to tell my Lord as to whether or not in 1993 the people in Hong Kong industry had a certain understanding of the words 'transmission on a point-to-point basis'; you have no personal knowledge, is that not correct ?

A : Correct."

69. He said that the word "request" in para. 2 had a technical meaning in the industry. This view had not been put forward before, nor did Dr. Morse (the other Wharf expert) suggest it. He then said that the word "demand" had a technical meaning and so there was a difference between these two words. I do not set out all the exchanges (found at Day 9 p.36 - 39) but I accept the closing submission of Mr. Huggins on this point when he said

"It is important because once it is established that 'demand' and 'request' mean the same thing (which they do), and that the word 'request' in para 2 relates to the transmission of the TV programmes (which indicates a customer driven-service and would involve switching) and not to the provision of a physical fixed link, then it is plain that 'point-to-point' cannot mean 'unswitched'."

70. I also put these questions (Day 9 pp 35 - 38).

" MR JUSTICE SEARS : When a customer for VOD is making what I would call his request, you would say it is a demand ?

A : Technically, I describe that, as a telephone man, as a telecommunications man, as a demand. It is a demand on my system to provide service.

MR JUSTICE SEARS : I appreciate that that is what you call it, but the word in the Ordinance is 'request', you see; in that paragraph it is 'request'. In a VOD situation you say that it is equivalent to a demand ?

A : Yes, it is, because I cannot - but the reason that request is used and the reason we had the debate yesterday, of course - shut me up if you know all of this - is because you cannot control what the customer says. The customer is going to say anything to you, but it is the way you treat that. If you are writing an ordinance in a telecommunications environment, you do have an obligation either to define your terms or assume that the people read it as telecommunication specialists.

MR JUSTICE SEARS : But if we assume that the word 'request' in paragraph 2 is equivalent to 'demand' - let us assume that.

A : Yes.

MR JUSTICE SEARS : It is still something which is passing through switches ?

A : Yes. 'Demand' means a user-driven switched connection.

MR JUSTICE SEARS : So if 'demand' then is the same as 'request', request in paragraph 2 means a request that would be passing through switches ?

A : 'Demand' does not mean the same as 'request'. I mean -

MR JUSTICE SEARS : You have not followed what I mean.

A : I do not think I have. 'Request' has no technical meaning.

MR JUSTICE SEARS : I have a word that is called 'request'.

A : And it has no technical meaning.

MR JUSTICE SEARS : Right, has no technical meaning, but in a VOD situation you are demanding a service, is that correct ?

A : Yes. That is why, when we looked at that EEC directive, or whatever it was called, where they were trying to describe VOD-type services, I was absolutely happy with them excluding VOD-type services by using the expression 'individual demand services'.

MR JUSTICE SEARS : Do not take me away from that. If in the paragraph 'request' is used and it is equivalent to a demand, there is a demand because there is contractual demand ?

A : If they had used the word 'demand', I would have thought : Hey, what are these guys talking about ?

MR JUSTICE SEARS : But it would be through switches that are controlled by the user; in other words, he is -

A : Yes, if they had used 'demand' I would have thought that they were talking about an individual demand-driven system, i.e. a switched system under the control of the customer.

MR JUSTICE SEARS : Which would not then square in with the words 'point-to-point', which causes the confusion ?

A : Quite.

MR JUSTICE SEARS : Does that not demonstrate to you that the words 'point-to-point' might mean something other than the definition you have given it ?

A : Not really.

MR JUSTICE SEARS : Otherwise it makes a nonsense of this paragraph ?

A : They are not using 'demand'; they have used 'request'.

MR JUSTICE SEARS : I am saying that if, in a VOD situation, 'request' is equivalent to 'demand' it would mean that this paragraph does not mean anything at all ?

A : It seems a funny mistake for them to make with a system that is called Video-on-demand, does it not ?

MR JUSTICE SEARS : I will leave it."

71. Having watched and listened to Dr. Troughton give evidence over a number of days and having re-read his evidence from the "live-note", I found him a poor witness. Despite his impressive record and background, his opinion that "on a point-to-point basis" could not apply to a switched VOD service is, in my judgment, wrong. I do not recite all his evidence, nor refer to all the documents and information to which he referred. There is no doubt that the words "point-to-point" used in an adjectival sense can in some instances refer to an unswitched network. In a Consultation Document issued by the Office of Telecommunication in England (OFTEL) in 1995 is found in the Glossary -

"Point-to-Point

- where two locations are directly linked without any switching."

72. [It is also interesting to note that in this same document is found "Television on-Demand

"Also known as video-on-demand. A programme or film sent independently to a customer in response to his individual request. This contrasts with broadcast television which is sent simultaneously to all customers able to receive it."]

73. The United Nations in Geneva has an international Telecommunications Unit (I.T.U.) which sets appropriate standards for telecommunications services so as to facilitate international compatibility and interchange. 13 of the recommendations were examined in detail which have the words "point-to-point" used with such words as "circuit", "configuration", "operation" and so on. All of these appear to denote an unswitched network, but in my judgment on a closer analysis the absence of switching is due to the particular context in which the phrase appears, as there would be no switching e.g. a leased circuit. I gained no assistance from these recommendations.

74. Other documents, textbooks, dictionary entries were referred to, but when I compare his evidence with that of Mr. Horrocks and Mr. Au, and examine the context of the words, I found him most unconvincing.

75. DR. MORSE researched the I.T.U. recommendations. He also was not an impressive witness.

76. MR. HORROCKS, called by the Government is an experienced electronic engineer - from 1986 to 1990 he was Deputy Technical Director of OFTEL. His opinion was that "point-to-point" is used for both switched and unswitched services and that it is in contradistinction to "point-to-multipoint".

77. His conclusions were :

"1. Use of the term point-to-point is not 100% consistent and there are some different and conflicting uses. Terminology has tended to become more precise since the early 1980s due to increasing formalism in standards work.

2. There appears to be some identification between the term "point-to-point" and non-switched leased or private circuits, but this identification is somewhat vague and the references tend to be old.

3. The use of the term "point-to-point" in ITU since the mid 1980s is that the communication is between two points and not more than two points. The purpose of the term "point-to-point" is to describe a distinction from the term "point-to-multipoint" and these two terms are mutually exclusive. It is quite clear that the term "point-to-point" may be applied to both switched and non-switched circuits.

4. The most reasonable interpretation of the words in para 2 of Schedule 1 of the TV Ordinance "Transmission of television programmes that is made available only to persons making a request for the programmes on a point-to-point basis" is that the requests is individual, and consequently that the subsequent transmission is specific to a single subscriber line. My view is that this specificity relates to the combination of :

* the content; and

* the timing

of the transmission, and that VOD services fall within this description."

78. I found his evidence well-researched, and he was a good witness. Mr. Griffiths criticized him as a "regulator", but I did not find his background affected the quality of his evidence.

79. MR. AU, another Government witness, is Assistant Director of OFTA. He gave similar evidence to Mr. Horrocks that point-to-point was used to distinguish a single transmission from one point to one other point, from one point to many. Some of his evidence was inadmissible. His conclusion also seemed to me highly sensible.

80. MR. BROWN - swore an affidavit on behalf of Telco. He is the Company Secretary and he produced an E.C. Green Paper (June 1994). I found this helpful and it may be that the European Communities are of the view that VOD is a point-to-point service. However, I can reach a conclusion without this paper. There were other affidavits I have considered.

81. In analysing the experts' evidence, I have borne in mind two matters.

(a) Although the Ordinance is in one sense technical, as it is dealing with the transmission of signals, the legislation is not some examination question on the technology of circuits, or networks. I can find nothing in the context of the Ordinance which demonstrates that the legislature intended a word, or words, to be dependent on the configuration, or concatenation of circuitry. The purpose of the Ordinance is not to regulate the network, or the engineering aspects of the network. The legislature is not concerned with how a network is set up, or whether a transmission link should be by copper wire or fibre optic, or whether there should be switching. It is only concerned with the transmission of signals and the reception of these signals whether by one person, or more than one person.

(b) A construction of this paragraph based on the concept of switching is illogical. From a policy point of view, why should para. 2 exclude VOD over a switched circuit, but include it if it is provided on a fixed unswitched leased circuit ? Either this new method of transmitting television programmes should be STV, and require a licence, or it should not be.

82. Although a VOD service is not "broadcasting" within the general words of s.2, this does not mean that it may not also fall within the words of para. 2. The language of Schedule I which identifies a transmission "... not regarded as transmission in relation to a subscription television service", is wide enough to cover transmissions which are within the definition of "broadcasting" in s.2 and excluded by the Schedule, and transmissions which are outside the definition of "broadcasting". I have not referred to the interesting arguments as to what precise transmissions fall within paras. 2 and 4 of Schedule I. It is not the function of the Court to give opinions as to what is or is not covered by paras. 2 and 4, all I have to do is to say whether the provision of VOD falls within the words of para. 2.

83. I have disregarded the views, or opinions from foreign jurisdictions and I have had no regard to a statement by Mr. James So when he moved the second reading of the 1993 Bill. Mr. Griffiths made, with respect to him, a misconceived submission when he said that Mr. So's statement that :

"A basic aim of our broadcasting policy is to enable the people of Hong Kong to have the widest possible choice of high quality television services. Upon completion of a major review of the policy on television broadcasting in mid-1992, the Government drew up an overall regulatory framework to enable existing and new television services to co-exist and compete in a healthy and equitable environment."

in some way assisted me in construing the Ordinance. It is not within the ambit of Pepper v. Hart (Supra). This statement is dealing with STV and commercial television competing together.

84. At one time, I was concerned that, as it was said that the provision of VOD only required a licence under the Telecommunications Ordinance, it was not regulated and subject to the stringent conditions of a STV licence. I am satisfied, however, that it is a matter for Government policy, not for the Court, as to how particular media services are regulated.

85. VOD is an important and far - reaching service. Its effect on people and their habits of shopping, banking and other everyday matters may be very dramatic. I was pleased to note that in the Government's statement of February 13th, proposals will be made for regulating VOD services.

86. The fact that, at the present time, STV is regulated and VOD is not, does not affect my approach to the construction of the Ordinance.

MEANING

87. I have considered all the evidence produced and I find that much of it gives me little assistance. Detailed examination of minutiae in documents and technological discussions, more appropriate to a classroom than a courtroom, only demonstrate that I must accord this paragraph the most natural and ordinary meaning, albeit a technical one, which is appropriate in all the circumstances.

88. As far as the witnesses are concerned, I much prefer the evidence of Mr. Horrocks and Mr. Au. I therefore find as a fact that the meaning to be given to the words "on a point-to-point basis" is from one point to another point in contradistinction to one point to multi-point. I do not accept the evidence from Wharf that it means an unswitched transmission. I am sure that the meaning of para. 2 is not dependent on the technology of the network.

89. The service of VOD by Telco falls precisely within the words of para. 2

"(i) the user has to make a request for television programmes (the request is made by the user to HKTC).

(ii) Following the request, a transmission of the television programmes will be made by HKTC to the user,

(iii) the transmission is made available only to persons making the request (i.e. persons not having made the request will not get the transmission)

(iv) the transmission is made available on a point to point basis (i.e. not point to multi-point)."

90. It may be that Wharf's Pay-per-view channel (PPV) also falls within (i), (ii) and (iii) above but it does not fall within (iv). At any rate, my role is not to give advisory opinions on the legal extent of Wharf's variety of cable services, it is solely to declare whether VOD is or is not STV and requires a licence under the Television Ordinance.

CONCLUSION

91. Wharf was given a 3 year exclusivity period until 1st June 1996 to provide cable television in Hong Kong. This is called, under the Television Ordinance, subscription television broadcasting. Telco wish to provide a VOD service. This, in my judgment, is not "broadcasting" within the general words of s.2 and by virtue of para. 2 of Schedule I is also not regarded as transmission in relation to a subscription television broadcasting service.

92. A VOD service does not therefore require a licence under the Television Ordinance. I refuse the relief sought by Wharf, I dismiss the application for judicial review in so far as it relates to the construction of the Ordinance.

Representation:

Mr. J. Griffiths Q.C. and Mr. B. Barlow instructed by Messrs. Linklaters & Paines for the Applicant.

Mr. A. Huggins Q.C. and Mr. A. Chan instructed by Attorney General for the Respondent.

Mr. Warren Chan Q.C. and Mr. A. Reyes instructed by Messrs. Johnson Stokes & Master for the Intervener.