Pccw-hkt Telephone Ltd v. The Telecommunications Authority

HCAL 112/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 112 OF 2006

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BETWEEN

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Before: Hon Reyes J in Court

Date of Hearing: 12 February 2007

Date of Judgment: 13 February 2007

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J U D G M E N T

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I. INTRODUCTION

1.PCCW provides fixed telecommunications services under a licence issued by the Authority.

2.By this judicial review, PCCW challenges the legality of the Authority's approach to the second stage of a consultation process.

3.The consultation concerns proposed changes to the current regulatory framework for interconnection charges between fixed and mobile telecommunication networks.  The Authority initiated the consultation in anticipation of a greater convergence between fixed and mobile telecommunication services.  That convergence is referred to in the trade as “fixed-mobile convergence” or “FMC”.

4.PCCW accuses the Authority of having predetermined the outcome of the consultation.  On the basis of statements by the Authority when introducing the consultation, PCCW contends that a fair-minded and informed observer would conclude that the Authority was apparently biased.  PCCW says that, in advance of the outcome to the consultation, the Authority appears to have already made up his mind that the existing regime regulating fixed mobile interconnection charges (FMIC) is obsolete and should be dismantled.

5.In consequence, PCCW asks the Court to direct the Authority to recuse himself from participation in any decisions relating to the issues under consultation.

II.      BACKGROUND

6.In this section, I briefly set out facts relating to the Authority, FMC and the second stage consultation.

A.      The Authority

7.By the Telecommunications Ordinance (Cap.106) (TO), the Authority has the duty of regulating the telecommunications industry in Hong Kong. 

8.TO s.6A authorises the Authority to determine the policies which he will apply from time to time in the regulation of the industry. 

9.TO s.6C provides that in performing his functions the Authority “may consult with (a) the persons who may be directly affected ...; or (b) members of the public”.

10.TO s.36A(1) empowers the Authority to determine the terms and conditions of interconnection between telecommunications systems and services.

11.As practical guidance to the industry, the Authority may issue guidelines setting out the principles governing the criteria for determinations to be made by him under s.36A(1).  But, by TO s.6D(1), before issuing any guidelines of that nature, the Authority “shall ... carry out such consultation withe the telecommunications industry as is reasonable in all the circumstances of the case”.

12.The current Authority is Mr. M. H. Au.  He is expected to retire in mid-2007.

B.      FMC

13.FMC will mean that fixed and mobile network calls can be made using the same handset.

14.For instance, a caller might initially connect to a fixed network hub within his home using a handset equipped with a short-range Bluetooth or wi-fi capability.  If the caller ventures outside the range of this fixed network hub, his handset will then automatically and imperceptibly connect to a wide-area cellular mobile network.

15.From the example, it will be seen that with FMC the line between fixed and mobile telecommunications becomes blurred.  A single handset can switch back and forth between a fixed and a mobile network as convenient.

16.Although available in some countries, FMC is presently not yet being offered in Hong Kong.

C.      The consultation

17.On 20 April 2005 the Office of the Telecommunications Authority (OFTA) announced its intention to review regulatory issues relevant to FMC.  In particular, there would be a review of the existing FMIC regime.

18.Currently, mobile network operators pay usage charges to fixed network operators for interconnection between their networks.  Mobile operators pay those charges regardless of whether a call originated from the fixed or mobile network.  This charging basis is known in the trade as “Mobile Party’s Network Pays” or “MPNP”.

19.I note that today, as the largest fixed network operator in Hong Kong, PCCW receives a substantial portion of the charges paid by mobile operators.

20.MPNP was established in the early 1980s.  The Authority last promulgated guidance on MPNP in 2002.

21.On 21 September 2005 OFTA commenced its review in relation to FMC by issuing a first Consultation Paper entitled “Revision of Regulatory Regimes for Fixed-Mobile Convergence”.  The paper identified FMIC as an issue on which a separate consultation would take place later.

22.The first Consultation Paper acknowledged that a change in MPNP would involve “a redistribution of benefits between fixed and mobile network operators, and ultimately consumers”.  The paper stated:-

“whether it is justified to make the change to existing interconnection charging arrangement requires a detailed assessment of the consumer benefit and economic efficiency associated with such a change”.

23.This assessment (the paper noted) would be conducted by a consultant commissioned by the Authority in parallel with the first consultation.  Following the assessment, OFTA would consult the public on “whether and how the interconnection charging arrangement should be modified”.

24.OFTA commissioned Ovum Limited to study FMIC. Ovum submitted a report entitled “Review of the Regulatory Framework for Fixed-Mobile Convergence in Hong Kong” on 28 April 2006.  Ovum recommended that MPNP be replaced by a “Bill and Keep” (BAK) principle.

25.Under BAK, there would be no interconnection charges between mobile and fixed network operators.  According to Ovum, the likely impact of a change from MPNP to BAK would be as follows:-

“Moving to the BAK model will lead to a reduction in interconnect revenues for the fixed operator of approximately $600 million per annum.  The fixed operators currently receive $600 million per annum from the mobile operators in interconnect revenues.  With the loss of such revenue fixed operators will come under pressure to raise prices or reduce discounts, which will be constrained by fixed mobile substitution and the emergence of triple/ quadruple play packages.  On the other hand, mobile operators will save a corresponding amount each year and, given the competitive nature of the mobile market, customers should see compensating price reductions.  So in the short term most citizens will see little change in their telecommunications bills.  In the long term a move to BAK should encourage investment and cross platform competition.  So, provided a competitive telecommunications industry is maintained in Hong Kong, these changes should lead to the average citizen enjoying a wider range of better functionality services at lower prices.”

26.On 14 July 2006 OFTA published a second Consultation Paper entitled “Deregulation for Fixed-Mobile Convergence”.  There the Authority stated the following (at Executive Summary §§S5-S10):-

“It is an essential principle in a market-driven approach to regulation that regulatory interventions should only be maintained, in the case of existing interventions, or introduced, in the case of new ones, in the clear circumstances that market forces have failed, or are likely to fail.  In relation to the interconnection settlement arrangement between fixed and mobile networks, the central question in this consultation is therefore whether there will be a market failure, if the historic regulatory guidance in favour of the mobile network operators paying the fixed network operators, for calls between fixed and mobile networks in both directions (under the ‘Mobile Party’s Network Pays’ or ‘MPNP’ mechanism), is withdrawn.

Up to this point, the TA [the Authority] has found no credible evidence to demonstrate that a market failure would occur if the current regulatory guidance in favour of MPNP is eventually removed.  Moreover the current guidance, introduced by the TA more than ten years ago, may now in fact be distorting competitive processes today thereby constituting barriers to the eventual development of FMC.  Accordingly, the TA is proposing to set a transitional period of two years for the current regulatory guidance concerning MPNP to be phased out.

During the transitional period, the status quo continues to apply.  Network operators will be free to negotiate the terms and conditions of interconnection to apply after the transitional period (and, if they so wish, during the transitional period), using the settlement option which is mutually acceptable to the parties concerned.  However, in recognition of the importance of communications services with ‘any-to-any connectivity’ to daily life and business in Hong Kong, the TA will resort to the powers under section 36A of the Telecommunications Ordinance to determine terms and conditions of interconnection between particular networks after the transitional period if commercial negotiations fail and when a market failure is established.

Where a market failure is established, and the TA undertakes a determination, the TA’s determination will be based on the most appropriate settlement option having regard to the case-specific circumstances and any relevant regulatory guidance in place.  Of course, the TA will also be bound to follow due process in terms of consultation with all affected parties concerning the settlement options to be adopted.

While providing no guidelines to the TA as to how he should exercise his powers under section 36A would arguably impose the least interference with the commercial negotiations among network operators, this approach might create great regulatory uncertainties and could be contrary to the objective of providing a clear and predictable regulatory framework to facilitate investment decisions.  Therefore the TA seeks the industry’s views on whether the TA should re-issue the guidance on how the TA should exercise his powers under section 36A should he be called upon to make a determination on the terms and conditions for interconnection between fixed and mobile networks.

In the event of a conclusion that the re-issue of such a guidance is warranted, the guidance should avoid the distortion to the competitive processes in the FMC environment.  In relation to the settlement options identified in the consultancy study, and others which affected parties may wish to put forward, the TA seeks evidence on the merits and demerits of the different options in terms of their current or likely future impact on competition between and amongst mobile and fixed network operators, and the significance of any identified distortion to competition and to the evolution of telecommunication markets, including FMC.”

27.OFTA set a deadline of 13 October 2006 for comments on the second paper.

28.The second paper was launched at a press conference on the date of its publication.  Mr. Au attended the press conference.

29.On 15 July 2006 The Standard reported Mr. Au as having made the following comment (Remark 1) at the press conference:-

“Local customers will be the biggest beneficiaries by enjoying cheaper mobile services amid the new changes...

It should be beneficial for customers...

Hong Kong customers will enjoy lower mobile tariffs as well as more innovative fixed-telecom services on the back of the new arrangement.  Mobile services no longer need be a luxury product.  It is good timing to remove an expired policy”.

30.An OFTA press release of 14 July 2006 coinciding with the press conference quoted an unidentified OFTA spokesperson as having made the following comment (Remark 2):-

“The status quo is the result of regulatory intervention put in place in the early 1980s when mobile services were introduced to the telecommunications market as a luxury product.  Its continuation is not conducive to competition today, and will be a problem as FMC comes along. Rather, the operators should have the liberty to reach commercial arrangements themselves...

We propose to phase out existing regulatory preference for Mobile Party’s Network Pays in two years ...”

31.The OFTA press release also included the following statement (Remark 3):-

“Currently, the interconnection payment by the mobile network operators to the fixed network operators amounts to some HK$600 million per annum.  As the factors underpinning the existing asymmetric arrangement have already changed, OFTA proposes to withdraw the regulatory intervention.”

32.On 31 August 2006 PCCW wrote to the Authority complaining that “OFTA’s position expressed in the Consultation Paper and subsequently reported by the press, goes well beyond any legitimate form of predisposition”. 

33.As far as PCCW as concerned, the Authority had predetermined the outcome of the consultation on the 2nd paper.  Thus, the consultation did not (PCCW suggested) meet the basic requirements of procedural fairness.

34.PCCW asked the Authority to discontinue the consultation initiated by the 14 July 2006 conference.

35.On 11 October 2006 OFTA wrote to PCCW denying the latter’s allegation of bias.  On the same day, OFTA announced that the consultation period would be extended by 2 weeks to 27 October 2006.  OFTA took this decision despite a large number of industry operators and service providers calling for a longer extension of several months.

36.Thus, on 11 October 2006, OFTA in effect refused to discontinue the consultation process, contrary to PCCW’s request.

37.In November 2006 the Office of Communications in the UK published a book entitled Communications: The Next Decade.  The book included an essay (“Possibilities for deregulation: a case study of Hong Kong”) by Mr. Au.  That essay included the following comment (Remark 4):-

“The current asymmetric arrangement [in Hong Kong FMIC] is obsolete and would not be sustainable in the environment of ‘fixed mobile convergence’ (FMC).”

38.On 1 February 2007 OFTA’s solicitors provided a transcript to PCCW’s solicitors of what was said at the 14 July 2006 press conference.  The transcript contains the following statements by the Authority (as highlighted by PCCW):-

(1)     Remark 5:-

“I think a regulation which was not designed on a technology neutral basis has in today’s environment started to distort market competition...”

(2)     Remark 6:-

“... if the fixed operators actually lose the $600 million under the new arrangement after the transitional period, they can adjust their business plan to explore new sources of income ... we think the impact of this change to Hong Kong generally, the industry and the consumers will be positive ...”

(3)     Remark 7:-

“... today we are dismantling regulation...”

(4)     Remark 8:-

“There is a 2 year transitional period.  The 2 year means basically no change to the status quo...  After two years when the regulation is dismantled....”

(5)     Remark 9:-

“The distortion is that the current regime dictates one network technology paying one direction to the other network technology and this is not consistent with our technology neutral regulation ... I hope that via the consultation we pointed out the reasons for dismantling the existing regulation...”

(6)     Remark 10:-

“... this change in interconnection charge arrangement is not related to usage based charge...”

39.PCCW also refers to the following statement (Remark 11) made by Ms. Gracie Foo (Deputy Director-General of Telecommunications) at the press conference:-

“To answer the other question previously raised relating to legal proceedings, I think at the moment we should focus on the present work including a properly prepared proposal which is rational and reasonable so that it is less likely to be challenged by service operators ...

...  Our whole proposal talks about withdrawal of regulation under the new environment and let the market determine.  There is a transitional period and the main principle of the transition is to let operator have room for development.  We consider this reasonable and rational among the options ...”

40.It is PCCW’s case that Remarks 1 to 11 show apparent bias on the Authority’s part.  Although its Notice of Motion suggests actual bias on the Authority’s part, at the hearing before me PCCW abandoned such contention of actual bias.

III.     DISCUSSION

A.      The Authority’s duties

41.Mr. David Pannick QC (appearing for PCCW) submits that the second consultation concerns the replacement of the 2002 guidance on MPNP with a new set of FMIC guidelines.  Because of this, by TO s.6D(1), the Authority (Mr. Pannick says) is under a statutory duty to consult before he can carry out such substitution of guidelines.

42.I shall assume that Mr. Pannick is right and the second consultation is being conducted to fulfil the Authority’s statutory obligation.  I note that Mr. Nicholas Green QC (appearing for the Authority) accepts that the Authority is obliged to consult with the telecommunications industry before making any decision on the regulation of FMIC.

43.Given the statutory obligation, the consultation must obviously be a proper one. 

44.This means that in the conduct of the consultation the Authority should ensure that there is procedural fairness.  The consultation must be a genuine stage in the decision-making process and not a perfunctory ritual.  The Authority has to keep an open mind on the subject under consultation and must not display bias.

45.There is “apparent bias” if a hypothetical fair-minded observer would conclude that there was a reasonable possibility of bias in the way in which the Authority came to a decision.  See Porter v. Magill [2001] UKHL 67 (Lord Hope at §§102-105). 

46.The observer is taken to be a reasonable person, who adopts a balanced approach and is neither complacent nor unduly sensitive or suspicious.  In arriving at any conclusion of bias or the absence of it, the observer is assumed to be fully informed of all facts capable of being known to the general public in relation to the relevant decision-making process.  See Lawal v. Northern Spirit Ltd. [2003] UKHL 35 (Lord Steyn at §14); Johnson v. Johnson (2000) 201 CLR 448 (Kirby J at §53).

47.However, when applying the test of the fair-minded observer, it is important for the Court to have regard to the context of the relevant decision-making process.  This is because, as Woolf J pointed out in R v. Amber Valley District Council, ex parte Jackson [1984] 3 ALL ER 501 (at 509):-

“The rules of fairness or natural justice cannot be regarded as rigid.  They must alter in accordance with the context.”

48.What is the context here?

49.The Authority is charged with regulating the Hong Kong telecommunications industry.  Among other things, he is responsible for ensuring that Hong Kong’s telecommunications laws are compatible with the latest technological developments. 

50.It is part of the Authority’s job constantly to assess whether the industry here is in step with recent breakthroughs.  He has to evaluate whether specific regulations (or the lack of them) are hindering the introduction of technological innovation for the benefit of the Hong Kong consumer.

51.Given those duties, it would be surprising if the Authority did not form provisional views on issues to be ventilated in a consultation. 

52.I do not think that there can be any criticism for the Authority forming such provisional views.  On the contrary, having a predisposition to a certain course of action would seem a normal and inevitable incident of the Authority’s job.  Such predisposition should not by itself lead a fair-minded observer to suspect apparent bias. 

53.The difference between predisposition and predetermination is explained by Richards LJ in National Assembly for Wales v. Condron [2006] EWCA Civ 1573 (at §43):-

“We were referred to various cases in which the distinction has been drawn between a legitimate predisposition towards a particular outcome (for example, as a result of a manifesto commitment by the ruling party or some other policy statement) and an illegitimate predetermination of the outcome (for example, because of a decision already reached or a determination to reach a particular decision).  The former is consistent with a preparedness to consider and weigh relevant factors in reaching the final decision; the latter involves a mind that is closed to the consideration and weighing of relevant factors.  The cases include R v. Secretary of State for the Environment, ex p Kirkstall Valley Campaign Ltd. [1996] 3 All ER 304 at 320-321, Bovis Homes Ltd v. New Forest Plc [2002] EWHC 483 (Admin) at paras 111-113, and R (Island Farm Development Ltd) v. Bridgend County Borough Council [2006] EWHC 2189 (ADMIN) at paras 25-32.  I do not propose to quote from them, since I regard the general nature of the distinction as being clear enough.”

54.The case of R (Island Farm Development Ltd.) v. Bridgend County Borough Council [2006] EWHC 2189 (Admin) (cited by Richards LJ) provides further help on the Court’s approach to predisposition and predetermination.

55.Island Farm concerned alleged apparent bias on the part of local councillors. 

56.At §29 of his judgment, Collins J referred to Georgiou v. Enfield [2004] EWHC 779 (Admin), where Richards J said:-

“36.   Having regard to the objective nature of the question of apparent bias, I do not think that any significant weight is to be attached to the members’ own witness statements in which they state they did approach the planning decision with open minds: cf. per Lord Hope in Porter v. Magill at page 496 Paragraph 104.”

57.Collins J then continued (at §§30-32):-

“I confess to some doubt as to this approach [of Richards J], and in particular to what he says in para.36.  Councillors will inevitably be bound to have views on and may well have expressed them about issues of public interest locally.  Such may, as here, have been raised as election issues.  It would be quite impossible for decisions to be made by the elected members whom the law requires to make them if their observations could disqualify them because it might appear that they had formed a view in advance.  The decision of the Court of Appeal in Baxter’s case [[1988] QB 419], of the New Zealand Court of Appeal in the Lower Hutt case [[1974] 1 NZLR 545] and of Woolf J in the Amber Valley case do not support this approach.  Nor is it consistent with those authorities that no weight should be attached to their own witness statements. Porter v. Magill was a very different situation and involved what amounted to a quasi-judicial decision by the Auditor.  In such a case, it is easy to see why the appearance of bias tests should apply to its full extent.

The reality is that Councillors must be trusted to abide by the rules which the law lays down, namely that, whatever their views, they must approach their decision-making with an open mind in the sense that they must have regard to all material considerations and be prepared to change their views if persuaded that they should.  It is to be noted that the Court of Appeal sees nothing objectionable in a judge who has refused permission to appeal on the papers sitting on an oral hearing to reconsider his decision.  That is because it is recognised that a judge is always prepared to be persuaded to change his mind.  So it is with Councillors and, unless there is positive evidence to show that there was indeed a closed mind, I do not think that prior observations or apparent favouring of a particular decision will suffice to persuade a court to quash the decision....

It may be that, assuming the Porter v. Magill test is applicable, the fair-minded and informed observer must be taken to appreciate that predisposition is not predetermination and that Councillors can be assumed to be aware of their obligations.  In this case, the evidence before me demonstrates that each member was prepared to and did consider the relevant arguments and each was prepared to change his or her mind if the material persuaded him or her to do so.  I am not therefore prepared to accept that there was apparent bias or predetermination which vitiated the decision.”

58.Much of what Collins J said of councillors in Island Farm can be said here.

59.The Authority is not a tribunal.  He performs administrative functions instead. 

60.Accordingly, in deciding whether the Authority has displayed apparent bias, the fair-minded observer should not assess the Authority’s pronouncements with the same rigour that one might apply to a Court or tribunal.  The Court must be realistic in its approach.

61.The nature of the Authority’s functions means that the Court should be slow to condemn him for apparent bias.  Otherwise, it would be practically impossible for the Authority to carry out his duty if he could not express views (possibly even robust views) on the matters within his expertise, if only to generate debate on an issue.

62.A fair-minded observer would be conscious of this when assessing whether there is a real possibility of predetermination as opposed to a mere statement of predisposition by the Authority.  Likewise, the Court should not treat every opinion voiced by the Authority on policy as precluding the possibility of the Authority open-mindedly re-considering that view in light of submissions made in a consultation.

63.In the same way that Collins J thought that local councillors should prima facie be trusted, so should the Authority.  He can safely be assumed to know of his obligation to carry out a transparent and even-handed consultation.  He should be assumed to be ready and willing to fulfil such obligation.

64.Here the fair-minded observer would also be familiar with how the Authority has conducted himself during past consultation exercises.  The observer would realise that on at least 4 previous recent occasions the Authority has issued a paper setting out his view on a matter, only to reach a different conclusion at the end of a consultation.  This historical fact would reinforce a view that the Authority is someone who can be trusted properly to perform his duty of consultation.

65.At the end of the day, as Collins J noted, the essential question which the Court must decide is whether there is positive evidence suggesting that the Authority has likely closed his mind to any views at variance with his.

66.There was some dispute among the parties over the extent to which, when applying the fair-minded observer test, a Court might have regard to a decision-maker’s express declaration of open-mindedness.

67.On this, at least 2 situations may arise:-

(1)     Situation 1:-

Before finally deciding a matter, the decision-maker D expresses a preliminary view.  At the same time he declares that he retains an open mind, capable of being persuaded otherwise.

(2)     Situation 2:-

D makes a decision.  That decision is later challenged for apparent bias arising from some circumstance X (for example, D’s past association with one or other party).  D then declares (in say a witness statement or affidavit) that, in making his decision, he was unaware of (or had forgotten about) X and thus X did not influence his decision.

68.In situation 1, D’s declaration of an open mind is plainly a relevant factor to take into account when applying the fair-minded observer test.  This is because the observer must be deemed to know of D’s declaration of an open-mind, publicly made at the time of espousing a preliminary view.

69.In situation 2, D’s declaration is made after the event.  It is a statement by D as to his subjective frame of mind when making a decision.  There would have been no public manifestation before or at the time of the decision of D’s subjective state of mind.

70.A fair-minded observer appraising the events leading up to D’s decision in situation 2 would obviously not have been aware of D’s subjective frame of mind.  A bare ex post facto declaration by D may then be of little help in the objective exercise of assessing whether a fair-minded observer will regard D’s decision as apparently biased.

71.Nonetheless, I doubt that there can be any “hard and fast” rule in relation to situation 2.  In many cases, the Court may be sceptical and regard a bare ex post facto declaration as self-serving.  But, like Collins J in Island Stream, I do not believe that Lord Hope in Porter v. Magill went so far as dismiss all ex post facto declarations as self-serving or worthless evidence.

72.For instance, when assessing apparent bias, the Court should be able to attach some weight to an ex post facto declaration which is consistent with other evidence (for instance, an administrator’s conduct of past decision-making exercises).  The fair-minded observer may draw comfort from an ex post facto declaration in light of the decision-maker’s track record and so more readily conclude that there is no appreciable risk of bias.

73.Ultimately, I think that, in line with what Woolf J said in Amber Valley, the Court’s approach must be flexible.  How much (if any) weight to give to a declaration (whether made before, during or after a decision) must depend on all relevant circumstances.

74.Here Mr. Au has filed an affirmation stating the following:-

“5.     ....  I and OFTA always keep an open mind about the final outcome of the Consultation relating to the deregulation of FMC.  Before I take a decision in relation to the future regulatory arrangements for Hong Kong, I will pay close attention to all submissions and responses submitted....

7.      ....  What I must emphasize is that, in approaching this, and all the other considerations relevant to the issue, I will and feel duty-bound to consider all the evidence and submissions fully and impartially, and am also fully open to persuasion as to what the eventual outcome should be....

11.    ....  Further, it is submitted that I had in no way predetermined or prejudged the issue of whether to withdraw the existing guidance on FMIC....”

75.Contrary to Mr. Pannick’s submission, in light of a history of changes to the Authority’s views following previous consultations, I think that I can attach significant weight to Mr. Au’s declarations.

B.      The Authority’s remarks

76.In this section, I propose to examine each of Remarks 1 to 11 highlighted by Mr. Pannick in his submissions.  My examination will consider whether the fair-minded observer would find anything in the remarks justifying a conclusion of apparent bias or closed-mindedness.  The Remarks will be considered in the following order: Remark 1, Remarks 2 and 3, Remarks 5 to 11 and Remark 4.

B.1    Remark 1

77.Remark 1 is taken from a report in The Standard of the 14 July 2006 press conference.

78.The fair-minded observer would be wary of forming any view of bias on the basis of a newspaper report.  He would realise that the Authority has little control over which of his remarks a newspaper chooses to report or not to report.  A newspaper article is necessarily selective in its account of an event.  It cannot be expected to provide the full context in which quoted remarks were made.

79.Mr. Pannick faintly suggests that I can infer from the Standard journalist’s account of the press conference how a fair-minded observer would have regarded Mr. Au’s remarks.  On this argument, the journalist is equated with the fair-minded observer.  Then, since the journalist quotes Mr. Au to the effect that a switch from MPNP would mean local customers enjoy cheaper mobile charges, the fair-minded observer would (it is asserted) likewise regard Mr. Au as inflexibly espousing a change in FMIC regime as beneficial.

80.I am not persuaded.

81.Knowing nothing about the journalist, I do not think that I can attribute to him the qualities of reason and balance implicit in the fair-minded observer.  The Court has no idea why a journalist choses to stress one point in his article as opposed to some other point.

82.Further, even if the journalist had himself been reason incarnate, what finally appeared in the Standard may yet have been the result of cutting by some editor anxious to fit the journalist’s article into the limited newspaper space available. There is no evidence about how the journalist’s perception of the press conference was incorporated into his article.  In those premises, it cannot be assumed that the final article would mirror the thinking of a fair-minded observer.

83.Consequently, I reject Remark 1 as any evidence of bias.  Unlike PCCW (which apparently did not attend the press conference), the fair observer would (it can be posited) have been physically present when Mr. Au made his remarks.  The fair observer would judge the appearance of bias or its absence in the context of his impressions of the press conference as a whole.

84.PCCW refers to articles on the press conference in other newspapers.  I have read those articles.  I see nothing in them suggestive of apparent bias on the Authority’s part.  But, even if I did, I think observations similar to those I have made about the piece in the Standard can be made of those articles.

B.2    Remarks 2 and 3

85.These remarks, both extracted from the OFTA press release on the 14 July 2006 conference, can be considered together.

86.The release is little more than a newspaper article.  As such, it might be said that the comments already made on the Standard and other newspaper pieces should equally apply here.

87.I think that the fair-minded observer would be careful about forming any view of apparent bias based on the press release alone.  He would recognise that the account in the release is inevitably compressed and may not give the full (or any) flavour of what actually transpired in the underlying conference.

88.Nonetheless, as the press release has almost certainly been drafted and authorised by OFTA itself, I accept that the release is a relevant piece of information which the fair-minded observer may consider in relation to apparent bias.

89.Let me then read through the release, commenting (as I go along) on how I believe the hypothetical fair observer would react to the article.

90.The press release begins with a paragraph stating that OFTA has issued a paper “to solicit views from the public and the industry on its proposal of updating the regulatory approach to pave the way for sustained market developments”.  Thus, from the outset, the press release signals that OFTA is advancing “proposals” for debate by the public.

91.The second paragraph of the release then quotes an unidentified spokesperson (who may or may not be the Authority) to the effect that FMC will blur distinctions between fixed and mobile networks.

92.The quote cannot be controversial.  It is simply a matter of fact.  If FMC means that I can use one handset to access fixed and mobile networks at will, the distinction between using a fixed and mobile service must become “blurred,” possibly even meaningless.

93.The release then goes on to state OFTA’s role (“to ensure that the regulatory environment in Hong Kong is conducive to the emergence of innovative technologies and services”).  It recounts how, to fulfil that role, OFTA has commissioned a consultancy study on “possible regulatory changes in the light of FMC prospects”.

94.OFTA has since (the press release continues) received and reviewed the consultancy report.  That has led to the identification of “a number of existing differential regulatory treatments ... that may require changes”.  In particular, the MPNP arrangement “is an essential one to be reviewed”.

95.Even if one takes the unnamed spokesperson to be Mr. Au himself, there has so far has been nothing to indicate that he has made up his mind on anything about MPNP.  The language up to this point has been scrupulously tentative. Although there is to be a review, there may or may not ultimately be changes.

96.Then come Remarks 2 and 3. 

97.They explain how the current MPNP was put into place in the early 1980s, some 20 years ago.  MPNP was imposed because at the time, a mobile phone was considered “a luxury product”.

98.But (the release says) today “the factors underpinning the existing asymmetric arrangement have already changed”.  Accordingly, OFTA “proposes” to withdraw the regulatory intervention.

99.In OFTA’s view (the release reports), the continuation of MPNP “is not conducive to competition today” and “will be a problem as FMC comes along”.  OFTA would prefer a regime where fixed and mobile operators are free to reach commercial agreements among themselves in relation to interconnection charges.

100.The OFTA spokesperson is then quoted as having mentioned OFTA’s proposal to phase out MPNP after a 2 year transitional period to allow operators time to adjust.

101.In the context of the earlier paragraphs of the release, I do not see how Remarks 2 and 3 can even remotely be regarded as evidence of apparent bias on the part of the Authority.

102.The release states the undeniable fact that MPNP was introduced more than 20 years ago at a time when few people had mobile telephones.  At that time, more people subscribed to fixed (as compared to mobile) services and the mobile phone was understandably regarded as a luxury.

103.But now in Hong Kong the situation has radically changed. 

104.Obviously, mobile phones are no more the luxury that they once were.  The release does not offer supporting statistics.  But the second Consultation Paper (to which presumably the fair-minded observer would have access) cites chapter and verse on this theme.

105.Currently the penetration rate of mobile sales exceeds 100% of Hong Kong’s population.  Since November 1999, the penetration rate for mobile services has actually surpassed that for fixed services.  See the second Consultation Paper, p.14 (at §26).

106.In this context, the thrust of Remarks 2 and 3 amounts to no more than that the original “luxury product” reason for introducing MPNP is no longer valid.  This justification for imposition of MPNP having become “obsolete,” the continuation of that regulation cannot be conducive to competition.  Hence, according to OFTA, it is proposed to withdraw the regime and phase out MPNP over a 2 year period.

107.I do not see anything here that might raise eyebrows on the part of a fixed network operator unless he is unduly sensitive or suspicious.  After more than 20 years, one would expect change in the telecommunications environment, if only due to scientific innovation.  The industry landscape having undeniably changed, all the Authority has done is to launch a consultation on how he should respond.

108.If an original justification for market intervention no longer holds good, why should not the Authority say so?  Why can he not invite public comment on what he should do about the matter?  There may or may not be new justifications for maintaining the old intervention which the Authority has not thought about.  If there remains justification for the status quo, presumably members of the public can and will tell the Authority.  That is the whole point of the Authority consulting (and being required to consult) the public. 

109.The Authority has merely kicked off the debate by explaining why there is a consultation and what he proposes to do.  That is miles away from predetermination.  It is no evidence of the Authority possibly having a closed mind.

110.Note in this connection that both the withdrawal of MPNP and the 2 year transitional period are put forward in the release as proposals.  I think the fair-minded observer would see this as confirming that the Authority has merely come to a predisposition.

111.Remark 2 suggests a further, perhaps more technical, reason for regarding MPNP as obsolete.  That reason has to do with the blurring of the lines between fixed and mobile services which FMC will bring about.  If FMC will blur the boundary between fixed and mobile, then a charge which crudely requires a mobile to pay a fixed operator may be unworkable.  There will (as the unnamed spokesperson recognises) be a “problem”.

112.Again that is purely a statement of a harsh reality.  I do not think the identification of an apparent incompatibility between FMC and MPNP signifies apparent bias or apparent closure of mind.

113.The release concludes by inviting the public to communicate its views on a range of specific questions.

B.3    Remarks 5, 6, 7, 8, 9, 10 and 11

114.These remarks have all been extracted from the press conference transcript.  It is convenient to consider them together.  I shall assume for the purposes of argument that Remark 10 (attributed to Ms. Foo) can be treated as reflective of the Authority’s views.

115.I shall proceed by running through (and commenting on) passages in the transcript where Remarks 5 to 10 appear.

B.3.1 The Authority’s opening and Remark 5

116.Mr. Au began the press conference by referring the media to the second Consultation Paper.  That paper itself contains the following statement:-

“8.     It should be noted that the views expressed in the consultancy report do not represent the views of the TA or the OFTA.  Any views expressed and proposals made in this consultation paper are preliminary ones for the purpose of discussion and consultation only.  Nothing in this consultation paper represents or constitutes a determination, direction or decision made by the TA.  Nothing in this paper should be construed as indicating that the TA has finalised any opinion or decision on these issues.”

117.A fair observer would be aware of and would bear such paragraph in mind while attending the press conference.  The paragraph tacitly accepts that the Authority may have formed some opinions.  But the paragraph is at pains to stress that such views have not been finalised and are subject to discussion and consultation.

118.Mr. Pannick submits that it is striking that the Authority said nothing at the start about the views expressed in the press conference being provisional.  But, given the Authority’s prefatory reference to the 2^nd paper and given the 2^nd paper included the paragraph just cited, I do not accept Mr. Pannick’s point.

119.Mr. Au then went straight into FMIC.  He first fleshed out why the situation in the 1980s (when MPNP was first introduced) has since changed.  He provided this historical background to explain why the original rationale for the introduction of MPNP in the 1980s can no longer be maintained. 

120.He stated (in translation from Cantonese):-

“[MPNP] was introduced some twenty years ago.  At that time, mobile was regarded as a luxurious service.  The price of fixed line service was below costs and need to be subsidized by international (IDD) service.  Therefore, when mobile service was introduced in the 80s, it was treated as a value-added service and its survival was dependent on fixed service.

But nowadays, the mobile customers have exceeded 8.5 million and substantially outnumbered fixed customers.  The number of fixed lines is currently about 3.8 million.  Also, mobile service is no longer a luxurious service.  So the whole population and the average person can afford it.  The price has also dropped substantially when compared with that in the 80s.  The price of fixed line has, during the three years from 1999 to 2001, gradually increased to cost level.

At present, therefore, it cannot be said that fixed service is a subsidised service.  Thus, it can be said that the rationale behind the introduction of this regulation in the 80s can no longer stand.

....

Therefore, the regulation on the FMIC introduced in the 80s is indeed at the present moment an intervention in the market.

The regulatory principle for imposing regulation is that when the market has not yet developed, regulation would be used to protect consumer interest and help the market develop.  When the market has already developed, we should review whether the regulation is worth maintaining.

We have to ask one question: today, if there is no such regulation [as MPNP], can the market still operate as normal?  If the answer is yes, i.e. the removal of regulation will not lead to market failure, then this means the regulation does not need to exist.

According to the information that we collected from the market, we have no evidence to show that there will be market failure if we now remove the FMIC regulation.  We have no evidence to prove this....

We do not consider the normal functioning of the market is due to our regulation to force operators with one technology to pay interconnection charges to operators with another technology.  On the contrary, I think a regulation which was not designed on a technology neutral basis has in today’s environment started to distort market competition.

Also, when FMC continue to develop, it will actually hinder the development.

Therefore, we propose today in the consultation paper that after the transitional period of two years, the current regulation on FMIC be removed so that the operators can negotiate freely amongst themselves on the interconnection terms.”

121.Remark 5 (underscored) appears in the passage just quoted.

122.Read in context, I do not see anything exceptional in Remark 5. 

123.The Authority is setting the scene for the consultation.  He is explaining why there is a need to consult: Given technological change, mobile phones can hardly be described today as luxuries.  Accordingly, the original rationale for MPNP is no longer good.  The Authority sees its role as only regulating where, in the absence of intervention, there would be market failure.  Since the original reason for MPNP is now obsolete and (as far as the Authority can see) there would be no market failure if MPNP regulatory intervention were withdrawn as no longer justified, the second paper proposes to phase out MPNP.

124.MPNP is not “technology neutral” as it imposes a charge on mobile in favour of fixed networks, even if a call operates from a fixed network.  In the absence of good reason for the charge, the favour of fixed networks will logically distort the market.  There will be distortion in the sense that operators and users of fixed networks will not be paying the true cost of the services provided by such networks.  Mobile users will be subsidising fixed networks.

125.Thus, the Authority poses the central question on which he seeks public feedback during the consultation period: Is the Authority right that there will be no market failure (that is, the market will operate as normal), if MPNP is withdrawn?  The clear implication is that, if (with the aid of the public) a market failure arising from a withdrawal of MPNP can be identified, the Authority will have to engage in a rethink.

126.The fair observer would see nothing to quibble about in Mr. Au’s words so far.

B.3.2 The effect of change and Remark 6

127.Mr. Au moved on to examine the possible effect of a withdrawal of MPNP on fixed and mobile operators and on consumers.

128.He said (in translation):-

“What will be the impact of our change on operators? 

The mobile operators now have to pay fixed operators a one way annual interconnection charge of about HK$600 million as estimated under the current regulation.

Regarding the impact on operators, if we remove the regulation, it should depend on the negotiation between them and the replacement that is acceptable to them.  That is the financial impact on them.  If they use, for example, a balanced method for interconnection settlement, fixed operators will of course receive $600 million less income annually and mobile operators can save $600 million costs.

But we consider such change of incomes is in fact a change that experienced in the past 10 years because of market change or technological advancement.  With the changes in the market and technology, the income, source of income and amount of income of an operator will also change.  You cannot expect certain income will exist forever at the same level.

A notable example is that fixed operators in the past relied heavily on IDD income to subsidise its operation, but since liberalisation of the IDD market such IDD income could no longer subsidise the fixed service.

Although IDD income is less than before, it does not mean the income of fixed operators is less. They have new source of income from new services such as broadband and IPTV.

I want to point out the source and amount of income is evolving.  I think, if the fixed operators actually lose the $600 million under the new arrangement after the transitional period, they can adjust their business plan to explore new sources of income.  That is the objective of our proposed transitional period.

I now want to say about the impact on consumers.

As mobile operators can save $600 million, there will be room for price reduction.  Whether fixed operators will face the pressure to increase price or whether they can do so will all be subject to market constraint.

We consider that only if there is sufficient competition in market, consumer interest will be protected.  Therefore, we do not consider consumer interest will be adversely affected.  Rather, in the long term, customer will benefit earlier from innovative service in an environment with fair competition which does not hinder market and technology development.

Thus, we think the impact of this change to Hong Kong generally, the industry and the consumers will be positive.

One has asked me whether the change to fixed operators’ income will result in the introduction of usage charge.

I think the feasibility is very low, as we see it in the past.  Now, we are talking about the interconnection charge between networks but not the price paid by consumer.  The interconnection settlement between networks has always been on the basis of usage charge, and on a minute basis.

For example, interconnection charge between fixed networks is calculated on a minute basis. They are charged on a minute basis.  However, they have not passed this usage charge to consumers.

Consumers are still paying a flat monthly rate. Therefore, I think there is no direct relationship between the interconnection settlement between operators and whether the consumers should pay charges on a flat monthly basis or on a usage basis.”

129.Remark 6 (underscored) appears in the passage just quoted.

130.I do not see any material in the passage which would give a fair observer any basis to suspect bias. 

131.It is true that expressions such as “new arrangement” and “change” were used by the Authority.  But it is evident from the context that he was referring to a “proposed new arrangement” and “proposed change”.

132.It is also true that the Authority ventured the view that, over the 2 year transition, fixed operators might be able to take advantage of technological developments to find new sources of income.  Such income would then off-set any potential loss of $600 million from the withdrawal of MPNP.

133.That is an opinion.  But, read in context of the whole passage just quoted, it is clearly tentative.  The Authority is not even sure that fixed operators will lose out to the extent of $600 million. They could (for example) negotiate imaginatively with mobile operators to secure favourable deals.

134.Note that, in contrast to the categorical statements in the Standard about consumer benefit, the Authority is more guarded.  He believes, based on what has happened in the past, that consumers will benefit in the long term.  But that belief is only tentatively advanced.  For instance, the Authority does not rule out usage charges being imposed by fixed operators on consumers, even though he considers the likelihood of that as low.

B.3.3 The effect of market failure and Remark 7   

135.Mr. Au’s remarks were followed by a question and answer session.

136.One question (which the transcript describes as inaudible) appears (from Mr. Au’s answer) to have concerned the possibility of market failure if the MPNP is withdrawn. 

137.Mr. Au’s answer is recorded as follows (in translation):-

“No, it is not hope.  I do not hope to do a settlement.  I hope we do not need to intervene because today we are dismantling regulation; the question is, does that mean there will be a vacuum if there is no regulation. 

As I said we will need any to any [connectivity][:] if settlement cannot be reached what happen?  I think if settlement cannot finally be reached we will need to use [TO s.] 36A to make a determination. 

But do you need to know how we will determine?  If I don’t say anything will there be too many uncertain factors thereby increasing investment risk therefore we need to address each side.  On the one hand, I do not want to interfere [with] the market[;] on the other hand[,] I want to give the market a clear signal on the regulatory environment.

Where is the balancing point?  This is one of the question that we asked in the Consultation Paper.”

138.The reporter appears to have asked about what Mr. Au proposes to do if, having withdrawn MPNP, there was a market failure which fixed and mobile operators could not resolve through arm’s length negotiations.

139.In referring to the “dismantling” of regulation, Mr. Au seems simply to be reciting the reporter’s premise: “If today the MPNP regulation is dismantled, then what?”

140.Mr. Au’s response is that, if today MPNP goes, that does not necessarily mean there will be a vacuum or market failure.  But if there is one such that any-to-any connectivity is threatened, the Authority could use TO s.36A to determine appropriate terms.  

141.I note that by “any-to-any connectivity” is meant the principle whereby telecommunications operators (including mobile and fixed) are able to interconnect with one another.  This principle allows a subscriber of one network type to connect to a subscriber of another network type.

142.Mr. Au then concludes his answer by inviting submissions on the extent to which (in the interests of market certainty) he should spell out in advance the sort of terms which he proposes to determine.

143.Given my understanding of question and answer, I do not think a fair observer would find material here supporting a case of apparent bias.

B.3.4 The 2 year transition and Remark 8

144.Another reporter asked the Authority the following (in translation):-

“First, this Consultation Paper is published.  You proposed two years.  What’s next?

The second question is ...”

145.The Authority replied (in translation):-

“There is a 2 year transitional period.  The 2 year means basically no change to the status quo.  Within 2 years if there is a determination request, it is possible that we follow the existing one way payment of MPNP.  That’s to say within 2 years there is no change.  After two years when the regulation is dismantled, we hope that they can reach a commercial settlement.  Otherwise, depending on the circumstances, we will make a determination in accordance with the most appropriate settlement mechanism.

The second question is...”

146.Read in context, I do not think that Remark 8 (underscored) shows apparent bias. 

147.Reference is made to a 2 year transitional period.  But it is clear that the reporter asking the question wished the Authority to assume that there was be a decision (as a result of the 2nd consultation exercise) to phase out MPNP following a 2 year period.

148.The reporter in effect was asking the Authority to speculate how, following the assumed transition, he would deal with FMIC.  Not surprisingly, the Authority answered on the basis of the assumptions implicit in the reporter’s question.

B.3.5 The effect of market distortion and Remark 9

149.Another reporter asked (in translation):-

“Do you mean because of market distortion this regulation must be dismantled[?]  [B]ecause [(]according to what you said[)] regardless of the result of the consultation[,] you will not allow the market to be distorted continuously....”

150.The Authority responded (in translation):-

“The distortion is that the current regime dictates one network technology paying one direction to the other network technology and this is not consistent with our technology neutral regulation.

You asked whether we have decided already or not. Of course there is no decision[,] otherwise we don’t need to consult here!  I hope that via the consultation we pointed out the reasons for dismantling the existing regulation and welcome the views from the industry and will decide after considering the industry’s submission....”

151.I have already discussed the Authority’s views on the potential for market distortion, given that the mobile phone has ceased to be a luxury good.  See my comments on Remarks 2, 3 and 5.

152.Similar observations can be made in respect of Remark 9 (underscored in the foregoing passage). 

153.More importantly, if there was any doubt as to the Authority’s open mind, the fair observer should have been comforted by the Authority’s assurance at the press conference that there had been “no decision”.

154.Such declaration by the Authority would fall within situation 1 identified above.

155.Even if the Authority’s declaration could be regarded as falling within situation 2, given the Authority’s track record in past consultations, I do not think it should be wholly disregarded by a fair-minded observer.

156.I do not accept Mr. Pannick’s submission that the Authority’s declaration at the press conference of “no decision” should be given little weight.

B.3.6 The possibility of usage-based charges and Remark 10

157.Another reporter asked (in translation):-

“Is there any concern that usage-based charge will mean that consumers will be charged more?”

158.The Authority replied (in translation):-

“...  [H]ow to say that ... a message today is[,] I mean[,] to the citizens[,] is that this change in interconnection charge arrangement is not related to a usage based charge.  If a company wants today to have usage based charge, it may do it now even without any change to the interconnection regime.”

159.PCCW’s complaint appears to be the reference to “this change”.  But again, in context, the expression is referring to “the change being proposed in the second Consultation Paper”.  There is no ground for alleging apparent bias here.

B.3.7 Ms. Foo’s response to a reporter (Remark 11)

160.I see nothing in Ms. Foo’s response that points to apparent bias. 

161.She refers to a “new environment”.  But that refers to the new regime which the proposal seeks to bring about through a withdrawal of MPNP.  I do not think Ms. Foo can fairly be read as saying that there definitely will be a new environment, regardless of what happens in the consultation.

162.She mentions a “transitional period” for operators to have “room for development”.  But again that must simply refer to what is being proposed.

163.Finally, complaint seems to be made that Ms. Foo described the second paper’s proposals as “reasonable and rational among the options”.  I am unable to see this as indicative of a closed mind.  It is the Authority’s duty to present proposals which he believes to be reasonable and rational.  It would be odd if he were to suggest irrational options.

164.Assume the Authority regards certain options as “reasonable and rational” (or even optimal) in light of the facts as he understands them.  That does not mean that he has closed his mind to contrary representations in respect of other “reasonable and rational” options.  A fair observer, who was not unduly sensitive or suspicious, could not therefore infer apparent bias from Remark 11.

B.4    Remark 4

165.PCCW says that Remark 4 confirms its suspicions of bias.

166.I do not think PCCW’s belief is justified.

167.In his article, Mr Au wrote as follows:-

“The current asymmetric arrangement is obsolete and would not be sustainable in the environment of ‘fixed mobile convergence’ (FMC), as user terminals served by the same network operator may be fixed at some times and moving at others. Interconnection rules based on the distinction on whether the user is fixed or mobile would become unenforceable. OFTA has therefore initiated a review on appropriate inter-connection charging arrangements in the FMC environment.

The first question to be addressed in the review is whether any market failure is expected when the existing regulation imposing the asymmetric arrangement is withdrawn.  If not, it should indeed be withdrawn.  The next question is whether some guidance to the industry on the basic rules of interconnection would still be necessary, in order to provide more certainty and predictability of the regulatory environment after the existing regulation is withdrawn.

If this guidance is warranted, in evaluating options of the basic rules, OFTA aims to identify arrangements that would facilitate the development of convergence services and encourage operators to negotiate efficient interconnection arrangements among themselves without regulatory intervention.  The arrangements should, in principle, simulate the outcome of commercial negotiations between operations of comparable bargaining power.  A symmetric arrangement would better satisfy these criteria than the existing asymmetric one.  This potential change is on the OFTA agenda of consultation with industry in 2006.”

168.It will be seen that Mr. Au merely repeats in his essay what he already stated in the 2nd paper and at the press conference.

169.Mr. Au’s unwavering message has been this:-

(1)     The old rationale for MPNP has become outmoded. 

(2)     Worse, the regulation may even become unenforceable in light of the blurring of fixed and mobile services which FMC will usher. 

(3)     OFTA has therefore initiated a consultation to invite the public’s views on whether there will be a market failure if MPNP is withdrawn. 

(4)     If no market failure can be identified, there would be no good justification for continued intervention in the market through the imposition of MPNP.

(5)     If no market failure can be identified, MPNP should be withdrawn and individual operators should be free to negotiate deals on FMIC.

170.It will be noticed that the foregoing summary of Mr. Au’s article in effect encapsulates §§S5-S10 of the Executive Summary to the second Consultation Paper.

171.In my judgment, for the reasons already explained in relation to Remarks 1 to 10, nothing in Mr. Au’s essay or the paper as summarised can be regarded as pre-judging or appearing to pre-judge.  I do not think that the Authority has treated (or apparently treated) the fate of MPNP any differently from any of the other isses raised by the 2^nd paper. 

172.As far as I can see, on the future of MPNP, the Authority retains an open mind capable of persuasion.  All the Authority has done is to set the parameters of debate along with the Authority’s preliminary views on the issues raised.

B.5    Conclusion

173.The fair-minded observer would reject any suggestion of apparent bias on the part of the Authority in relation to the press conference, the 2nd paper or Mr. Au’s article.

174.Mr. Pannick complained about the Authority’s dilatory response to PCCW’s 31 August 2006 letter, the Authority’s failure to disclose documents relating to the press conference which PCCW requested, and the Authority’s late disclosure of the press conference transcript.  He invites me to draw adverse inferences from these events in relation to apparent bias.

175.But, as Mr. Pannick accepts, the events of which he complains do not stand alone on the question of bias.  I must first find some indication of apparent bias in the press conference transcript.  If, having found material which would support a contention of apparent bias in the transcript, I am left in any doubt, then the events just mentioned might tip the balance in favour of PCCW.  However, given that I have found no sign of apparent bias in the transcript, the events do not advance PCCW’s case.

176.Therefore, I need not consider the events and their ramifications any further.

C.      The Authority’s decision

177.There is a minor issue among the parties in relation to the timing of this judicial review.  The question is whether the application has been launched prematurely.

178.Typically, an applicant for review complains of a decision and asks that the decision be quashed.  On its face, the present application is of that nature.  But on closer inspection the application is far from orthodox.

179.PCCW complains of the Authority’s “decision” on 11 October 2006 to proceed with the consultation, rather than curtail it.  The consultation as initiated on 14 July 2006 should have been abandoned (PCCW contends) because of the Authority’s bias.

180.In my view, Mr. Green is right to criticise PCCW’s mode of proceeding.

181.The consultation remains ongoing. 

182.The 11 October 2006 “decision” to proceed with the consultation was simply an intermediate step in the process of coming to a decision in relation to an appropriate FMIC regime.  No decision has yet been taken on FMIC.  PCCW is at best seeking review of a mere interlocutory direction by the Authority.

183.That interlocutory direction (to continue with the consultation) is only procedural in nature.  It is not a substantive determination. 

184.The Court does not ordinarily entertain judicial reviews of procedural directions.  See Financial Secretary v. Wong [2004] 1 HKLRD 303 (CFA), where Bokhary PJ stated (at §14):-

“The court’s judicial review jurisdiction is of a supervisory nature.  This extremely important jurisdiction is not meant for the purpose of micro-managing the activities of subordinate tribunals or administrative decision-makers.  It should hardly ever be exercised to review decisions that go only to procedure rather than to the end result.  I say ‘hardly ever’ rather than ‘never’ because there can be wholly exceptional cases calling for special treatment.... Quite apart from anything else, it often happens that th effect of questionable decisions made at an intermediate stage of a process are dissipated or overtaken by subsequent developments and turn out to have little or no impact by the time the final stage is reached.”

185.Mr. Pannick argues that it was right for PCCW to seek judicial review at this stage.  He says that this was because the Authority’s apparent bias would (if substantiated) have vitiated the entire consultation.  Time and money would needlessly have been spent on the consultation process, unless it were declared void at the earliest opportunity.

186.But I do not find that reasoning persuasive.  I do not believe that the present circumstances constitute an exceptional case of the sort specified by Bokhary PJ.

187.During the consultation, it would have been open to PCCW to make submissions on the issues raised by the Authority.  PCCW could have attempted to persuade the Authority that (say) there would be a glaring market failure if MPNP were replaced by BAK or some other regime. 

188.As Bokhary PJ points out, it often happens (and we know that with the Authority it has happened) that a decision-maker will change his mind and thereby rectify an originally questionable stance.

189.There are merits in waiting, rather than straightaway inviting the Court to micro-manage the administration of OFTA.  The latter is not the Court’s function.  Further, there is a danger that premature review of the Authority’s procedural “decision” will needlessly hold up a consultation.

190.If later PCCW’s submissions were rejected and if at that time there was cogent evidence that the Authority had failed properly to consider PCCW’s submissions, it seems to me that only then would it be appropriate to mount a judicial review.

191.Thus, on the basis of prematurity alone, I would have been inclined to refuse PCCW’s application.

IV.     CONCLUSION

192.PCCW has failed to make out a case of apparent bias on the part of the Authority.  Its application for judicial review is dismissed.

193.I shall now hear counsel on costs and consequential orders.

Mr David Pannick, QC and Mr John Bleach, SC, instructed by Messrs Clifford Chance, for the Applicant

Mr Nicholas Green, QC and Mr Johnny Mok, SC, instructed by Messrs Slaughter & May, for the Respondent

Mr Russell Coleman, SC, instructed by Messrs Mallesons Stephen Jaques, for the Interested Parties