REACH LTD.

COMMENTS ON THE TELECOMMUNICATIONS AUTHORITY’S

CONSULTATION ABOUT REACH LTD’S

APPLICATION FOR RECLASSIFICATION OF THE REMAINING

ROUTES ON THE CATEGORY B OBSERVATION LIST

AS CATEGORY A ROUTES

OF 15 JULY 2003

5 AUGUST 2003

1

Reach Ltd.

Comments on the Telecommunications Authority’s

Consultation Paper about Reach Ltd’s

Application for Reclassification of the

Remaining Routes on the Category B Observation List

as Category A Routes

of 15 July 2003

1 INTRODUCTION

1.1 In response to an application (the Application) by Reach Ltd. (REACH), on behalf of

its subsidiary company Reach Networks Hong Kong Limited (Reach Networks), on 23

June 2003 for reclassification of the remaining routes on the Category B Observation List

(the Routes) as Category A routes, the Telecommunications Authority (TA) issued, on

15 July 2003, a consultation paper (the Consultation Paper) inviting comment on the

Application.

1.2 In the Consultation Paper, as well as inviting general comment, the TA specifically asked

for comment on three questions:

Question 1: whether the MDF regime remains necessary, appropriate and efficient

in maintaining a level playing field for the external call services market.

Industry comments should be supplemented with any quantified impact

on competition as well as the administration cost incurred.

Question 2: specific comments on those routes highlighted by REACH in the

Application for abrupt traffic changes, accounting rate declines and

misreported refile traffic.

2

Question 3: any other issues relevant to the competitive status over any of the

Routes that may not be directly reflected in the traffic or pricing figures.

1.3 REACH, herein, provides its comments on these questions.

2. NECESSITY FOR THE MODIFIED DELIVERY FEE REGIME

2.1 The TA introduced the modified delivery fee (MDF) regime in the LAC Statement in late

1998.1 This was shortly before the commencement of full external call services

competition from 1 January 1999.

2.2 The reason the TA introduced the MDF regime was because of a concern that for routes

which he considered not competitive (Category B routes) in the incoming direction,

Reach Networks could use any “excess” inpayments it receives to offset or “net account”

its outpayments to gain an unfair competitive advantage in the outgoing direction.

2.3 Subsequent to the introduction of the MDF regime, the TA has classified or reclassified

all but the 44 routes remaining on the Category B Observation List (see Attachment 1) as

competitive in both the outgoing and incoming directions (that is, as Category A routes),

while the Routes are regarded as competitive in the outgoing direction but not in the

incoming direction.

Absence of Potential for Competitive Harm

2.4 While REACH has long maintained that the Routes are competitive in the incoming

direction – through alternative connections and refiling – REACH also maintains that the

level of incoming traffic on these routes and their associated inpayments are now so

immaterial that there is no longer a justification for the MDF regime to continue.

1 “Local Access Charge and Modified Delivery Fee Arrangements, Statement of the Telecommunications Authority,Hong Kong”, dated 25 November 1998 (the LAC Statement).

3

2.5 The TA has stated that his only remaining concern regarding the competitiveness of the

Routes in the incoming direction – and the need for the MDF regime – is the potential

created for net accounting :

“[B]y lifting the gateway price control in the outgoing direction …, the only significance

for retaining Category B regulation is the sharing of any supernormal profits from

settlement inpayment between external gateway and local network operators under the

MDF regime.”2

2.6 The incoming traffic for the Routes for June 2003 was only x minutes (actual figures

provided to the TA) (see Attachment 1), representing less than 1.5% of Reach Networks’

total incoming minutes, and generating only $ x in “supernormal” profits (actual figures

provided to the TA) with which to potentially net account. Both the level of incoming

traffic on the Routes and the amount with which to potentially net account are clearly

immaterial in the context of overall accounting rate inpayments and outpayments. It

should be apparent that the very limited potential for Reach Networks to net account – in

what are already fully competitive outgoing markets – is negligible, and there is no risk

of competitive harm arising as a result of any “excess” inpayments.

2.7 Consequently, because of the workings of market forces for both incoming and outgoing

minutes, there is now no risk of competitive harm arising from inpayments on the Routes.

Equally, as no competitive harm can arise in this situation, there is no need for the TA to

continue with the arrangements he put in place as a safeguard against competitive harm –

the MDF regime. The goal of the MDF regime – that inpayments do not provide Reach

Networks with a source to net account to any material extent – has been achieved. The

MDF regime is, therefore, no longer necessary, appropriate or efficient in maintaining a

level playing field for the external call services market. This market has been fully

competitive for some while, and has reached a degree of maturity where such intrusive

regulatory intervention is no longer needed.

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2.8 REACH anticipates that other commentators opposed to the Application may attempt to

make a case that discontinuing the MDF which Reach Networks pays to the Fixed

Telecommunications Network Services (FTNS) licensees and mobile operators in respect

of incoming traffic on the Routes will harm them as they rely upon the MDF to support

their businesses (or to potentially net account themselves). REACH suggests that any

such comments would be frivolous.

2.9 First, the MDF is not an “entitlement” to which the FTNS and mobile operators have a

right in perpetuity. The MDF is simply an outcome of regulation to balance what the TA

perceived at the time of its introduction as the not yet full workings of market forces.

Now that market forces are fully in effect – and REACH maintains have been for a long

time – there is no need for regulatory intervention, and unnecessary regulation should be

withdrawn. Consequently, as markets have become more competitive, the perceived

requirement for a mechanism to “level the playing field” through the MDF has been

eroded and the MDF “subsidy” is no longer needed.

2.10 Second, the amount of MDF received by each FTNS licensee and mobile operator is

insignificant. The cessation of MDF payments to these operators will not have any

impact on either their individual competitiveness or the competitiveness of the overall

market:

Table 1

MDF Payments for June 2003

Recipient $000

PCCW-HKT Telephone Limited x

Hong Kong Broadband Network Limited x

Hutchison Global Communications Limited x

Wharf New T&T Limited x

New World Telephone Limited x

New World PCS x

2 “Application for Reclassification of all the Category B and Category B Observation List Routes as Category A,

5

People x

Sunday x

CSL GSM x

Hutchison Telephone Limited x

CSL DAMPS x

Smartone x

Others x

_____

(Actual figures provided to the TA) x

====

2.11 REACH maintains that because of the negligible sums involved, neither the retention of

the MDF by Reach Networks in future nor its loss for the current recipients will have any

potential for competitive harm.

Administrative Burden and Cost

2.12 Reach Networks shoulders a considerable burden and bears a not insignificant cost in

maintaining and supporting the MDF and others arrangements resulting from the

continued classification of the Routes as Category B – a burden and cost from which

Reach Networks derives no benefit itself.

2.13 For example, in a recent letter to OFTA3, REACH sought classification from the TA why

Reach Networks is required to support and maintain the arrangements and systems for

rebates of the local access charge (LAC) by FTNS licensees to external

telecommunications services (ETS) operators for outgoing traffic over the Routes

through the Reach Networks gateway. The system support costs for these arrangements

alone are $ x a year (actual figures provided to the TA) – for something which Reach

Networks does not even use itself. Added to the support staff and others system costs

associated with the MDF regime, the cost to Reach Networks of the continued Category

Statement of the Telecommunications Authority”, dated 30 December 2002 (the 2002 Reclassification Statement).

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B route classification of the Routes is approximately $ x a year (actual figures provided

to the TA) – almost one third of the annual MDF payments themselves.

2.14 Additionally, maintaining the MDF regime must impose certain costs on OFTA which

could be avoided (or resources otherwise deployed) if the MDF regime came to an end.

These costs include the monthly recalculation of the MDF following accounting rate

changes, tests to ensure that exchange rate movements are within acceptable parameters,

maintaining and updating the OFTA website for changes in the MDF, issuing a statement

of changes to the MDF, and advising relevant licensees that there has been a change in

the MDF.

2.15 Given that no risk of competitive harm arises from ending the MDF regime, that (as will

be expanded upon below) the Routes are competitive in the incoming direction, and the

unnecessary burden and cost to both Reach Networks and OFTA, the TA should

reclassify the Routes as Category A immediately.

3 ANALYSIS OF THE ROUTES

3.1 In the Consultation Paper, the TA has said that he would focus his analysis of the

Application on any changes in accounting rates over the Routes since the 2002

Reclassification Statement4. The rationale for such an approach is:5

“When there is genuine price competition in the delivery of incoming traffic to Hong

Kong, competitive pressure would force Reach Networks to negotiate for lower

accounting rates in order to compete with the alternative connections. The level of

accounting rates in relation to cost is best reflected by the difference between MDF and

[LAC] … When the settlement in payment is equal to the sum of the costs of external

switching and transmission and the cost of domestic connection, the MDF is simply the

LAC.”

3 Letter from REACH to Mr M H Au of OFTA dated 20 June 2003.4 See paragraph 11 of the Consultation Paper.5 See paragraphs 27 and 28 of the 2002 Reclassification Statement

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[T]he convergence between MDF and LA is an indirect indication of actual or potential

competitive pressure … as MDF converges with LAC, Category B regulation becomes

irrelevant.”

3.2 While REACH agrees with the TA that reductions in the accounting rates are strong

indications of competitive pressure, the absence of accounting rate reductions since the

2002 Reclassification Statement is not evidence that the Routes are not competitive in the

incoming direction. There are a number of sound and practical reasons for this.

3.3 Attachment 1 shows that 32 of the 44 routes on the Category B Observation List are net

recipients of external traffic from Reach Networks – those routes with an In/Out (I/O)

ratio of less than 100%. That is, Reach Networks sends more traffic to these locations

than it receives from them. Material levels of imbalance in telecommunications traffic

often develop with less developed economies as many of their citizens of working age

seek either temporary or permanent employment overseas. The greater access to and

affordability of telephone calls for these expatriate workers in overseas locations mean

that more calls are made from overseas to their home countries than from their home

countries to external locations.

3.4 Where there are such traffic imbalances, the distant end operator or administration

receives more in inpayments than it spends in outpayments. Therefore, it is often in the

distant end administrators’ interests to maintain higher accounting rates to maximise their

net inpayments. As a reduction in accounting rates requires the agreement of both parties,

there is little that Reach Networks can do to reduce accounting rates if the other

administration maintains an entrenched position of resistance to accounting rate

changes – particularly if the other administration is a long established incumbent operator.

3.5 It must also be remembered that in some of these countries, the distances and facilities

(which may not be as modern as Hong Kong’s) required to terminate a call are likely to

be greater than in Hong Kong. Therefore a seemingly high accounting rate may in fact

be cost justified.

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3.6 As net inpayments are often important sources of foreign currency earnings (sometimes

the main source) in developing economies, their respective governments sometimes

either openly or tacitly encourage the retention of high accounting rates to preserve these

foreign currency streams.

3.7 However, this does not mean that there is not competition for incoming traffic on these

routes, or that there is not genuine price competition. First, distant end operators and

administrators will offer at least the same price as the accounting rates to Reach

Networks’ competitors – so Reach Networks has no competitive advantage. Second,

while outgoing traffic from Reach Networks to these locations may be settled at the

accounting rate outpayment rate, much of the traffic incoming to Hong Kong from these

locations is not carried by Reach Networks or settled under the accounting rate system.

Rather, it is hubbed or refiled and bypasses both Reach Networks and the accounting rate

system. The TA is already aware that this is a widespread practice as this is one of the

potential external feeder channels to the alarming increase which the TA has seen in LAC

bypass for external traffic terminating in Hong Kong.

3.8 For those routes where traffic incoming to Hong Kong is greater than outgoing traffic,

these routes are mainly Middle Eastern countries with affluent populations and often

government subsidised international call charges, generate negative net inpayments for

Reach Networks, have immaterial volumes of traffic in either direction, and whose traffic

through the Reach Networks gateway is declining.

3.9 REACH, therefore, maintains that even where there have not been reductions in

accounting rates it does not mean that a route is not competitive or that there is not

genuine price competition. Although REACH does not have the total Hong Kong

incoming traffic figures by route which are necessary to make a route-by-route

comparison of Reach Networks incoming traffic against the industry total for each route,

Attachment 2 does provide a comparison of Reach Networks incoming traffic for the past

two and a half years for major Category B Observation List routes against OFTA’s

figures for all routes other then the top 10 Category A routes. While not strictly an

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“apples with apples” comparison, the OFTA trend for the period (including the Routes)

shows an increase in incoming minutes while Reach Networks’ figures show significant

decreases in incoming minutes. Also, REACH further believes that the increasing trend

shown by the OFTA figures is understated as hubbed or refiled traffic may not have been

declared as coming from its true point of origin.

3.10 Attachment 3 shows that Reach Networks’ incoming traffic over the Routes has been

declining at a faster pace than the decline in Reach Networks’ overall incoming traffic –

nearly 99% of which is on fully competitive Category A routes. Both these sets of

analysis demonstrate that Reach Networks has lost considerable volumes of incoming

traffic over the Routes to its competitors. There is only one reason for this migration of

incoming traffic from Reach Networks to other operators, and that is that Reach

Networks’ competitors are able to offer lower prices – there is genuine price competition.

3.11 To support the fact that there is genuine price competition in the incoming direction over

the Routes, the TA has already recognised that refile rates are available in the outgoing

direction for all but one of the Routes.6 As there is essentially no difference in the

facilities required to send traffic in one direction rather than the other, refile rates are

commonly available in both directions. Therefore, if the TA has concluded that there is

genuine price competition from refile in the outgoing direction, it follows that there is

also genuine price competition from refile in the incoming direction. For the one route

for which there were no refile rates – Sakhalin – Reach Networks receives an average of

just over 200 minutes of incoming traffic a month, which cannot be considered a material

level of traffic.

3.12 A more recent review of one refiler’s rates shows that refile is still available for most of

the Routes (see Attachment 4), and reviews of other refilers’ rates show that Sakhalin is

the only exception.

6 “Application for a Declaration of Non-Dominance in the Retail External Call Services Market for all the Routesover which PCCW-HKT Telephone Limited is still regarded as Dominant, Statement of the TelecommunicationsAuthority, Hong Kong.” dated 8 October 2002, paragraph 51.

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3.13 Looking at the refile rates for the major refile hubs of the US and the UK to Hong Kong,

plus an estimation of the cost of getting from the originating location to the refile hub, it

can be seen that the market price for refiling traffic into Hong Kong is far lower than the

accounting rate inpayment (see Attachment 5). Consequently, it can be concluded that

refile provides vigorous price competition for traffic incoming to Hong Kong.

3.14 In addition to the evidence of genuine price competition provided by this refile rate

comparison and the migration of incoming traffic from Reach Networks to its

competitors, there have been a significant number of inpayment rate reductions since the

2002 Reclassification Statement. In the period between the 2002 Reclassification

Statement and the Application, there were reductions in accounting rates over 16 of the

Routes – Cambodia, Russia-Rostelcom, Iran, Pakistan, Seychelles, South Africa, India,

Mongolia, Nepal, Turkey, Brunei, Sri Lanka, Vietnam, Chile, Egypt, and Mexico. The

inpayment rates for South Africa and Brunei are now below the cost of external

switching, transmission and the LAC – negative net inpayments.

3.15 Subsequent to the Application, there have been inpayment rate reductions over the routes

for Bahrain, North Korea, and the United Arab Emirates, and a further reduction in the

rate for Cambodia. This downward pricing pressure is expected to intensify even further

with the re-emergence of global operators like WorldCom capitalising on the lower

financing costs afforded by their restructured balance sheets.

3.16 In a further development, Sri Lanka liberalised its wholesale international

telecommunications market for traffic origination and termination in March 2003 – and

an estimated 20 plus licences have been issued. In terms of liberalised

telecommunications environments, it should be noted that Guam is an Unincorporated

Territory of the United States and may be served under an FCC 214 authorisation for the

US mainland. Similarly, Diego Garcia is a British Indian Ocean Territory.

3.17 While the total incoming traffic for the Routes (less than 1.5% of Reach Networks’ total

incoming traffic) and the total associated “supernormal” profits from inpayments (at $ x

for June) (actual figures provided to the TA) are not material, the traffic and associated

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inpayments for some of the Routes are so small as not to merit consideration beyond a

cursory review. Reach Networks received less than 2000 incoming minutes during June

2003 over the routes for Argentina, Brazil, Chile, Fiji, Jordan, Laos, Nakhodka, Paraguay,

Peru, Sakhalin, Seychelles, Tonga, Uruguay, and Yemen Republic (see Attachment 1).

There were no incoming minutes at all over some of these routes.

3.18 There are no regulatory or other barriers to entry for operators wishing to compete for

incoming traffic over the Routes. The market evidence of Reach Networks’ declining

traffic figures, the widespread availability of refile routes, and the reductions in

accounting rates all demonstrate the availability of alternative connections and the

existence of sustainable price competition.

4 OHER ISSUES

4.1 One issue which has rarely been considered when assessing the price competitiveness of

routes in today’s market is that Reach Networks can be hampered rather than helped by

its legacy position of incumbency and the accounting rate obligations and restrictions

associated with that legacy.

4.2 Having developed with the accounting rate system and being the recognised international

administration for Hong Kong, Reach Networks does not have the same freedom and

flexibility as its competitors to pick and choose where and how it sends and receives its

external switched minutes. While Reach Networks’ competitors are free to buy and sell

minutes in the refile market at will, Reach Networks has long standing obligations, which

tie it closer to bilateral agreements with other administrations and the accounting rate

system. Reach Networks’ competitors have an advantage in that they have greater

opportunity to play the market for their international capacity.

4.3 In any event, the routing of traffic incoming to Hong Kong is largely at the discretion of

the operator who originates that traffic. It would be unusual for an operator who has an

accounting rate agreement with Reach Networks and who wishes to receive the full

inpayment rate for traffic from Hong Kong to that location to then approach Reach

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Networks with a refile proposal for the return traffic to Hong Kong. That operator will

turn to someone other than Reach Networks for refile options.

5 CONCLUSION

5.1 REACH has clearly demonstrated that the level of “supernormal” profits arising from

inpayments over the Routes is immaterial and still declining – having fallen from $ x a

month in May 2003 to $ x in June (actual figures provided to the TA). No competitive

harm can arise even if Reach Networks were to use these “excess” inpayments to net

account to the fullest extent possible – there are, therefore, no market or other

justifications for the TA to continue with the MDF regime. However, given that

maintaining and supporting the MDF regime and associated arrangements costs Reach

Networks $ x a year (actual figures provided to the TA), plus the administrative burden

and cost to OFTA, there is every justification for reclassifying the Routes and ending the

MDF regime.

5.2 The analysis of Reach Networks’ declining incoming traffic over the Routes, the

explanation why accounting rate reductions are not always necessary for a route to be

competitive in the incoming direction, the actual accounting rate reductions, and the

comparisons of inpayment rates against refile rates all demonstrate that the Routes are

highly competitive in terms of both connectivity and prices in the incoming direction.

Further, REACH has commented that Reach Networks’ legacy position of incumbency

and ties with the accounting rate system probably work to its disadvantage in today’s

market environment.

5.3 In conclusion, REACH contends that there is overwhelming evidence that the Routes are

highly competitive in the incoming direction and, that aside, the materiality of

“supernormal” profits from the associated inpayments is so insignificant that the MDF

regime is no longer justified – both in terms of a means of protection against potential

competitive harm, and because of the disproportionately high cost of maintaining the

regime compared to the level of MDF payments themselves. Accordingly, REACH

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requests the TA to immediately reclassify the all remaining routes on the Category B

Observation List as Category A routes.

Routes on the Category B Observation List Attachment 1

Month DataApr-03 May-03 Jun-03 Total Outbound Min Total Inbound Min

Country Outbound Min Inbound Min Outbound Min Inbound Min Outbound Min Inbound Min IO Ratio1 Argentina2 Bahrain3 Bangladesh4 Brazil5 Brunei Darussalam6 Cambodia7 Chile8 Cyprus9 Diego Garcia

10 Egypt11 Fiji12 Guam13 India (ACTUAL FIGURES 14 Iran PROVIDED TO THE TA)15 Israel16 Jordan17 Kenya18 Korea DPR (North Korea)19 Laos20 Maldives21 Mariana Is22 Mauritius23 Mexico24 Mongolia Pr25 Myanmar (Burma)26 Nakhodka27 Nepal28 Pakistan29 Paraguay30 Peru31 Poland32 Qatar33 Russia34 Sakhalin35 Saudi Arabia36 Seychelles37 South Africa38 Sri Lanka39 Tonga40 Turkey41 United Arab Emirates 42 Uruguay43 Vietnam44 Yemen Rep

Grand Total

Attachment 2

Inbound Traffic to HK via REACH Gateway (min)

India Israel Saudi Arabia Brazil Mexico Myanmar Poland Sri Lanka Vietnam

Others Total(OFTA non-

Top10)Jan-01Feb-01 (ACTUAL FIGURES PROVIDED TO THE TA)Mar-01Apr-01

May-01Jun-01Jul-01

Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02

May-02Jun-02Jul-02

Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03

May-03Jun-03

20012002

Attachment 3

Inbound Traffic over the Routes via REACH (min)

Sum of IB MonthCountry Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 YTD 2003IndiaUnited Arab Emirates (ACTUAL FIGURES PROVIDED TO THE TA)South AfricaVietnamSaudi ArabiaBangladeshPakistanSri LankaIsraelMauritiusTurkeyNepalCambodiaBahrainBrunei DarussalamOthersCat B Total

Total REACH InboundCat B as Total %

Top 10 TotalTop 10 as total Cat B %

Attachment 4Page 1/7

Refile Rates

AXCESSRATE SAMPLEThis is a SAMPLE report for 01/10/2003. An recent report is available for subscribers at www.axcessrate.com.

Country Destination UMI TOD AVG_RATE AVG_ASR(% MIN_RATE MIN_ASR(%) MAX_RATE MAX_ASR(%CHANGE_DAY(%)Afghanistan Proper AFX All DayAfghanistan Mobile AFM All Day (ACTUAL FIGURES PROVIDED TO THE TA)Albania Proper ALX All DayAlbania Mobile ALM All DayAlbania Tirane ALTIA All DayAlgeria Proper DZX All DayAlgeria Algiers DZALG All DayAngola Mobile AOM All DayArgentina Proper ARX All DayArgentina Buenos Aires ARBAS All DayArgentina Cordoba ARCOR All DayArgentina Mar del Plata ARMDQ All DayArgentina Mendoza ARMDZ All DayArgentina Rosario ARROS All DayArmenia Proper AMX All DayArmenia Yerevan AMEVN All DayAruba Proper AWX All DayAruba Mobile AWM All DayAustralia Proper AUX All DayAustralia Mobile AUM All DayAustralia Sydney AUSYD All DayAustria Proper ATX All DayAustria Mobile - Connect ATCAM All DayAustria Mobile - Mobilkom ATMAM All DayAustria Mobile - Telering ATTRM All DayAustria Mobile - Tmobile ATTMM All DayAustria Vienna ATVIE All DayAzerbaijan Proper AZX All DayAzerbaijan Mobile AZM All DayBahamas Proper BSX All DayBangladesh Proper BDX All DayBangladesh Mobile BDM All DayBangladesh Chittagong BDCGP All DayBangladesh Dhaka BDDAC All DayBangladesh Sylet BDSYT All DayBelarus Proper BYX All DayBelarus Mobile BYM All DayBelarus Minsk BYMSQ All DayBelgium Proper BEX All DayBelgium Brussels BEBRU All DayBelgium Mobile - BelgacomBEBGM Off-peakBelgium Mobile - BelgacomBEBGM PeakBelgium Mobile - Mobistar BEMSM Off-peakBelgium Mobile - Mobistar BEMSM PeakBelgium Mobile - Orange BEORM Off-peakBelgium Mobile - Orange BEORM PeakBenin Proper BJX All DayBolivia Proper BOX All DayBolivia Mobile BOM All DayBolivia Cochabamba BOCBB All DayBolivia La Paz BOLPB All DayBolivia Santa Cruz BOSCZ All DayBosnia and HerzProper BAX All DayBosnia and HerzMobile BAM All DayBosnia and HerzSarajevo BASJJ All DayBotswana Mobile BWM All DayBrazil Proper BRX All DayBrazil Belo Horizonte BRBHZX All DayBrazil Belo Horizonte MoBRBHZM All DayBrazil Brasilia BRBSA All DayBrazil Campinas BRCPQ All DayBrazil Other Cities MobileBROTM All DayBrazil Rio De Janeiro BRRIOX All DayBrazil Rio De Janeiro MoBRRIOM All DayBrazil Sao Paulo Mobile BRSPOM All DayBrazil Vitoria BRVIX All DayBrunei Darussal Mobile BNM All DayBulgaria Proper BGX All DayBulgaria Mobile - Globul BGGBM All DayBulgaria Mobile - Mobiltel BGMLM All DayBulgaria Sofia BGSOF All DayBulgaria Varna BGVAR All DayBurkina Faso Proper BFX All DayCambodia Mobile KHM All DayCameroon Proper CMX All DayCameroon Mobile CMM All DayCameroon Douala CMDLA All DayCanada 204 Manitoba CAN204 All Day

Attachment 4Page 2/7

Canada 250 British ColumbCAN250 All DayCanada 306 SaskatchewanCAN306 All DayCanada 403 Alberta CAN403 All DayCanada 416 Metro TorontoCAN416 All DayCanada 506 New BrunswicCAN506 All DayCanada 514 Quebec CAN514 All DayCanada 519 Ontario CAN519 All DayCanada 604 British ColumbCAN604 All DayCanada 613 Ontario CAN613 All DayCanada 780 Alberta CAN780 All DayCanada 819 Quebec CAN819 All DayCanada 902 Nova Scotia CAN902 All DayCanada 905 Ontario CAN905 All DayCape Verde Proper CVX All DayChile Proper CLX All DayChile Mobile CLM All DayChile Santiago CLSTO All DayChina Proper CNX All DayChina Mobile CNM All DayChina Beijing CNBJG All DayColombia Proper COX All DayColombia Mobile COM All DayColombia Bogota COBOG All DayColombia Cali COCLO All DayColombia Medellin COMDE All DayColombia Palmira COPMA All DayColombia Pereira COPEI All DayComoros Proper KMX All DayCongo Proper CGX All DayCongo (Zaire), DMobile CDM All DayCote D'Ivoire Mobile CIM All DayCote D'Ivoire Abidjan CIABJ All DayCroatia Proper HRX All DayCroatia Mobile HRM All DayCuba Proper CUX All DayCyprus Proper CYX All DayCyprus Mobile CYM All DayCzech Republic Proper CZX All DayCzech Republic Mobile CZM All DayDenmark Proper DKX All DayDenmark Mobile DKM All DayDenmark Copenhagen DKCPH All DayDominican RepuProper DOX All DayDominican RepuMobile DOM All DayDominican RepuSanto Domingo DOSDQ All DayEcuador Proper ECX All DayEcuador Mobile ECM All DayEcuador Bolivar ECBVR All DayEcuador Cuenca ECCUE All DayEcuador Guayaquil ECGYE All DayEcuador Quito ECUIO All DayEgypt Proper EGX All DayEgypt Mobile EGM All DayEgypt Cairo EGCAI All DayEl Salvador Proper SVX All DayEl Salvador Mobile SVM All DayEritrea Proper ERX All DayEstonia Proper EEX All DayEstonia Mobile EEM All DayEthiopia Addis Ababa ETADD All DayFiji Proper FJX All DayFinland Proper FIX All DayFinland Mobile FIM All DayFinland Helsinki FIHEL All DayFrance Proper FRX All DayFrance Mobile - BouyguesFRBOM Off-peakFrance Mobile - BouyguesFRBOM PeakFrance Mobile - Orange FRORM Off-peakFrance Mobile - Orange FRORM PeakFrance Mobile - Orange FRORM WeekendFrance Mobile - SFR FRSFM Off-peakFrance Mobile - SFR FRSFM PeakFrance Mobile - SFR FRSFM WeekendFrance Paris FRPAR All DayGabon Proper GAX All DayGabon Mobile GAM All DayGambia Proper GMX All DayGeorgia Mobile GEM All DayGermany Proper DEX All DayGermany Berlin DEBER All DayGermany Cologne DECGN All DayGermany Dusseldorf DEDUS All DayGermany Essen DEESS All DayGermany Frankfurt DEFRA All DayGermany Hamburg DEHAM All DayGermany Hannover DEHAJ All Day

Attachment 4Page 3/7

Germany Mannheim DEMHM All DayGermany Mobile - D1 (TmobDETMM Off-peakGermany Mobile - D1 (TmobDETMM PeakGermany Mobile - E1 (E-Plu DEEMM Off-peakGermany Mobile - E1 (E-Plu DEEMM PeakGermany Mobile - O2 DEOXM Off-peakGermany Mobile - O2 DEOXM PeakGermany Mobile - Vodafone DEVDM Off-peakGermany Mobile - Vodafone DEVDM PeakGermany Munich DEMUC All DayGermany Stuttgart DESTR All DayGermany Wiesbaden DEWBN All DayGhana Proper GHX All DayGhana Mobile GHM All DayGhana Accra GHACC All DayGhana Tema GHTMA All DayGreece Proper GRX All DayGreece Athens GRATH All DayGrenada Proper GDX All DayGuatemala Proper GTX All DayGuatemala Mobile GTM All DayGuinea Proper GNX All DayGuinea Mobile GNM All DayGuyana Proper GYX All DayHaiti Proper HTX All DayHaiti Mobile - Comcel HTCCM All DayHaiti Mobile - Haitel HTHTM All DayHonduras Proper HNX All DayHonduras Mobile HNM All DayHong Kong Proper HKX All DayHong Kong Mobile HKM All DayHungary Proper HUX All DayHungary Mobile HUM Off-peakHungary Mobile HUM PeakHungary Mobile HUM WeekendHungary Budapest HUBUD All DayIceland Proper ISX All DayIndia Proper INX All DayIndia Ahmedabad INAHDX All DayIndia Ahmedabad (Guja INAHDM All DayIndia Bangalore INBLR All DayIndia Bombay INBOM All DayIndia Calcutta INCCU All DayIndia Gujarat INGUJX All DayIndia Hyderabad INHYD All DayIndia Karnataka INKNKX All DayIndia Karnataka Mobile INKNKM All DayIndia Kerala INKLAX All DayIndia Madras INMAA All DayIndia New Delhi INNDIX All DayIndia New Delhi Mobile INNDIM All DayIndia Other Cities MobileINOTM All DayIndia Pune INPNE All DayIndia Punjab INPUNX All DayIndia Punjab Mobile INPUNM All DayIndonesia Proper IDX All DayIndonesia Mobile IDM All DayIndonesia Surabaya IDSUB All DayIran Proper IRX All DayIran Mobile IRM All DayIran Tehran IRTHR All DayIraq Proper IQX All DayIraq Baghdad IQBDD All DayIreland Proper IEX All DayIreland Mobile IEM Off-peakIreland Mobile IEM PeakIreland Dublin IEDUB All DayIsrael Proper ILX All DayIsrael Jerusalem ILJSM All DayIsrael Mobile - Cellcom ILCCM All DayIsrael Mobile - Jawwal ILJWM All DayIsrael Mobile - Orange ILORM All DayIsrael Mobile - Pelephon ILPPM All DayItaly Proper ITX All DayItaly Milan ITMXP All DayItaly Mobile - Blu ITBRM PeakItaly Mobile - Omnitel ITORM Off-peakItaly Mobile - Omnitel ITORM PeakItaly Mobile - Omnitel ITORM WeekendItaly Mobile - TIM ITTIM Off-peakItaly Mobile - TIM ITTIM PeakItaly Mobile - Wind RadITWRM Off-peakItaly Mobile - Wind RadITWRM PeakItaly Rome ITROM All DayJamaica Proper JMX All DayJamaica Mobile - CWJ JMCWM All Day

Attachment 4Page 4/7

Jamaica Mobile - CentenniaJMCNM All DayJamaica Mobile - Digicell JMDGM All DayJapan Proper JPX All DayJapan Mobile JPM All DayJapan Tokyo JPTYOX All DayJordan Proper JOX All DayJordan Mobile JOM All DayJordan Amman JOAHH All DayKazakhstan Proper KZX All DayKazakhstan Mobile KZM All DayKazakhstan Almaty KZALA All DayKazakhstan Karaganda KZKGA All DayKenya Mobile KEM All DayKenya Mombassa KEMBA All DayKorea, South Proper KRX All DayKorea, South Mobile KRM All DayKorea, South Seoul KRSEL All DayKuwait Proper KWX All DayKuwait Mobile KWM All DayKyrgyzstan Proper KGX All DayKyrgyzstan Mobile KGM All DayLatvia Proper LVX All DayLatvia Mobile LVM All DayLebanon Proper LBX All DayLebanon Mobile LBM All DayLibya Proper LYX All DayLithuania Proper LTX All DayLithuania Mobile LTM All DayMacedonia Proper MKX All DayMacedonia Mobile MKM All DayMalaysia Proper MYX All DayMalaysia Mobile MYM All DayMalaysia Johor Baharu MYJHB All DayMalaysia Kuala Lumpur MYKUL All DayMalaysia Malacca MYMLA All DayMalaysia Penang MYPEN All DayMali Proper MLX All DayMali Mobile MLM All DayMalta Mobile MTM All DayMexico Proper MXX All DayMexico Guadalajara (JAL) MXGDLX All DayMexico Mexico City (DF) - MXMEXX All DayMexico Mexico City (DF) - MXMEXM All DayMexico Monterrey (NL) - FMXMTYX All DayMexico Rate Group 1 MXRG1 All DayMexico Rate Group 2 MXRG2 All DayMexico Rate Group 3 MXRG3 All DayMexico Rate Group 4 MXRG4 All DayMoldova Proper MDX All DayMoldova Mobile MDM All DayMoldova Chisinau MDCNU All DayMonaco Mobile MCM All DayMorocco Proper MAX All DayMorocco Mobile MAM All DayMorocco CasaBlanca MACAS All DayMorocco Rabat MARBA All DayMyanmar Proper MMX All DayNamibia Proper NAX All DayNepal Proper NPX All DayNepal Kathmandu NPKTM All DayNetherlands Proper NLX All DayNetherlands Amsterdam NLAMS All DayNetherlands Mobile - Ben/TmobNLTMM Off-peakNetherlands Mobile - Ben/TmobNLTMM PeakNetherlands Mobile - Ben/TmobNLTMM WeekendNetherlands Mobile - DutchtoneNLDUM Off-peakNetherlands Mobile - DutchtoneNLDUM PeakNetherlands Mobile - KPN NLKPM Off-peakNetherlands Mobile - KPN NLKPM PeakNetherlands Mobile - KPN NLKPM WeekendNetherlands Mobile - O2 NLOXM Off-peakNetherlands Mobile - O2 NLOXM PeakNetherlands Mobile - Vodafone NLVDM Off-peakNetherlands Mobile - Vodafone NLVDM PeakNetherlands Mobile - Vodafone NLVDM WeekendNetherlands Ant Mobile ANM All DayNetherlands Ant Curacao ANCCO All DayNew Zealand Proper NZX All DayNew Zealand Auckland NZAKL All DayNew Zealand Mobile - Telecom NZTNM All DayNew Zealand Mobile - Vodafone NZVDM All DayNicaragua Proper NIX All DayNiger Proper NEX All DayNigeria Proper NGX All DayNigeria Mobile NGM All DayNigeria Lagos NGLOSX All Day

Attachment 4Page 5/7

Norway Proper NOX All DayNorway Mobile NOM All DayNorway Oslo NOOSL All DayOman Proper OMX All DayOman Mobile OMM All DayPakistan Proper PKX All DayPakistan Islamabad PKISB All DayPakistan Karachi PKKHI All DayPakistan Lahore PKLHE All DayPakistan Mobile - IstaphonePKISM All DayPakistan Mobile - Mobilink PKMKM All DayPakistan Mobile - PakTel PKPTM All DayPakistan Mobile - Ufone PKUFM All DayPanama Panama City PAPTY All DayPeru Proper PEX All DayPeru Lima PELIMX All DayPeru Lima Mobile PELIMM All DayPhilippines Proper PHX All DayPhilippines Manila PHMNL All DayPhilippines Mobile - Other CarPHOTM All DayPhilippines Mobile - Smart PHSMM All DayPoland Proper PLX All DayPoland Mobile PLM All DayPoland Warsaw PLWAW All DayPortugal Proper PTX All DayPortugal Mobile PTM All DayPortugal Azores PTAZS All DayPortugal Lisbon PTLIS All DayPuerto Rico Proper PRX All DayRomania Proper ROX All DayRomania Bucharest ROBBU All DayRomania Mobile - CosmoromROCSM All DayRomania Mobile - Mobifon ROMFM All DayRomania Mobile - Mobil RomROMRM All DayRussia Proper RUX All DayRussia Mobile RUM All DayRussia Leningrad Region RULEN All DayRussia Moscow RUMOW All DayRussia St. Petersburg RUSMA All DaySao Tome and PProper STX All DaySaudi Arabia Mobile SAM All DaySaudi Arabia Dhahran SADHA All DaySaudi Arabia Jeddah SAJED All DaySaudi Arabia Riyadh SARUH All DaySenegal Proper SNX All DaySenegal Mobile SNM All DaySenegal Dakar SNDKR All DaySierra Leone Proper SLX All DaySierra Leone Mobile SLM All DaySierra Leone Freetown SLFTN All DaySingapore Proper SGX All DaySingapore Mobile SGM All DaySlovakia Proper SKX All DaySolomon IslandsMobile SBM All DaySomalia Proper SOX All DaySomalia Hormud SOHM All DaySomalia Nationlink SONK All DaySomalia STG Galcom SOSG All DaySomalia Telesom SOTL All DaySouth Africa Proper ZAX All DaySouth Africa Mobile ZAM All DaySouth Africa Cape Town ZACPT All DaySouth Africa Johannesburg ZAJNB All DaySpain Proper ESX All DaySpain Barcelona ESBCN All DaySpain Madrid ESMAD All DaySpain Mobile - RetevisionESRVM Off-peakSpain Mobile - RetevisionESRVM PeakSpain Mobile - TelefonicaESTCM Off-peakSpain Mobile - TelefonicaESTCM PeakSpain Mobile - TelefonicaESTCM WeekendSpain Mobile - Vodafone ESVDM Off-peakSpain Mobile - Vodafone ESVDM PeakSpain Mobile - Vodafone ESVDM WeekendSri Lanka Proper LKX All DaySri Lanka Mobile LKM All DaySri Lanka Colombo LKCMB All DaySudan Proper SDX All DaySudan Mobile SDM All DaySweden Proper SEX All DaySweden Malmo SEMMX All DaySweden Mobile - Other CarSEOTM All DaySweden Mobile - Tele2 SETLM All DaySweden Mobile - Telia SETIM All DaySweden Mobile - Vodafone SEVDM All DaySweden Stockholm SESKM All Day

Attachment 4Page 6/7

Switzerland Proper CHX All DaySwitzerland Geneva CHGVA All DaySwitzerland Mobile - Orange CHORM All DaySwitzerland Mobile - Sunrise CHSRM All DaySwitzerland Mobile - SwisscomCHSCM All DaySyria Proper SYX All DayTaiwan Proper TWX All DayTaiwan Mobile TWM All DayTanzania Proper TZX All DayTanzania Mobile TZM All DayThailand Proper THX All DayThailand Mobile THM All DayThailand Bangkok THBKK All DayTogo Proper TGX All DayTogo Mobile TGM All DayTrinidad and TobProper TTX All DayTrinidad and TobMobile TTM All DayTunisia Proper TNX All DayTunisia Mobile TNM All DayTurkey Proper TRX All DayTurkey Mobile TRM All DayTurkey Adana TRADA All DayTurkey Ankara TRAKA All DayTurkey Antalya TRAYT All DayTurkey Bursa TRBTZ All DayTurkey Istanbul TRIST All DayTurkey Izmir TRIZR All DayTurkey Konya TRKYA All DayTurkey North Cyprus TRNCP All DayTurkmenistan Proper TMX All DayUganda Mobile UGM All DayUkraine Proper UAX All DayUkraine Mobile UAM All DayUkraine Dnepropetrovsk UADPK All DayUkraine Donetsk UADOK All DayUkraine Kharkov UAKKV All DayUkraine Kiev UAKBP All DayUkraine L'viv UALWO All DayUkraine Odessa UAODS All DayUnited Arab Em Proper AEX All DayUnited Arab Em Mobile AEM All DayUnited Arab Em Dubai AEDXB All DayUnited Kingdom Proper UKX All DayUnited Kingdom London UKLON All DayUnited Kingdom Mobile - O2 UKOXM Off-peakUnited Kingdom Mobile - O2 UKOXM PeakUnited Kingdom Mobile - Orange UKORM Off-peakUnited Kingdom Mobile - Orange UKORM PeakUnited Kingdom Mobile - Tmobile UKTMM Off-peakUnited Kingdom Mobile - Tmobile UKTMM PeakUnited Kingdom Mobile - Vodafone UKVDM Off-peakUnited Kingdom Mobile - Vodafone UKVDM PeakUnited States 201 USN201 All DayUnited States 206 USN206 All DayUnited States 210 USN210 All DayUnited States 212 USN212 All DayUnited States 213 USN213 All DayUnited States 248 USN248 All DayUnited States 251 USN251 All DayUnited States 253 USN253 All DayUnited States 281 USN281 All DayUnited States 303 USN303 All DayUnited States 305 USN305 All DayUnited States 310 USN310 All DayUnited States 314 USN314 All DayUnited States 323 USN323 All DayUnited States 347 USN347 All DayUnited States 404 USN404 All DayUnited States 407 USN407 All DayUnited States 425 USN425 All DayUnited States 480 USN480 All DayUnited States 502 USN502 All DayUnited States 513 USN513 All DayUnited States 516 USN516 All DayUnited States 562 USN562 All DayUnited States 602 USN602 All DayUnited States 615 USN615 All DayUnited States 617 USN617 All DayUnited States 623 USN623 All DayUnited States 626 USN626 All DayUnited States 631 USN631 All DayUnited States 646 USN646 All DayUnited States 650 USN650 All DayUnited States 678 USN678 All DayUnited States 704 USN704 All DayUnited States 713 USN713 All Day

Attachment 4Page 7/7

United States 714 USN714 All DayUnited States 718 USN718 All DayUnited States 720 USN720 All DayUnited States 770 USN770 All DayUnited States 781 USN781 All DayUnited States 786 USN786 All DayUnited States 801 USN801 All DayUnited States 816 USN816 All DayUnited States 832 USN832 All DayUnited States 914 USN914 All DayUnited States 917 USN917 All DayUnited States 919 USN919 All DayUnited States 954 USN954 All DayUnited States Domestic US All DayUnited States Freephone USF All DayUnited States Hawaii USN808 All DayUruguay Proper UYX All DayUruguay Mobile UYM All DayUruguay Montevideo UYMVD All DayUzbekistan Proper UZX All DayVenezuela Proper VEX All DayVenezuela Mobile VEM All DayVenezuela Caracas VECCS All DayVenezuela Maracaibo VEMAR All DayVietnam Proper VNX All DayVietnam Mobile VNM All DayVietnam Ho Chi Minh VNSGN All DayYemen Proper YEX All DayYemen Mobile YEM All DayYugoslavia Proper YUX All DayYugoslavia Mobile YUM All DayYugoslavia Belgrade YUBEG All DayZambia Mobile ZMM All DayZimbabwe Proper ZWX All DayZimbabwe Mobile ZWM All Day

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Attachment 5

Inpayment Rate to Reach Networks vs Refile Rates into Hong Kong

Latest Inpayment Rate to REACH (HK)

RoutesInpay/min

(US$)Refile rate incoming toHong Kong (US$)

Argentina (ACTUAL FIGURES PROVIDED TO THE TA)BahrainBangladeshBrazilBrunei DarussalamCambodiaChileCyprusDiego GarciaEgyptFijiGuamIndiaIranIsraelJordanKenyaNorth KoreaLaosMaldivesMariana IsMauritiusMexicoMongolia PrMyanmar (Burma)NakhodkaNepalPakistanParaguayPeruPolandQatarRussia - AstelitRussia - BCLRussia - CombellgaRussia - ComstarRussia - DALTelecomRussia - RostelecomRussia - TatarstanRussia - VostokTelecomSakhalinSaudi ArabiaSeychellesSouth AfricaSri LankaTongaTurkeyUnited Arab EmiratesUruguayVietnamYemen Rep