The Subsidy Scheme targets remote villages located far away from the existing fibre-based backbone networks of FNOs where villagers can only choose broadband services delivered over copper-based networks at a speed of 10 Mbps or below. In preparing the list of villages proposed to be covered under the Subsidy Scheme, OFCA has considered the villages specified in the Rural Representative Election Ordinance and the List of Recognised Villages under the New Territories Small House Policy promulgated by the Lands Department (collectively the Recognised Villages). OFCA has also consulted the Legislative Council, nine relevant District Councils (namely North, Sai Kung, Tai Po, Sha Tin, Yuen Long, Tuen Mun, Tsuen Wan, Kwai Tsing and Islands) and 27 Rural Committees. Having regard to the comments received during the consultation and the latest network coverage of the FNOs, OFCA finalised the list of 235 villages covered under the Subsidy Scheme.

The Subsidy Scheme should have covered most of the remote villages located far away from the existing fibre-based backbone networks of the FNOs. For those villages already with fibre-based networks reaching the vicinity of the village entrances, the FNO(s) concerned generally can provide broadband services to the villagers at a speed of more than 10 Mbps. Therefore, these villages are not covered under the Subsidy Scheme. If the villagers concerned wish to increase the speed of the available broadband services, they may consider reaching commercial agreement with the FNO(s) to allow the FNO(s) to roll out fibre-based networks and carry out optical fibre wiring works within private land areas and properties of the villages. With the fibre-based networks extended to the village houses, the speed of the broadband services to be provided by the FNO(s) can be increased significantly.

Furthermore, as the selected FNOs roll out the fibre-based lead-in connections to the vicinity of the village entrances, there should also be improvement for the broadband services for buildings along the lead-in connections.

Upon the extension of fibre-based lead-in connections to the vicinity of the village entrances, broadband speed for the villages concerned can be increased instantly (to at least 25 Mbps). Stability of service can also be improved. If the villagers reach an agreement with an FNO to allow the latter to roll out fibre-based networks within private land areas of the village, the broadband speed can further increase substantially to a level comparable to that in the urban areas (e.g. 500 Mbps or 1000 Mbps).

Besides rolling out fibre-based lead-in connections to the villages concerned, the selected FNOs have made additional service commitments for some of the villages, e.g. providing broadband services at a speed of 1000 Mbps or above, thereby further benefiting villagers.

In view of the fact that wiring and installation works at individual village houses would usually involve private land areas and properties, and a FNO is required to obtain consent from the relevant property owners before it can carry out the works, the Subsidy Scheme does not mandate the selected FNOs to roll out fibre-based networks to reach the individual village houses.

The extension of fibre-based networks is complicated and time consuming, it involves road excavation works as well as rollout of fibre-based networks and submarine fibre-based cables, etc. Some of the projects involve works at very remote villages without leading roads or having to pass through country parks. Prior traffic impact assessment and environmental impact assessment, which involve complicated statutory requirements and procedures, may be required. Therefore, it will take a longer time to complete the works.

In order to benefit the villages covered under the Subsidy Scheme as soon as possible, four milestones are set for each project. The selected FNOs are required to complete the works for a certain percentage of the villages before the specified deadlines. Except for Project 5 and Project 6 which involve the construction of submarine fibre-based cables and hence require a longer implementation time, the respective completion deadlines for the first milestones for Project 1 to Project 4 are set between 2022 and 2023. By that time, the works for 30% of the villages under the respective projects will have been completed. At present, the works of the selected FNOs are in good progress. It is expected that the newly built fibre-based networks will be extended to the villages concerned in phases from 2021 onwards.

The selected FNOs must complete their works before the completion deadlines specified in the tender documents. OFCA has been closely monitoring the implementation progress of the selected FNOs. They are required to submit monthly progress report, attend regular progress review meetings and arrange regular site inspections. If a selected FNO fails to complete the works of the relevant milestones in accordance with the tender requirements (including the completion deadlines) and the commitments made in its proposal, the Government may defer payment of subsidies, deduct the amount of subsidies, and/or call on the performance bond in accordance with the terms and conditions of the tender documents.

The Subsidy Scheme will introduce market competition to the villages concerned. Not only are the selected FNOs able to provide broadband services to the villages concerned, but the other FNOs are also able to share the use of at least half of the capacity of the subsidised network facilities (including fibre-based lead in connections and submarine fibre-based cables) for provision of broadband services to the villages concerned, thereby offering more choices to the villagers. Service charges are expected to be able to peg at a competitive level under the market mechanism.