C,D

CONFIDENTIAL

2006 respectively.

CW see BT's offensive in Hong Kong as part of a

concentrated attack by BT on their position worldwide. Further

background is in Hong Kong telno 781 and the Financial Times'

article of 22 April.

4. Understandably the Hong Kong Government, despite its general

commitment to commercial competition, is unconvinced of the need for

two competing telephone networks in the territory. The Hong Kong telegram explains that a formal submission to ExCo was deferred

until after the new Governor has settled in sufficiently to consider

the question. So far as we are aware the Hong Kong Government have not subsequently consulted ExCo. But as this is strictly speaking a commercial matter and thus within the bounds of Hong Kong's autonomy in its handling of commercial affairs, the Hong Kong Government would not be bound to keep us informed of progress.

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CONFIDENTIAL

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