a
(d) by 1995, technological development may make regulation more difficult. It is not possible at present to predict when the cost of switched voice telephone services on broadband network will come down to a level that is competitive with a copper pair network. The OFTEL view is that 1995 appears now to be a reasonable forecast. However, this should
should be qualified by the fact that, unless most users
make use of the broadband services, and the current evidence is that,
be
apart from cable TV, domestic subscribers generally do not yet find them attractive, the provision of a telephone service on broadband network is likely to remain more costly than on a copper pair network.
а
are subsidised by business
Telco states that, in Hong Kong at present, residential telephone subscribers subscribers. It argues that increased competition arising from an alternative network would lead inevitably to a rebalancing of tariffs in the telephone service in favour of business subscribers and to the disadvantage of residential subscribers. This is because, with greater competition, prices for individual services would have to relate more directly to their respective costs.
The Administration
believes that, so long as Telco's exclusive franchise is not infringed by an alternative network, the bulk of its revenue earned under the Scheme of Control should not be affected and, as a profitable entity, there would be no need for any significant rebalancing. 93% of revenue earned under the Scheme of Control (1985-86) related to the switched telephone service. The remaining 7% derived from leased data and voice circuits for use by major commercial organisations and the interconnection for the public mobile radiotelephone service (mobile telephones) and value added services, e.g. electronic mail box, public facsimile, viewdata which are provided on a competitive basis. The revenue from leased circuits is covered by the Scheme of Control because at present they can only be
be provided by Telco since it has the only public
telecommunications network.
20
According to legal advice, leased data and private voice circuits and circuits for carrying value added services could in theory be provided by an alternative network without infringing the franchise. This would lead to a corresponding revenue loss to Telco under the Scheme of Control (up to 7% of total Scheme of Control revenue on 1985/86 figures as explained in paragraph 19 above). However, it is unlikely that the
the revenue loss would be such as to have more than a marginal effect on telephone tariffs. The extent of the impact would depend on the degree to which the competitor was able to attract Telco's existing customers, and force down