prior to the expiry of Telco's franchise. Under Section 35 of the Telephone Ordinance, the Governor-in-Council may authorise an organisation other than Telco to set up a new public switched telephone network during the five years preceeding the termination of Telco's concession in 1995 for the purpose of continuing the supply of
of public telephonic communication after the termination of the concession.
29
The advent of cable television and the willingness of HCV to invest in a broadband network gives the community a rare opportunity to secure an alternative high quality carrier to Telco's existing network. This should in turn give Government greater flexibility in deciding on the best option for the community when the existing franchises are due for a review.
Provision of Cable Television
30
In considering the provision of cable television, the Administration has a choice between granting an exclusive franchise or allowing more than one service provider. A cable television monopoly could generate higher cash flows and a more rapid development of the network than if both networks were allowed to carry cable television. Essentially, a decision rests on whether the market can
can generate sufficient patronage and advertisement revenue to support competition. Since these are, to a great extent, inter-linked and influenced by programme content,
content, it would not be possible to undertake any meaningful analysis or research at this early stage to determine likely market support. However, given
(a) the heavy initial investment
cable network;
in in installing a
(b)
the very high recurrent programming cost (referred to in paragraph 11 above);
(c)
the low initial revenue when the market has yet to be penetrated;
the Secretary for Administrative Services and Information
(SASI) is of the view that the market is unlikely to be able to support two fiercely competitive cable television service franchises, at least in its initial stages of development. SASI favours the initial issue of one non-exclusive cable TV licence (that is to be carried either on Telco's network or a second network),
network), subject to a review as regards whether second cable TV licence should be offered after a period of say 5 years.
a