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INTRODUCTION AND OBJECTIVES
1.
This study is submitted by Booz Allen & Hamilton Inc (BAH) to Hong Kong Post Office. It assesses the alternative options open to the Government to satisfy the future telecommunications needs of the Territory.
2.
The Government recently invited expressions of interest in the provision of a cable television service covering the entire Territory. It received substantial submissions from two parties :
3.
policy.
Cable Television Hong Kong Ltd (CTHK), which proposed the use of a cable television network to be constructed by the main existing local telecommunications service provider, the Hong Kong Telephone Company (HKT or Telco).
Hutchison CableVision Ltd (HCV), which proposed the construction of a cable television network independent of HKT facilities; this could subsequently be used to provide telecommunications services in competition to HKT.
The proposals raised important issues of telecommunications Both parties were backed by major international
telecommunications interests, HCV being 40% owned by British Telecom plc and CTHK 38% owned by HKT (in turn a subsidiary of Cable and Wireless plc). The HCV proposal would bring into being a second, competing, telecommunications network, while the CTHK proposal would result in a continuation of the existing telecommunications monopoly.
4.
The basic objectives of the consultancy were to give advice on the issues involved in the second telecommunications network question and to evaluate the detailed views of HKT and HCV on the case for and against allowing such a network. The study was to assess the merits of franchising a second network operator to carry one or both of:
telecommunications traffic
о cable television services
as against the alternative of maintaining an integrated network infrastructure operated by the established monopoly carrier.
5.
Quantitative techniques of benefit cost analysis were to be employed as far as possible. Estimates of cost duplication in a second network were to be compared with estimates of productivity and price performance improvements consequent on the introduction of competition. The current state and growth potential of the telecommunications system in the Territory were also to be assessed, in the light of international standards and trends.
THE STATE AND FUTURE PROSPECTS OF THE TELECOMMUNICATIONS SECTOR IN HONG KONG
6.
The local telecommunications network is provided and operated by HKT, which was incorporated in 1925 to acquire part of the undertaking of
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