reasonably pay as the price for vertically integrated control of its business, also shows that this should not be regarded as a decisive factor. The success of cable television development in Hong Kong is almost certain to depend instead on non-technical factors.
It
45.
The choice of cable television network builder may have an impact on the speed with which cable television service is introduced. is not clear which of the two scenarios for cable network development (construction by HKT or construction by a second operator) would result in more rapid introduction of service. In theory, the HKT solution should enable construction to proceed more rapidly, due to the availability of existing horizontal ducts. However we note that the majority of construction effort will be represented by vertical duct and other in-building work, rather than laying of cables under streets. The timing advantage thus given to HKT may not be decisive, provided the second network operator commits the necessary resources to horizontal network construction in parallel with other aspects of service development. Weighing against this benefit of a Telco-built network is the advantage, already noted, of vertically integrated management of the cable television business. This is likely to result in greater management attention to the rapid deployment of network facilities, in view of the very strong incentive faced by an integrated business to realize revenues in accordance with the timing dictated by its business plan. International experience points to difficulties which can arise when the construction of the network is divorced from the main cable television service provision business, due to the competing priorities claiming attention of top management in a telephone company entrusted with cable network construction.
46.
We have concluded that, taking account of these two conflicting factors, the rate of development of cable television service in Hong Kong cannot reliably be forecast to proceed either faster or slower under scenario 1 than under the remaining scenarios. We have consequently based our projections of service revenues on an equal rate of development of the network in the two cases.
END