1.2.3 International comparisons
In recent years there have been fundamental changes in telecommunications competition policies in many countries. In the United Kingdom, United States and Japan, public enterprises have been privatized, private monopolies divested and competition has been introduced at the networks, services and terminal equipment levels. Liberalization measures have been introduced in France, Belgium, the Netherlands and Switzerland, among other countries.
The arguments proposed by the two parties in Hong Kong are very similar to those which were put forward by potential competitors elsewhere, such as Mercury in the United Kingdom and MCI in the United States, and those which were advocated by the existing or monopoly carriers such as BT in the United Kingdom or AT&T in the United States. Prior to liberalization in the United Kingdom, British Telecom argued fiercely in favour of the national telephone network being a "natural monopoly" founded on "substantial economies of scale". BT were even reluctant to give up for resale their based circuit capacity for fear of losing revenues from long distance traffic which were required for the modernization and digitalization of the network. Mercury argued strongly in favour of competition in order to provide a low cost high technology solution for high volume business users.
Particularly in Japan, the United States and the United Kingdom, the arguments of the monopolist were gradually eroded by the arguments put forward by users or by the Government for opening up the telecommunications industry to investment by new companies. In Japan the convergence of computer and telecommunications technologies and the widening range of transmission technologies such as optical fibres, satellite and a new generation of microwave equipment greatly weakened the case for regarding telecommunications as a "natural monopoly". In the United States, as elsewhere, many parties believed that it was beyond the abilities of any single company to develop and market the diverse range of applications made possible by recent advances in computer and telecommunications technology. In the United Kingdom, as in Japan, it was pressure from users and equipment suppliers that advanced the transition to competition in telecommunications. The process was assisted by the Conservative Government's commitment to promoting competition, improved productivity and higher growth for the United Kingdom economy.
However the case for competition in telecommunications is not universally accepted. While almost throughout the industrialized world progress is being made in the liberalization of markets for terminal equipment and value added services, few have yet adopted a policy of allowing competition in the operation of basic networks. The recent Witte Commission Report to the German Government on "Restructuring of the Telecommunications System" came out conclusively against a second telecommunications network. Its first recommendation was as follows:
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