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EXHIBIT 1.3 SUMMARY OF QUANTITATIVE ANALYSIS APPLIED IN THIS STUDY
Note:
Pro-monopoly refers to argument for monopoly supply of networks (both telecommunication and cable television); pro-competition refers to
argument for separate operation of cable television and second telecommunications network by entity competing with HKT.
1 Argument
1. TELECOMMUNICATIONS SERVICES
1A Pro-monopoly
1B
Economies of scale due to provision
of telecommunications services to all customers on one network
Pro-competition
Stimulus to competition provided by presence of two network operators
2. CABLE TELEVISION SERVICES
2A Pro-monopoly
2B
Economies of integration (scope) due to joint provision of narrow -band and broadband networks
Pro-competition
Benefits of vertical integration of cable television business (improved coordination of network and service development
2
Data Collected and Analysed
Extent to which second network costs would be saved if whole market were served by existing network; (see Exhibit 1.4 for detail)
Size of markets shared between two carriers under competitive model (see Exhibit 1.5 for detail)
Extent to which separate cable television network cost would be saved if network were laid by HKT (see Exhibit 1.4 for detail)
Magnitude of investment at risk in (a) network (b) content; forecast profitability of cable television business, and its sensitivity to penetration levels
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3
Benefit Cost Comparison
Compare benefits due to competitive incentives with costs due to network duplication (see Exhibits 1.4, 1.5, } 1.6)
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Compare benefits due to integrated business operation with costs due to separate network construction (see } Exhibits 1.4, 1.7)
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