3.
(iii)
(iv)
The tariffs for Datapak International and IDAS (HKT's and CWHK's international packet switched data services) are very high by world standards. The telecommunications cost of accessing on-line databases in the United States is five times more from Hong Kong than from Europe. [3]
As a result of the above, Hong Kong users justify access to value added services later and at lower quantities than those in many other countries. Agents for such services are discouraged from operating here. Hence Hong Kong lags many other countries in the development and use of such services, and it is not as far along the "learning curve" as the United States, Western Europe or Japan.
Exhibit 2.17 summarizes the impact of deregulation and shows that other suppliers have gained a major market share in cellular radio, and radio pagers
The main effects of deregulation have been in four areas:
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lower prices for customer premises equipment or a higher technology product for the same price
wider range of choice of suppliers and maintenance agreements
greater product choice in terms of product design, attachments and capabilities
more customer support and training directly from the product manufacturers
The non franchise sector is dynamic, innovative and generally profitable. It is seen as offering higher risks matched by higher rewards for HKT's subsidiaries.
The equipment suppliers complain that HKT has an unfair competitive advantage for non franchised products and services due to
- its well established name/presence in the market
service interconnection and equipment approval advantages
advance warnings of changing customer requirements being passed from one part of the Cable and Wireless group to another.
On-line searching of a Dialog database typically costs US$60-80 per hour in search charges. The associated cost of packet switched access from Europe is about US$20 per hour, but from Hong Kong, it is US$100 per hour. Thus the telecommunication cost is five times higher in Hong Kong than Europe, and the total cost of a search is more than doubled.
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FXHIBIT 2.17
THE CURRENT COMPETITIVE POSITION FOR THE PROVISION OF TELECOMMUNICATIONS