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2007
3.5
3.5.1
SCENARIO 4: TWO NETWORKS WITH A SECOND AND SEPARATE NETWORK FOR CABLE AND ALL LOCAL TELECOMMUNICATIONS
Definition of scenario 4
This scenario provides for the duopoly provision of local telecommunications alongside cable. There would be two interconnect agreements between the second carrier and HKT and between the second carrier and CWHK. The scenario might come into effect in 1995. It is assumed that the second network operator will not compete with HKT on the residential network but will serve large business users. The second network would initially be taken to the major commercial buildings, reaching 100 major buildings in year 1,215 in year 5 and 230 by year 2000. It reaches 5% of the "premium" lines in 1995 rising to 34% towards the end of the period. This would result in the second network having over 120,000 business lines by 2000 representing 11% of the total business lines.
In addition to the cable and interactive services offered under scenario 3 it would include automatic switched calls as well as interactive voice and data applications such as voice messaging, data transfer, image messaging (groups II,III and IV facsimile) and access to data bases and electronic mail systems. Provision of ISDN capability would be an essential part of the service, as would the capability for fast signalling to and between exchanges in technical compliance with MF4 and CCITT No 7 respectively. Closed user groups would be constructed and offered under specific tariff packages. Access to international services would be provided as a local by-pass carrying traffic directly to the international gateway, assuming the same 40:60 settlement in revenues as occurs between HKT and CWHK.
The network would be suitable for a range of supplementary services such as electronic funds transfer, dial-up voice-based information services and other value added services.
3.5.2 Forecast revenues for local telecommunications
The base year 1987 estimates of revenues for each service were provided by HKT. The growth forecasts were based on the actual growth trends in exchange lines and call minutes as published by the ITU, by HKT in their 'Review of Operations 1986-87' and by reference to HKT and HCV forecasts to 2007. Tariffs were established with reference to the current tariffs published by HKT and were adjusted to take into account changes in technology and the effect of competition on demand.
Franchised services
Local residential and business lines
Given the high penetration levels already achieved for residential lines, the slowing down in the population growth rates to less than 1% p.a. over the next 20 years and household growth rates to 2.1%, BAH estimates a net growth in residential lines of only 5% p.a. falling to
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