:
}
The magnitude of the externality cost in the first three cases, have been quantified in the HKT submission, using the methodology of welfare economics. The magnitudes obtained, expressed as Net Present Values in year one of all costs incurred during the period of construction, are assessed as follows: traffic congestion, HK$172 million - HK$344 million; noise pollution, HK$32 million HK$64 million; business losses, HK$5 million - HK$10 million. The total of the three estimates amounts to HK$209 - HK$418 million.
Bearing in mind the very great difficulties involved in applying the techniques of welfare economics to estimation of such costs, we consider the methodology which has been applied to be essentially sound. However we feel we cannot comment on the correctness of the actual figures calculated. The nature of the impacts being evaluated is such that the analyst has had to rely on very indirect measures of the costs incurred: in the case of noise pollution, the impact has been quantified by reference to amounts spent on double glazing by Hong Kong residences wishing to reduce exposure to outside noise. We do not criticize the calculations put forward: they are based on a correct and creative application of available techniques. However our own approach is not to attempt a quantification of these indirect costs, but instead to list them alongside indirect benefits; these latter are described in the following paragraphs. The judgement as to which carry greater weight should rest with the reader.
(We note, for completeness, that if the HKT assessments of indirect costs are correct and if no allowance is made for indirect benefits the costs are sufficient to outweigh net benefits in scenario 3 but not in scenarios 4 or 5 see Exhibit 5.8)
5.5.2 Indirect benefits
There are two main types of indirect benefits of competition in telecommunications:
those generated as a result of the increased range, sophistication and facilities of products and services available (as opposed to the effects of lower price, which are already analyzed as direct benefits)
the macroeconomic consequences of improved productivity, efficiency and competitiveness of user businesses.
These indirect benefits have the most impact when users are telecommunications intensive in their internal and external structure,
namely:
finance, banking, insurance and business services
trade and tourism
transport and communications
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