operate more efficiently than two competitive entities. However in reality the provision of international telecommunications services is more complex. Even before the provision of value added services is considered (for which the case for competition is generally thought to be overwhelming), there are many respects in which the provision of basic services can be more or less responsive to the rapidly changing needs of the Hong Kong community. Different digital data rates, different technical qualities of service, and different bundles of tariffs may be desired by different users. the dealing room of a financial institution requires a different package of international circuits than a manufacturing company. There are also many support services associated with the provision of international telephony which can be provided in different forms and with varying degrees of availability and quality; these include international directory enquiry facilities, facilities for use of different payment methods when calling in from overseas locations (e.g. credit cards, collect calling), and technically more sophisticated services such as automated setting up of conference calls.
Similar judgements on the desirability of international telecommunications competition (in light of these competing factors) have had to be made by other nations which have introduced telecommunications network competition in their internal networks - notably the US, the UK and Japan. Very similar considerations applied in those countries. The provision of international telecommunications services in the UK, for example, is subject to cost characteristics very similar to those which we described for Hong Kong, notably the presence of a "constriction" at the international gateways which is subject to substantial economies of scale. Nevertheless the decision was taken in all three of those countries to extend competition from the domestic to the international market, reflecting a judgement that the value of introducing competition in the market for international services outweighed the cost penalty incurred in the duplication of the gateways themselves. The Office of Telecommunications in the UK has therefore been a consistent supporter of Mercury's efforts to gain share in the market for overseas calls to and from the UK.
5.8.2 Interconnection with overseas administrations
Separate from the issue of the desirability in principle of authorizing a second international carrier is the success with which such a carrier would enter this market, particularly in view of the need to make agreements with carriers (often monopolists) at the distant end of each route. The new international carriers operating to and from the USA, UK and Japan have indeed experienced some difficulty negotiating agreements with PTTS elsewhere in the world. In the case of traffic to and from these three countries, Hong Kong would clearly experience no problems. This is an important consideration, given that the world's three largest financial centres are located in those countries, and calls on these routes alone make up a substantial proportion of international traffic entering and leaving Hong Kong. Even in the case of the remaining countries, we expect that a new competitive international carrier operating from Hong Kong would be able to surmount the problem of negotiating access to foreign PTTS. Pressure from the United States, United Kingdom and Japan is gradually breaking down the resistance among
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