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4
(ii)
losses) with respect to outgoing traffic. However, preliminary results show that the operation of international services would remain profitable overall because of the high level of revenue received for connecting incoming traffic, and the continuing growth in the total volume of traffic, even assuming that the current high accounting rates are retained. Hence, contrary to HK Telecom's claim, it is feasible to operate international services profitably at 10 15% discounts on current charges and this is borne out by the experience of the US and UK.
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In 1987 in-payments for international telephone services accounted for only 0.4% of total receipts for Hong Kong's exports of goods and services (3% of receipts from the export of services alone). Similarly, out-payments for international telephone services accounted for only 0.5% of total payments for the import of goods and services (5% of payments for imported services alone). Even assuming that HK Telecom's claim that
cuts in tariffs for international
telecommunications services would cause a
significant deterioration in the international payments position for those services is accurate, this would not be significant in the context of Hong Kong's overall balance of
payments. In any case, Hong Kong has a substantial overall surplus on trade in services at present. While a deterioration in the payments position for international
telecommunications services would not be of
significance to Hong Kong, it would be of some
G.F. 326
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