G.F. 326
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7
cable television network, equivalent to 18% of the cost of a network provided by another party separate from the main telecommunications network. This cost saving is only reduced to 5% when total project costs are considered, i.e. with the inclusion of the substantial programming costs. We do not find that HK Telecom provides a firm basis on which to alter BAH's cost comparison, whether to HKT's advantage or disadvantage.
HK Telecom : HKT would have access to technical manpower and administrative resources at a lower cost than a
competitor.
Administration's Response : This is not borne out by international experience, which suggests that telephone companies operate at higher costs than companies from a more competitive environment. BAH did not, though, apply a cost penalty to HKT on account of this factor.
HK Telecom : Construction of a non-HKT cable television
network would take nine to ten years compared with five years for HKT.
Administration's Response: The speed of network
construction will primarily depend on the commitment of the company involved and its deployment of resources. There are no special engineering constraints on a non-HKT network that would prevent it from being completed in five years.
G.
Business Line Demand
HK Telecom BAH's forecast of growth in demand for business lines is significantly higher than the forecast supplied by HK Telecom.
Administration's Response: BAH has confirmed HK Telecom's
In reply, BAH has stated that the HK Telecom
claim.
CONFIDENTIAL **