consortium has been providing telecommunications services in Hong Kong for several years. HCV also understands better the regulatory environment for telecommunications in Hong Kong. Both the HKCC and HCV consortia, however, include as members leading overseas telecommunications organisations with considerable experience in providing services in competitive environments.
The WTS proposal describes enhanced telecommunications services, but does not provide the specific detail needed to evaluate how those services could be developed and marketed in Hong Kong. In general, the WTS proposal to provide competitive telecommunications services is not at the same level as HKCC's or HCV's.
Despite differences in their proposals, as discussed below, in practice we feel that both HKCC and HCV will eventually end up introducing a similar range of services dependent on market demand and Government policy, in order to remain viable. Both are interested in providing telecommunications services in the expectation that full competition will be permitted after 1995. However, we expect HCV will be a more aggressive competitor to HKTel in the early years, as they have indicated that they will test the boundaries of the existing franchise. We feel HKCC has considerably underestimated the staffing levels needed to provide competitive telecommunications services.
Both bidders propose advanced and appropriate networks for competitive business services. On a conceptual level, HKCC appears to go somewhat further in proposing a distributed network architecture and capabilities that are still developmental.
The telecommunications networks being proposed are physically separate but parallel networks to the cable TV networks and to the extent possible will share cable TV ducts and other infrastructure elements, e.g. buildings for switches and multiplexors. Both HKCC and HCV propose networks which are independent of HKTel,
of HKTel, but both bidders propose that their networks interconnect with HKTel, and also with CWHK for access to international circuits.
Both HKCC and HCV have under-estimated the competitive response of HKTel. It will become important for the Government as the industry's regulator to ensure that HKTel does not use its monopoly in the provision of basic telecommunications services to cross-subsidise competitive services and unfairly undermine the ability of the second network operator to obtain a market share. The present regulatory organisation might be stretched to deal with. this.
Arthur D Little
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