Similarly, we think it undesirable to risk the loss the competitive benefits which had been forecast to arise from a second telecommunications network. In further pursuing the policy of liberalisation and encouraging competition in telecommunications, the Executive Council decided on 12 July 1988 that there should be a second telecommunications network. This decision was primarily based on the findings of the Booz, Allen and Hamilton consultancy report, which concluded that there were significant net direct economic benefits to be obtained from network competition in local telecommunication services and that these economic benefits would be increased substantially if competition were extended to international telecommunications.
Important indirect benefits would also be obtained from network competition, such as a wider range of innovative new services and a positive impact on the competitiveness of local businesses and Hong Kong's attractiveness as a centre for conducting international business and finance.
28
The addition of telecommunications capability to a cable television network can be achieved at relatively low The introduction of cable television
incremental cost. provides the opportunity to obtain a second telecommunications network which could, initially at least, provide competition in the field of non-franchised telecommunications services, such as local data and facsimile services, ending the de facto, monopoly of the Hong Kong Telephone Company in these areas. The second network would, no less importantly, provide maximum flexibility for the possible extension of the scope of competition when existing exclusive rights expire. Accordingly, the decision was taken to require a separate network for cable television and allow the franchisee to use it to provide local network competition for non-franchised telecommunications services.
D
Legal Implications
29
General's Chambers
We have consulted the Attorney regarding the civil liability arising from the contractual relationship between HKCC and the Government and the implications of the Council's previous decision to deregulate the reception and distribution of satellite TV particularly as regards the Administration's liability to possible claims arising from parties who expected to profit in some way from deregulation.
Attorney General's advice is attached at
Annex D.
The
CONFIDENTIAL