to the system although without any marginal profit accru- ing to the system owner. Such third party costs would include, for example, lease charges for equipment provision service and maintenance and required supplier profit margin.
Similarly, while it is not part of HutchVision's current plans to offer subscription-supported satellite program- ming services, should such services be developed in the future, the costs to the SMATV system for the rights to distribute such services should be able to be passed through to the householders, again without any marginal profit.
It should be noted that the criterion of "no commercial fees" is not required for exemption from licensing in the United States, where, as noted earlier, SMATV has not resulted in any serious degree of cable subscriber or revenue erosion. It is, however, a criterion that is central to the Canadian exemption regime and is con- sidered by HutchVision to be desirable in order to dispel any concern that SMATV in Hong Kong might in any way adversely affect the cable operator.
7.3. 4 No In-Building Programme Origination
Finally, HutchVision proposes that to qualify for exemp- tion, a private SMATV system should distribute only pro- gramming received via satellite reception. Given the low cost of VCR equipment and of "bicycling" tapes around Hong Kong, programming originating within a substantial number of building complexes could raise concerns that a rudimentary local distribution system for locally pro- duced Hong Kong programming might come into being that would by-pass the cable system.
While distribution of locally originated programming by private SMATV systems is inefficient and non-competitive vis-a-vis cable, HutchVision notes that Canadian author- ities have adopted a prohibition against the in-building origination of feature motion pictures, in order to protect cable operators (as well as local broadcasters and the pay television film channel operator). HutchVi- sion is accordingly prepared to propose a similar and indeed wider - restriction against any in-building programming origination.
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This restriction is not intended to cover uses of private SMATV systems that involve the in-building transmission of information to residents or to preclude the use of, for example, video surveillance systems covering apart- ment building entrances and premises.