CONFIDENTIAL
XCC(91)191
BACKGROUND AND ARGUMENT
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Following discussion of memorandum XCC(91)140 on 8 October 1991, the Council ADVISED and the Governor ORDERED that a separate submission should be made on the cable television issue raised in the memorandum, outlining the pros and cons of allowing Telco to install a territory-wide cable television network.
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The original decision by the Council to prohibit HKTC from installing and operating a territory-wide cable television network was made on 12 July 1988 following consideration of memorandum XCC(88)97. That decision was to be implemented by imposing a 15% limit on the ownership of the future cable television network licensee by Hong Kong Telecommunications Limited (HK Telecom), HKTC's parent company, and its subsidiaries. It was necessary to apply the ownership restriction to the HK Telecom group as a whole in order to prevent its circumvention through ownership of the cable television network licensee by a company with a corporate relationship with HKTC. (No ownership limit was imposed on HK Telecom and its subsidiaries with respect to the cable television service licence.)
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The main grounds for prohibiting HKTC from providing the cable television network were as follows -
(a) this would have been contrary to our policy preference for diversity of network ownership, as it would have given HKTC complete dominance over all public wired telecommunication networks (for local transmission of entertainment video services, as well as all current local wired telecommunications services); and
(b)
if HKTC were allowed to provide a territory-wide cable television network and the project failed, there was a concern, given the large investment required for such a network, that there could be an adverse financial and/or quality of service impact on ordinary telephone service users.
It should be noted that HKTC's existing network cannot convey television signals to homes because the only part of the network that is capable of transmitting television quality video signal to an acceptable standard, the optical fibre cables, are confined to linking telephone exchanges. The vast
Executive Council