TNAG-1779-FCO40-2539-Hong-Kong-international-telecommunications-1988 — Page 109

CHAPTER 1: INTRODUCTION BACKGROUND AND METHODOLOGY

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INTRODUCTION AND OBJECTIVES

This study is submitted by Booz Allen & Hamilton Inc (BAH) to the Hong Kong Post Office. It assesses the alternative options open to the Government to satisfy the future telecommunications needs of the Territory.

The Government recently invited expressions of interest in the provision of a cable television service covering the entire Territory. It received substantial submissions from two parties:

Cable Television Hong Kong Ltd (CTHK), which proposed the use of a cable television network to be constructed by the main existing local telecommunications service provider, the Hong Kong Telephone Company (HKT or Telco).

Hutchison CableVision Ltd (HCV), which proposed the construction of a cable television network independent of HKT facilities; this could subsequently be used to provide telecommunications services in competition to HKT.

The proposals raised important issues of telecommunications policy. Both parties were backed by major international telecommunications interests, HCV being 40% owned by British Telecom plc and CTHK 38% owned by HKT (in turn a subsidiary of Cable & Wireless plc). The HCV proposal would bring into being a second, competing, telecommunications network, while the CTHK one would result in a continuation of the existing telecommunications monopoly.

The basic objectives of the consultancy were to give advice on the issues involved in the second telecommunications network question and to evaluate the detailed views of HKT and HCV on the case for and against allowing such a network. Underlying these objectives was a need to place the work in the context of the current telecommunications situation and the options available for the next phase of telecommunications development in Hong Kong over the coming twenty years. Account was to be taken both of the requirements of Hong Kong as a financial and business centre and of the need to maintain a satisfactory public telephone service.

Currently HKT has a monopoly franchise to run all local telephonic services to the year 1995, and Cable & Wireless Hong Kong Ltd (CWHK) an exclusive licence to run all international services to 2006. The consultants were asked to consider the implications of a second carrier providing:

all services except those exclusively franchised to HKT and CWHK, before 1995

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