TNAG-1779-FCO40-2539-Hong-Kong-international-telecommunications-1988 — Page 13

considered carefully Telco and HCV's arguments and has also examined all other relevant

The following conclusions can be drawn -

issues.

(a)

(b)

on monopoly versus competition (paragraphs 15 and 16 refer): the current monopoly has enabled Hong Kong to progress to a mature network which provides a good range of services at affordable prices. However telecommunications is entering a new era of development and it can no longer be assumed that such services should continue to be provided through one exclusive network. Deregulation has already taken place in some services outside the basic telephone service. In line with international trends and Hong Kong's own philosophy of free enterprise, further liberalization of telecommunication services is now considered both necessary and desirable to enable Hong Kong to maintain its competitive edge. The advantage of Hong Kong's limited size, coupled with high density in high-rise buildings, will result in comparatively low cost for a broadband network. Hong Kong's population density and highly active business community should be able to sustain a fair measure of competition within an orderly licensed framework;

on demand (paragraph 16 refers): the figures available to the Administration indicate that the size of the competitive telecommunications market including revenue from cable television should be more than adequate for a second network serving that sector of the market alone.

(c) on infringement of Telco's exclusive franchise and the effect on tariffs (paragraphs 17 to 20 refer): allowing a second network would have only a marginal impact on telephone tariffs so long as Telco's exclusive franchise is protected. PMG has advised and OFTEL has confirmed that measures could be taken to protect Telco's franchise from any serious infringement.

(d) on disruption (paragraphs 21 to 26 refer): it has not been possible to fully assess the degree of disruption that would be caused either by Telco augmenting its existing system of telephone ducts, or by HCV laying a broadband network employing its mini-trenching technique, but it seems likely that disruption would occur in either case.

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