(e) on the future of the Telco and CWHK franchises (paragraphs 27 to 29 refer): although it is premature to give a commitment at this juncture on an early review of the current exclusive franchises for domestic telephone and external telecommunications services, this question needs to be addressed in due course. A monopolistic network provider would severely limit Government's options in considering future telecommunications policy.
In the light of the conclusions outlined above, the Administration believes that a prima facie case exists for allowing a second public telecommunications network in Hong Kong and that, conversely, there seems to be no compelling reasons for an expanded Telco monopoly to provide a broadband network for cable television and all other non-franchised telecommunication services. Whilst competition is to be encouraged, it needs to be developed within an orderly regulatory framework to protect consumers and to ensure fair competition. In this respect, Hong Kong can draw upon the experiences of other countries such as the United Kingdom and USA where deregulation has taken different routes.
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It is also proposed that the Administration's case in favour of a second network should be conveyed to Telco and HCV. This would give both companies a final opportunity to bring to the Administration's attention any aspect that may have been overlooked or inadquately presented, as well as to comment on the Administration's case as a whole. Members would then be asked to give further consideration to the companies responses and to advise on a final decision regarding a second network.
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in
As mentioned in paragraph 18 above, in the preparation of this memorandum, expert advice has been sought from Oftel in the UK. The advice received provides a useful second expert opinion on the issues involved. Given the complexity of this field, it is proposed that consultants be engaged' to assist the Administration in assessing the responses of the two companies. The particular value of consultants lies
their broader experience of telecommunication developments worldwide than is available in Hong Kong. Not only would this strengthen the Administration's technical expertise but it would also clearly demonstrate to
to the general public that great care is being taken to arrive at
the best possible solution. If it is decided to have a second network, consultants could also advise on the regulatory framework that is best suited to Hong Kong's circumstances to ensure that the community continues to enjoy an acceptable range of services at affordable prices.
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Private notes are available after approval.