CHAPTER 3: FUTURE SCENARIOS FOR TELECOMMUNICATIONS AND CABLE TELEVISION
3.1
FUTURE SCENARIOS
Chapter 3 describes five scenarios for the future of telecommunications and cable television in Hong Kong covering a 20 year period to 2007.
This study addresses the extension of existing policies towards telecommunications competition (notably in customer premises equipment and value added services) to the network construction and operation of basic networks. It is often argued that competition in the provision of services over telecommunications networks (rather than construction and operation of the networks themselves) will generate the necessary competitive benefits to users in the long run. It is true that telecommunications networks are being used increasingly to support the provision of information and related services; this is precisely what is meant by the term "value added service". There is little doubt that such value added activities should be open to the widest possible competition, and few advanced countries are contemplating the retention of monopoly arrangements in this area. Despite the importance of these ancillary activities, it must be remembered that the largest cost component in the telecommunications networks service industry (i.e. the source of greatest "value added") is due to provision of basic switching and transmission - the temporary or permanent interconnection of one terminal to another for the purpose of transmitting information. Unless this activity is opened up to competition, the majority of the telecommunications service business will remain monopolized. It is for this reason that the study focuses on competitive scenarios which involve the construction of duplicate telecommunications networks.
The primary determinant of the scenarios is the extent of introduction of competition. The five scenarios reflect a transition from limited competition to full competition provided by two separate
telecommunications networks. We have examined this in the context of the major classes of service provision defined by the regulatory process in Hong Kong:
1. "basic" or local telecommunications services
2. international telecommunications services
3. value added or enhanced services, both local and international 4. cable television
The five scenarios under analysis are shown in Exhibit 3.1 and summarized below.
SCENARIO 1
Single network carrier for telecommunications and cable television with the same or a separate operator of cable services.
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