TNAG-1779-FCO40-2539-Hong-Kong-international-telecommunications-1988 — Page 249

1988 onwards

late 1980s

1992

- broadband in business premises

early commercial product initiatives

- international broadband standard

mid 1990s

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commercial broadband switches introduced

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mid 1990s

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late 1990s

2000 onwards

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widespread use of broadband by large business customers for data communications and video applications

- detailed international standards

widespread use of broadband

widespread use of optical fibre in the local loop for residential customers for HDTV.

BAH estimates that the market for other wideband services will grow to only HK$22 million by 2000.

The cable and wideband service charges are a very small proportion of HKT's total revenues. (BAH estimates that they rise to only 8% of total franchised and obligatory revenues in 2000). Consequently their contribution to overall revenues under scenario 1 has no more than a marginal effect on the tariffs for telecommunication services under the Scheme of Control.

Finally, if the operation of the cable television network were carried out by HKT as an activity outside the Scheme of Control, there would be a small benefit to telephone subscribers in the form of a rental payment for use of ducts by the (unregulated) cable television operation to the (regulated) telephone business.[5] This gain to telephone subscribers would be risk-free. Assuming that approximately half of the cost advantage arising from HKT construction of the network (i.e. half of the HK$450 million sum marked on Exhibit 5.4) were paid as compensation for the use of ducts thus dividing the benefits of this cost advantage

this would result in a benefit to equally between the two parties telephone subscribers of HK$225 million (NPV at 1988). This corresponds to a saving of about 0.4% of HKT's local service revenues (NPV at 1988 of revenues to the year 2007). A saving of 0.4% in the average telephone subscriber's bill can be forecast.

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5.8 FURTHER ISSUES CONCERNING INTERNATIONAL COMPETITION

5.8.1 Considerations arising from cost and revenue analysis

Analysis of the desirability of retaining the monopoly in international telecommunications is made difficult by the unusual economic characteristics of international service provision. This unusual

5.

It should be noted that under these conditions there may be some difficulty separating, for regulatory purposes, investments in the cable TV network from investments in basic telephone service provision. could however be resolved to an acceptable degree of accuracy.

These

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