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(iii)
HK Telecom ignores the indirect benefits of
competition (e.g. increased attractiveness of Hong Kong as a financial centre and increased competitiveness of Hong Kong industry, a full analysis is given in paragraph 5.5.2, pages 127 to 129, of the main consultancy report), which could be given numerical values to offset, and even outweigh, the indirect
costs. BAH considers that quantification of
indirect costs and benefits is unreliable and leaves it to the reader to come to a judgement as to which should carry greater weight (the second paragraph on page 127 of the consultancy report refers).
In view of the foregoing, we conclude that HK Telecom's recalculation of costs and benefits is unacceptable.
C. International Accounting Arrangements
H.K. Telecom : The current system of high international accounting rates (i.e the charge levied by the home carrier on the distant carrier for receiving and connecting its outgoing telecommunications traffic) means that tariff cuts of 10-15% could not be implemented because they would
result in
(i)
losses on many routes; and
(ii) balance of payments problems.
Administration's Response : HK Telecom's two claims are
taken in order.
(i)
Investigation by the PO has confirmed that
10-15% tariff reductions would result in
reduced revenue (and on some routes even
G.F. 326
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