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period of time is neither unrealistic nor unprecedented as this has and is being done in both the UK and US. In any case there is no intention to phase out the cross-subsidy between international and local telephone services in the
near future.
E.
Vertically Integrated Management
HK Telecom : As there are no economies of scale between
the network and programming sides of the cable television business, vertically integrated management of the cable television project would be disadvantageous rather than advantageous as claimed by BAH.
Administration's Response : The case for vertically integrated management of the cable television is not based
on claims of economies of scale. It is based on the fact
that both the network and the programming sides of the
business are crucial to the success of the venture.
Without vertically integrated management there is a greater danger of a lack of proper coordination between the two sides of the business resulting in delays and increased costs that would jeopardize the venture's viability. This is borne out both in the long experience of cable television in North America and the shorter experience in
the UK.
F.
Cable Television Network
HK Telecom : BAH underestimates (at 5%) the saving obtained as a result of the cable television network being provided
by HKT.
Administration's Response: BAH attributes a significant cost saving of $495m arising from HKT provision of the
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