TNAG-1779-FCO40-2539-Hong-Kong-international-telecommunications-1988 — Page 4

(a) Hong Kong already has a high quality network

(b)

(c)

(a)

HCV's case

11

which

fulfil

could telecommunications needs.

the territory's Hence a second

network is unnecessary and indeed would be wasteful;

it has an existing network of ducts up to subscribers' buildings most of which could be used to provide a broadband network to carry cable television. This would reduce costs as well as inconvenience to the public;

consequences

there would be undesirable consequences in allowing another company to build a broadband network.

These

include disruption in the streets and infringement of Telco's existing exclusive franchise, which is likely to lead

lead to reduction in the tariffs for business lines at the expense of residential lines. The administrative burden for Government will also increase; and

in spite of its monopoly position, Telco already provides an efficient service to a high standard and at relatively low

low cost to consumers compared with other telephone service providers in the region and worldwide.

HCV has proposed that it builds a broadband network initially to carry cable television and non-franchised telecommunications services. This network could be upgraded over time to carry the whole range of telecommunications services including voice telephone. In other words, HCV hopes to compete for the existing franchises when they fall free. It is not prepared to provide a cable television service without its own broadband network (that is, it is not prepared to lease facilities the Telco network). HCV argues that considerable front end investments would be required to produce suitable ethnic programmes for cable television and that control over the network is essential to secure overall quality of service and to ensure that the speed and location of network development matches market

market demands. HCV is also seeking an assurance from the Administration that there will be an early review of the two current exclusive franchises for the voice telephone service and external telecommunications services but it has not made this a precondition of its bid.

12

HCV argues its position mainly on the grounds of the benefits which competition would help to continue to bring. Telecommunications technology is changing rapidly and there are rising consumer demands mainly led by the business