HCV on the other hand, in two of its scenarios, Scenarios 2 and 3 which it considers to be the most likely, intends to test the limits of the existing franchises by providing voice service over local private lines, including access to international circuits. For international communications delivered to CWHK by HCV over its local private circuits, HCV expects to receive the same share of international revenues as HKTel receives, i.e. approximately 40%. HCV does not consider its data only Scenario 1 to be financially viable.
HKCC and HCV have different forecasts of demand for competitive telecommunications services. HCV's projections appear to be based upon a better understanding of the market resulting from the market research it commissioned; by contrast, HKCC did not have time during preparation of its proposal to complete its research programme. Figure 1-11 shows, for HKCC and HCV, their expected total annual revenues in year 2004 and how these revenues are made up by the main services. For HCV we use Scenario 3, which is the scenario that allows for full competition after 1995. Both expect to achieve similar levels of revenue, but HCV expects to achieve the bulk of its revenue through IDD sharing, while HKCC expects to achieve a high proportion of revenue from value-added services.
Figure I-11
Main Sources of Revenue (Year 2004)
HCV Scenario 3
HKCC
Local traffic and installation
14%
45%
Value-added services
2%
34%
IDD sharing
84%
21%
Total Annual Revenue
1406
1209
(HK$ million)
Arthur D Little
17
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