Both bidders make questionable assumptions. In our view, HCV is being over- optimistic in expecting to receive 40% of international revenues from CWHK, because CWHK may argue that voice delivered over private circuits does not entail the same level of investment as would be involved in a switched local service. On the other hand, HKCC's estimate of revenue from value-added services is high, because the fibre optic infrastructure HKCC is constructing would not provide any advantage in the provision of such services. addition, HKCC's rationale for its local traffic revenues is weak.
In
HCV proposes a much higher level of staffing than HKCC, as illustrated below.
HCV Staffing
Scenario 1
Scenario 2 Scenario 3
HKCC Staffing
1990
30
81
81
17
1995
96
251
258
44
1999
103
256
314
110
2004
124
350
440
171
We feel that HKCC may have underestimated the staffing levels needed to provide competitive telecommunications services.
2.
Telecommunications Network
Both HKCC and HCV have proposed an appropriate state-of-the-art telecommunications network to provide competitive services, i.e. fibre optic infrastructure linking business centres. Both propose fibre optic networks which can provide wideband capacity - up to, and greater than, 45 Mbps - to customer locations. On a conceptual level, HKCC appears to go farther technically than HCV in proposing a distributed network architecture and capabilities that are still developmental, e.g. a Metropolitan Area Network (MAN). HKCC's approach is to provide network reconfiguration capabilities at network nodes equipped with intelligent digital access cross-connect units.
This approach is somewhat more aggressive technically than HCV's network design which appears more dependent initially on early installation of centralised digital switching capabilities. HCV proposes to install customer service interfaces or modules which can allow reallocation of capacity to meet customer requirements.
Both approaches can allow flexible addition of capacity.
Arthur D Little
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