TNAG-1987-FCO40-2820-Presentation-of-UK-policy-on-Hong-Kong-to-the-media-1989 — Page 14

application of the proposed sliding scale

scale is expected to produce royalty amount ing to an overall average of about 8.2% to 8.3% of gross receipts. This is slightly less than what HKCC is prepared to offer but more than what HCV has suggested. It takes into account the pioneering stage

of cable television as compared to wireless television.* Such a level of royalty will still enable either bidder to reap investment.

a reasonable return on

Areas for Negotiation

33

If Members

support

the

recommendation

in

paragraph 2(b), it will be necessary to negotiate with HCV and HKCC over several areas where the companies proposals in their present form are not acceptable to

to Government namely royalties, financial commitment, road works and microwave frequencies.

34

3

In addition to the above points, HCV has, in

in its submission, identified several areas on which it would wish to negotiate with Government. These include licence exclusivity, external wiring, satellite links, proprietory rights, the theft of service, the grant of land to the licensee and the right of access to buildings.

to buildings. In some of these areas Government policy is established and HCV will be appraised of the policy during any negotiations; in other areas, where there is no fixed policy, HCV's points will be addressed by Government during the negotiations.

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The Administration's requirements in the above areas are as follows

* Note:

The royalty payment for wireless television is calculated on the following scale but subject to an overall ceiling of 12% on gross receipts -

first $100 million @ 1%;

next $100 million @

5%; next $100 million @ 10%; next $100 million @ 15%; next $100 million @ 20%; exceeding $2,500 million @ 25%

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