TNAG-1987-FCO40-2820-Presentation-of-UK-policy-on-Hong-Kong-to-the-media-1989 — Page 9

is that both HKCC

services

ADL's evaluation provide viable telecommunications their telecommunications network proposals significant competition. Moreover,

as both

and HCV would and that both would lead to would face the the

scope of

same constraints of market demand and non-franchised services, in practice each is likely to provide more or less the same services at similar levels of provision. This view is also supported by the fact that over the 15 year period of their financial plans both are planning

invest comparable amount s

telecommunications infrastructure. We endorse ADL's conclusion that

that both HKCC and HCV would meet Government's objectives in increasing the scope of telecommunications competition.

to

in

27

Both HKCC and HCV assume in their proposals that the Hong Kong Telephone Company's (Telco's) franchise will not be extended beyond its date of expiry (1995) and that they will then be allowed to compete across the board in providing local telecommunications services, including all local voice telephone services. Indeed, their proposals are to a large extent dependent on this coming about and would be scaled down accordingly if it did not. We are giving careful consideration to the future of Telco's franchise and Members will be consulted on this later in the year.

28

has

market

While ADL considers both HKCC and HCV to be capable of executing the project, it favours HCV's telecommunications proposals over HKCC's on two main grounds. first, that HCV

a greater understanding of the

for telecommunications services in Hong Kong and the local regulatory environment; and secondly, that HCV would be a more aggressive competitor, especially in the early years. Regarding the first of these advantages, it is not surprising that HCV's knowledge of the local telecommunications market and regulations should be better than HKCC's given that its majority shareholder is already a major telecommunications player in Hong Kong and that it has been actively involved in the debate of recent years over the second telecommunications network.

>

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а

It is equally understandable that HKCC as prospective new market entrant should initially adopt a more tent at ive approach in challenging the existing monopoly telecommunications operators, since it has no first-hand experience of the local telecommunications regulatory environment. HKCC has, to some extent, played safe,

, seeking to be guided by the Government on what constitutes non-franchised services. By contrast HCV proposes to test the limits of the Telco franchise as far as possible, resorting, if necessary, to legal action. HKCC's telecommunications proposals prior the Telco franchise in

in 1995 concentrate on

Hence, while the expiry of carrying local

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