5) Regulatory Options for Hong Kong and Their Economic Benefits
5.1 Three options were evaluated on a qualitative and quantitative basis to assess their net economic benefits to Hong Kong (see Exhibit 11) (4). The options we considered
were:
Option 1) Maintain the status quo
Option 2) Full immediate deregulation of domestic and international
franchised services
Option 3) An incremental liberalisation of domestic and international services.
Exhibit 11: Market Liberalisation Options
OPTION
DESCRIPTION
TIMING
ADVANTAGES
DISADVANTAGES
Option 1
Maintain Status Quo
Continue current environment with regulatory modifications
Now
• Limited investment costs
• Limited benefits
•
Opportunity to make regulatory changes
Option 2
Full liberalisation of domestic and
Allow full competition for
1992
• Greatest benefit to Hong Kong
•
domestic and international
Breaks existing franchise agreements
international franchised services
services
Facilities based
Non-facilities based
Option 3
Partial
Five step approach to market
liberalisation of
liberalisation:
domestic and
international
1 Allow mobile operators direct
access to international
Now
•
markets
gateways
• Does not break existing
franchise agreements
Implementable
Introduces competition
Does not give benefits of full competition
• Potential for arbitration to settle
disputes regarding franchised
vs. liberalised market segments
•
2 Allow large users direct access
Now
to international facilities
3 Open HKT/HKTI network for
Now
competition in non-franchised services
4 Allow additional domestic
network operators
1995
5 Allow additional international
carriers
2006
Option 1) Maintaining the status quo
5.2 A number of arguments were raised in favour of not liberalising the marketplace and
simply maintaining the status quo in Hong Kong. The principal arguments were:
1) Hong Kong is a city, not a country, and thus does not have the same needs as larger
countries for choice and could not support multiple operators.
2) HKT is already providing a high quality of service.
3) A duplication of resources would be wasteful.
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