TNAG-2247-FCO40-3230-Business-interests-in-Hong-Kong-Cable-&-Wireless-1991 — Page 207

and Telegraph for example threatening to move to other Asian

centres unless the Hong Kong Government accedes to

competition.

The Hong Kong Government has appointed Booz Allen Hamilton,

an American firm of consultants, to consider whether a second

telecommunications network should be built in Hong Kong and to

assess the impact of removing the exclusive franchise on local

calls after the current agreement expires in 1995. The

report, which is expected to be completed shortly, is expected

to recommend early liberalisation of the network. The Hong

Kong Government publicly stated in February that there was no

intention to terminate Hong Kong Telephones local calls

monopoly, but said that if very compelling and overriding

factors in favour of the consumer existed they would

contemplate dissolving the international monopoly. As

internal telephone calls are free, revenue is made almost

entirely on international calls.

While any liberalisation programme would open the door for

British Telecom to enter the market, the likelihood is that

there would be pressure within Hong Kong to introduce non-

British companies into the telephone network rather than

maintaining it as a wholly British interest. Any change would

be at the expense of Cable & Wireless and UK interests would

be likely to be net losers.