CONFIDENTIAL
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MDHIAN 5277
CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE FCO
TELNO 3054
OF 010759Z OCTOBER 91
TOP COPY Q DIST?
YRTELNO 1734: HONG KONG TELECOMMUNICATIONS AND BROADCASTING
POLICIES
1. PARA 2 OF YOUR TUR REFERS. DROPPING THE LINKAGE BETWEEN SUBSCRIPTION TELEVISION AND A SECOND TELECOMMUNICATIONS NETWORK WOULD SIMPLY MEAN THAT WE WOULD NOT REQUIRE COMBINED PROPOSALS. IN OTHER WORDS, IF A COMPANY WAS INTERESTED IN PROVIDING A COMPETING SECOND TELECOMMUNICATIONS NETWORK BUT HAD NO INTEREST IN PROVIDING SUBSCRIPTION TELEVISION SERVICES, OR VICE VERSA, IT WOULD BE FREE TO MAKE PROPOSALS ON THAT BASIS. A COMPANY THAT WISHED TO DO BOTH WOULD EQUALLY BE FREE TO MAKE A COMBINED
PROPOSAL.
2. DROPPING THE LINKAGE WOULD NOT GIVE AN AUTOMATIC ADVANTAGE TO A CONSORTIUM WHICH INCLUDED HK TELECOM. THIS IS BECAUSE THIS
APPROACH WOULD NOT NECESSARILY AFFECT OUR PREVIOUS POLICY OF EXCLUDING HK TELECOM FROM INSTALLING A CABLE TELEVISION NETWORK. ASSUMING THAT POLICY REMAINS IN PLACE, A COMPANY THAT WISHED TO PROVIDE SUBSCRIPTION TELEVISION SERVICES ONLY WOULD EITHER HAVE
TO INSTALL ITS OWN FACILITIES FOR DELIVERING ITS SERVICES OR SUB-
CONTRACT THE PROVISION OF SUCH FACILITIES TO ANOTHER PARTY. IN OTHER WORDS, THERE IS NO NECESSITY FOR A NEW NETWORK THAT IS TO BE USED SOLELY FOR THE DELIVERY OF SUBSCRIPTION TELEVISION SERVICES TO BE INSTALLED AND OPERATED BY HK TELECOM.
3. THERE IS NO SIMPLE ANSWER ON THE LIKELY IMPACT ON COST OF DROPPING THE LINKAGE. ON THE ONE HAND, THERE ARE LIMITED SYNERGIES TO BE GAINED FROM COMBINING THE TWO PROJECTS. SO, IF THEY ARE SEPARATED, THERE COULD BE A MARGINAL INCREASE IN COST FOR EACH. ON THE OTHER HAND, IF, IN A COMBINED PROJECT, THE SECOND TELECOMMUNICATIONS NETWORK WERE UNSUCCESSFUL, THE SUBSCRIPTION TELEVISION SERVICE MIGHT HAVE TO BEAR EXTRA UNNECESSARY COSTS, DEPENDING ON THE EFFICACY OF ANY SAFEGUARDS ADOPTED TO PREVENT A KNOCK-ON EFFECT OF THIS KIND.
WILSON
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CONFIDENTIAL
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