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March 24, 1987


By CBR Staff Writer

Competition between British Telecommunications Plc and Cable and Wireless Plc has become increasingly fierce since telecommunications deregulation in the UK in 1984, but the biggest battle with the highest stakes to win or lose looks imminent with the fight for a franchise to operate a cable network in Hong Kong. Hong Kong is important to both companies because it is the gateway to the gigantic Chinese market; it has been C&W’s turf for years through a government-granted monopoly on voice transmission that extends through 1995: if Telecom succeeds through its consortium in running a cable network, this will be a strategic blow to C&W because it will break the monopoly it currently operates through its acquisition of the Hong Kong Telephone Company and because the cable television technology is expected to take over a substantial share of data transmission in the work place. Hong Kong is extraordinarily densely populated with around 1.5m households, and 28,500 people per square kilometre: cable communications is considered to be the best way of handling the situation. The main issue, according to the Wall Street Journal is deregulation. Nobody has decided yet whether the cable technology should be restricted to television programming or whether telecommunications should be liberalised so that cable could be used for a variety of profitable applications, especially by a competitor to the telephone company. British Telecom is part of a consortium called Hutchison Cable Vision Ltd, which is 50%-owned by Hong Kong tycoon Li Ka-shing through local companies, with 10% held by film magnate Sir Run Run Shaw, with the UK phone company having the rest. The only other real competition is Cable Television Hong Kong Ltd, which is 40%-owned by C&W through Hong Kong Telephone, in which it has an 80% controlling interest, and 20%-held by Golden Harvest Film Company, Swire Pacific Ltd and film-distribution company, Edco Communications Ltd. Details of tender requirements for the bid were scheduled to go to the Executive Council in Hong Kong by the end of 1986 but a tender will now not be issued until mid-May. Programming is currently sold in Hong Kong according to levels of service. The first level of the new cable services is expected to start at US$13 a month per customer. Competition between Telecom and C&W has not been very apparent historically because BT has held a monopoly on UK domestic telecommunications while C&W has been given free rein in overseas markets formerly under control of the British empire. But with C&W introducing competition in the UK market in the form of Mercury Communications, Telecom is keen to demonstrate that two can play that game and that it is more than a match for C&W overseas.

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