Firm argues for competition in UK while defending Hongkong monopoly

THE word hypocrisy is not very pleasant, yet it has a pretty succinct definition, which, according to my Shorter Oxford English Dictionary , is ''dissimulation, pretence, sham''. I am sure that the venerable Mr C. T. Onions, the editor of this great work, did not have Cable and Wireless in mind when he wrote these words, but they fit. Cable and Wireless calls itself ''The World Telephone Company'', because it wears many different hats in different parts of the globe. In Hongkong, the single biggest contributor to the British-based company's profits, C & W wears the hat of the monopolist with exclusive rights to operate the telecommunications network through its controlling stake in Hongkong Telecom. Back in Britain, it wears a rather different hat as the cheeky competitor to the former telecommunications monopolist British Telecom. With an 80 per cent stake in Mercury - the main rival to BT - C & W is doing all it can to whittle down the dominance which the bigger company enjoys in the British market. The bottom line here is that C & W can make more money if it gets its hands on more of the network currently controlled by BT. There is absolutely nothing wrong with this; indeed, C & W has a responsibility to its shareholders to maximise profits. The problem, however, is that Mercury is arguing its case in Britain in terms of universal principles, which C & W stoutly refutes when suggestions of increased competition are raised in Hongkong. The most blatant example of this hypocrisy was contained in an article recently published by The Observer, written by Mr Mike Harris, Mercury's chief executive. It was presented in the form of an open letter to Mr Don Cruickshank, who has just taken over as Britain's Director General of Telecommunications. ''You will need to ensure,'' wrote Mr Harris, ''that a genuinely competitive market emerges to the benefit of British business and consumers alike.'' He explained how difficult it was for poor old Mercury to secure genuine competition with the former monopoly because ''Mercury remains dependent on BT to deliver most of our calls because they are destined for BT numbers''. He identified a number of key tasks for Mr Cruickshank, most of which revolved around arrangements for Mercury to interconnect, on reasonable terms, with the BT network. First on the list was the question of numbering. ''Numbering must be controlled to ensure that customers can change their telecoms without changing their numbers,'' wrote Mr Harris. That looked like a very good point to me. So imagine my surprise when I read a press release from Hongkong Telecom criticising the recent recommendations to Hongkong's Postmaster General from the consultants' group looking into the future of telecommunications policy. The consultants said that a rival to Hongkong Telecom should have access to existing telephone numbers. ''We have no plans to provide portability [of telephone numbers] between networks,'' said Hongkong Telecom, ''because it is not clear that customers would be prepared to pay the price for this service . . . We believe that it is market forces that ought to determine which services are introduced.'' Wait a minute! In London, C & W is saying precisely the opposite. The situation in Hongkong is that the local, C & W-controlled monopoly is about to go, and Hongkong Telecom is fighting a desperate rearguard action to retain as many monopolistic practises as, for example, BT enjoys in Britain. The parallels between the two situations are fascinating and telling. Not only is Hongkong Telecom trying to prevent potential rivals from getting their hands on the telephone numbers vested in the current network, but, like BT, it seems determined to withhold information about revenue and pricing polices. One of the reasons that the Legislative Council is taking so long to examine the bill which will regulate Hongkong's new telecommunications system is that the company refuses to hand over financial information, which legislators say they require to make an intelligent assessment of the situation. The problem for C & W is that it lives in a glass house, where some of the inhabitants are throwing stones, while others duck for cover. Is it behaving any differently from another company faced with the loss of a privileged trading position? The company straining at the leash to get a piece of the action vacated by Hongkong Telecom is Hutchison Whampoa, which has made an eloquent case for telecommunications deregulation in Hongkong. There is every reason to believe that Hutchison would make a good job of running a telephone service, but I wonder how Mr Li Ka-shing, the company's boss, would feel if anyone suggested that his electricity generating monopoly, contained in Hongkong Electric, should be challenged by a rival. How would Lord Kadoorie feel about a rival for China Light and Power? How would the gentlemen who run the much criticised China Motor Bus and the less lampooned Kowloon Motor Bus, both former monopolies, feel about deregulation? At a more sophisticated level, look at the way Cathay Pacific battled tooth and nail to fight off competition from and deny landing rights to Dragonair, a dispute resolved by Cathay taking Dragonair under its wing. Contrary to popular myth and gross international misunderstanding, Hongkong is riddled with monopolies, restrictive practises and anti-competitive laws. Dear old Dr Milton Friedman, the high priest of the free market, keeps saying how Hongkong personifies this ideal, but little does he know. Presumably, no one has told him that half the population lives in state-provided housing, that every single utility operates without competition, that the transportation system is entirely state regulated etc, etc. I am not a free-market absolutist and can fully understand why the government chooses to operate a high degree of regulation in many areas and provides some admirable counter free market services, such as housing. My complaint is not so much with the monopolies, but the hypocrisy which surrounds them.