Tough call for monopolies

PUBLISHED : Sunday, 15 August, 1999, 12:00am
UPDATED : Sunday, 15 August, 1999, 12:00am

IT has been a bad week for Cable & Wireless HKT. Protests have continued against the announcement it will increase line rentals by 31 per cent.

Political parties demonstrated outside the company's Quarry Bay office. One group even called on customers to delay paying their phone bills in protest.

In the past, the Government would probably have weighed in on HKT's behalf. After all, the increase is part of an agreement with the administration last year, under which the company agreed to surrender its lucrative stranglehold over international calls.

Back in the colonial era, officials were only too happy to come rushing to the defence of local monopolies and cartels. Especially when they were owned by British interests, as is the case with HKT.

It was all part of a cosy deal, under which little effort was made to inject competition into much of the economy. Instead such companies were left to overcharge the consumer, under the pretext of ensuring stability in the run-up to the handover.

Times have changed since then. So last week the Government was conspicuous by its silence during the row over line rentals. When HKT tried to cut staff salaries last year, Tung Chee-hwa even took the unprecedented step of voicing implicit criticism of the company's move.

That may be partly due to its British ownership. It is doubtful if Mr Tung would have spoken out so strongly if his good friend Li Ka-shing had tried something similar.

But it also reflects a more general feeling within government that the big monopolies can no longer rely on help to protect their privileged position in these more politically-charged days.

'We've been feeling the heat since the early 1990s,' said one official, in a reference to the advent of a directly elected legislature. 'It's about time they started sharing some of it.' Even before the handover, such privileges were becoming unsustainable, as shown by the first moves to open up the telephone market. Now the situation has gone much further.

Far from defending them, these days when big companies come under attack for charging too much, government is far more likely to join in the criticism.

Some big oil companies are said to be still livid at the dressing-down they received from Secretary for Economic Services Stephen Ip Shu-kwan earlier this year.

Political parties had attacked their refusal to reduce liquefied petroleum gas prices, despite the plummeting cost of imports. When Mr Ip echoed such criticism, even threatening to open up the market to greater competition, the pressure became too much.

Deprived of the cloak of government protection, the oil companies had no choice but to cut prices.

Such tough tactics are not yet being applied to all monopolies. The Government gave Cathay Pacific scant support when its confrontation with pilots caused chaos at Chek Lap Kok in May. But nor did it really respond to the widespread public calls for a new policy to inject more competition into the local aviation industry.

Local power companies also escaped relatively unscathed from the recent review of their Scheme of Control. Although CLP Power and Hong Kong Electric did have to concede some price cuts, these were small compared with the amount critics have accused them of overcharging consumers.

But their reprieve is likely to be purely temporary. Plans are already under serious discussion to open up the industry to greater competition when the present scheme expires in 2008.

Both companies may be forced to give up their distribution network. Or, at least, allow new rivals equal access. Mr Ip has also said that he hopes to see natural gas provide an alternative to Towngas, which currently enjoys a de-facto monopoly in many buildings.

Some may feel the heat sooner than others. The oil companies have already faced it earlier this year, while HKT has now been abandoned to defend its increases unaided.

But no cartel or monopoly can expect to escape in the long-run. Hong Kong is no longer a colony. So those who want to cling on to outdated privileges must expect to face an increasingly tough battle in trying to defend them.