The best always comes at a premium

PUBLISHED : Monday, 21 April, 2008, 12:00am
UPDATED : Monday, 21 April, 2008, 12:00am

'The survey found Karachi has the lowest average monthly rent. Compared [with] Hong Kong, it is 17 times cheaper.'

SCMP, April 17

This, to my mind, is the key finding of a recent survey that rated Hong Kong as the world's most expensive city for expatriates in rents for a high-end three-bedroom flat.

It introduces the obvious question - why is Karachi so much cheaper?

The obvious answer is that very few expatriates want to live in Karachi. In fact, few of Karachi's inhabitants want to live there. I spent a few days there when a broking firm for which I worked wanted to set up an office in Pakistan. We set it up in Lahore.

So, if this survey by human resource consultants ECA International should induce you to think that our town's high rents for expatriate accommodation mean that we are uncompetitive, think again.

The reason these rents are so high is that expatriates are willing to pay them and the reason they are willing to pay them is that they think there is lots of money to be made by living here, enough to justify paying high rents. Let me assure you that no one thinks this about Karachi.

I now have another question to ask and again I think the answer is obvious, although I have not seen it in any of the reports or press releases on this survey.

Question: What does ECA International mean by expatriate?

Answer: A 42-year-old man of Caucasian ethnicity, who hails from an English-speaking country.

It is a worthwhile distinction to make because while this answer may have been a good working description 30 years ago, it is one no longer.

Caucasians are a minority now and most expatriates in Hong Kong hail from elsewhere in Asia.

This more recent class of expatriates does not invariably regard it as a God-given right to live in a spacious three-bedroom flat in the Mid-Levels, The Peak or Repulse Bay. Some of these people are actually willing to go overseas. It's true. They live in Kowloon. This does not seem to figure in the ECA survey.

And when they dine out, they are willing to eat noodles or congee and to wield chopsticks. They do not always insist on wine and a three-course western meal with their knees tangled up in an overly large tablecloth and the lights turned down too low to read the menu.

But it's my guess that I've just described the sort of thing the ECA survey means by living standards for expatriates. It's also my guess that this does not change in London or New York. The survey still measures wine and steak there, not noodles or congee for the Asian expatriate.

Just guessing, as I say, but there is no need to guess the reasons for the principal findings of this survey. We cost more because we're the best.

'If your fixed-line contract has less than six months remaining, we'll buy it out so you can switch your number now and enjoy HomePhone+ right away.'

SmarTone Vodafone ad, SCMP, April 17

Idon't know if you saw this advertisement in Thursday's newspaper, but its significance lies beyond an ordinary marketing promotion. It is an arrow aimed at the heart of our dominant telecommunications operator, PCCW, and it will be interesting to see what PCCW does to deflect it.

PCCW still owns the fixed-line business. Its predecessor, Hongkong Telephone, put in all the cables and wiring years ago and it's not worth anyone's time now to duplicate this across the whole of Hong Kong.

PCCW also defends this network. It has done its best to stall tariff reforms that would end a fixed-line advantage over mobile phones and it stands against allowing number portability between fixed and mobile phones.

But SmarTone has come up with a new twist. It has posed a question to the Telecommunications Authority - what defines 'fixed'?

Apparently, the TA has agreed that 'fixed' means a telephone set that only works where you physically install it and does not have to mean one that is connected to an installed copper wire.

So, what SmarTone is doing with its HomePhone+ is give you a portable handset that fits on a docking station plugged into the electrical mains of your home.

This docking station, however, is linked to the company's mobile network. It's a form of mobile phone that qualifies as fixed because you cannot use it outside your home.

But you can now transfer your fixed-line telephone number with PCCW to this new service and, of course, SmarTone pitches it at a lower tariff, which is possible for it to do because maintaining a mobile network costs less than keeping a vast tracery of wire and cable in proper repair and operation.

Let me say here that if this newspaper's rules allowed me to make a side income from my column, I would now immediately charge SmarTone an advertising fee.

But it's not my purpose to promote SmarTone. What interests me is that this definition of 'fixed' breaks down the last big defensive barrier around PCCW's traditional telecommunications services business and this business is where it makes all its money.

They can't just let it go like that. Watch this space.