The Government is being called on to formally investigate whether Hongkong Telecom's Integrated Multimedia Services (IMS) division should be divested from the rest of the company.
The call was made by the Hong Kong centre for Economic Research, in its submission to the Government's 1997 Telecommunications Review. It suggests the current structure could be holding back Hong Kong's progress from a digital age in which telecoms and computers merge.
Author Milton Mueller pointed out that since its launch last year IMS had captured a 35-40 per cent share of the Internet service market in the territory.
The existence of such a force could slow the future development of Hong Kong's market at a crucial time when the technologies of broadcasting, telecommunications, computing and publishing were converging, led by ever-more powerful computers, he claimed.
'Hong Kong is at a critical point right now where it could take the initiative, but it could suffer if the market is not opened properly' he said.
Mrr Mueller's report suggested the integration of IMS with the former monopoly phone company gave it enormous advantages over the opposition because: IMS had guaranteed access to large amounts of internally generated capital as a result of HKT's continued control of protected markets.
Given its staffing and service quality, the costs of IMS were higher than those of other Internet service providers - yet its prices were at the bottom of the market.