LAST week's awarding of three new telecommunications licences may not be a consumer windfall. Despite the end of Hongkong Telecom's 100-year monopoly, there is considerable doubt about the viability of the proposed new services and lower costs. All three consortiums, led by Wharf, New World and Hutchison, are proposing large scale, fixed-line networks requiring massive capital investment over the next few years. The three will be offered essentially the same licence to provide services currently outside Hongkong Telecom's domestic monopoly (defined as basic voice telephony over fixed wires). These services include video-on-demand, distance-learning, home-shopping, and other multi-media services. Undoubtedly, the Government's intention is to introduce competitive, fixed network services at lower costs to consumers. Based on the business plans of the new consortiums, the Office of Telecommunications Authority (OFTA) believes the proposed services, plus the existing operations of HK Telecom, will provide an optimal number of consumer benefits. Given the experience of liberalisation of telecommunications in other mature overseas markets, customers are certain to benefit from greater competition. But in the Hong Kong context, the questions are when and how far. Telecommunications experts concur that the only forecast one can make now is that these projects are capital-intensive with a long pay back period. It will take a minimum of five to six years before they can compete effectively with Hongkong Telecom. They also agree that Hongkong Telecom's existing earnings from the basic domestic telephone services would not be threatened in the foreseeable future. The main effect of bringing in new players will be to stimulate and expand the existing fixed-line telecom services. It is understood that the main criteria for granting the licences are: business plans (types of services, pricing, cost structure), technological backup, network roll-out plan and financial capability. However, the lack of details released at this stage makes it difficult to estimate costs and profitability. Warburg Securities senior analyst Allan Ng said: ''No doubt all three consortiums have done their feasibility studies but what looks good on paper may not really survive the test of the marketplace.'' The CT2 mobile phone experience is a good example. Before the service was launched almost all industry experts believed that if CT2 was priced at one-third the overall cost of the cellular phone, consumers would be persuaded to buy the gadgets. The reality is that the three operators are forced to price their product at one-fifth of the cost of the cellular. Salomon Brothers senior analyst Andrew Harrington agreed that the capital investment figures provided by the consortium were indicative rather than meaningful because the Government and consortium alike did not really know what the figures were. THE Government believes that competition will reduce costs for consumers who will be able to save $1.7 billion in real terms over the next 10 years. ''This is a very rough figure. Even if it is a realistic estimate, whether it really makes business sense for the operators remains to be seen,'' said Mr Ng. Mr Harrington believed that it would be premature to estimate the benefits to consumers of the end of Hongkong Telecom's monopoly. . ''With the gradual coming of age of the new telecom services like video-on-demand and home shopping, Hongkong Telecom is in an no-lose position given that it got a huge built-in optical fibre network to compete with the newcomers,'' he said. ''The whole telecom cake will be expanded, and no tariff war in the domestic telephone services could be expected because the real arena will be in the broad band network services. '' Consumers would have to wait until the end of the century before the benefits of the new services are fully operational, Mr Harrington expected. Details of the licences will be ironed out over the next few months and the consortiums may still be able to withdraw depending the terms and conditions of the licences. For instance, the problem of number portability is one of the outstanding issues to be resolved in the coming negotiations. Number portability allows the subscriber to retain the same number regardless of location or telecommunications network operator. OFTA supports the principle of fully integrated portability although it is technologically immature, potentially very expensive and untried anywhere in the world. Hongkong Telecom disputes the desirability of full portability on cost grounds. For the new consortiums, full portability will improve the chances of luring customers away from Hongkong Telecom. At the end of the day it is the customers who will bear the cost, but it makes a difference as to who (Hongkong Telecom, or the competitive operators) passes on the charge to the customers. Furthermore, while most customers will want to have full portability, it is not clear how much they are willing to pay for it. OFTA will conduct a feasibility study on full portability over the next few months. A compromise may be found in ''interim portability'', essentially a call-forward function that lasts for six months after a customer moves. It is cheaper and technologically simpler. The important consideration in awarding licences to the three consortiums is the fact that their business plans taken together should provide the maximum competition to Hongkong Telecom and therefore potentially the maximum benefit to consumers. It is understood that Hutchison will focus on the business district first but eventually will expand the network to residential districts as well. New World will begin its network along the underground transport system (complemented by leased capacity from Hongkong Telecom) thus servicing a large number of small businesses and residential users. Wharf will roll out its network along with the cable network, that is starting in Sha Tin, Tsuen Wan and Tsing Yi, thus also servicing small businesses and residential users.