Telephony On Hold for Hong Kongs Cable TV

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Hong Kong -- Troubled pay TV provider Cable TV's plans
to launch a cable-telephony project here with a sister company in the Wharf Holdings
stable have run into difficulties.

Cable TV had planned to start a cable-telephony trial to
30,000 homes with New T&T later this year or in early 1999. The project was to have
operated with another one offering Internet access through cable modems.

But New T&T president Leslie Harris said the trial was
postponed because of the costs. "It requires both hardening of the outside network
and some equipment inside the home," Harris said, adding that this would cost between
$600 and $800 per household.

Conflicting remarks from Cable TV and New T&T also
indicated that the high costs were likely to jeopardize the cable-modem trial.

Cable TV put an indefinite hold on the rollout of its fiber
optic network after it reached a government target of 600,000 of Hong Kong's 1.6
million homes in June. About 160,000 of Cable TV's subscribers currently receive the
service through fiber optics, with the rest taking a microwave relay.

This year has been a difficult one for Cable TV: Not only
has it suspended the fiber optic build, but, due to Hong Kong's worsening economy,
the pay TV provider added only two subscribers in July.

Cable TV was also snubbed in its initiative to create a
united front of Hong Kong-based broadcasters, which would have addressed legislative and
technical issues related to the introduction of digital services.

Despite calling for a task force of interested parties to
work with the government, Cable TV was not even invited to a demonstration of the
technology organized by terrestrial Television Broadcasts Ltd. (TVB).

Garmen Chan, a spokesman for Cable TV chairman and managing
director Stephen Ng, said there was no date set for when the cable-telephony trial would
go ahead, although a laboratory trial had been completed and the results were under study.

A New T&T source said there was no timetable for
working with Cable TV on the trial, or on any commercial rollout that might follow. An
analyst commented that the two companies had laid systems that were not compatible,
questioning whether Harris' costs for hardening the system were on the conservative
side.

But Harris said there are definite symmetries between Cable
TV and New T&T, which would enable his company to expand its customer base and provide
operational and capital savings in the future.

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