Ofta should auction precious airwaves
Put yourself in the place of the responsible government official in a country where a big oil field has just been discovered and all the foreign oil companies are clamouring to get in.
If you have not already signed production agreements with them at the exploration stage, you will probably set criteria for how much the bidders must invest in production facilities, when production must start and what sort of flow rates you expect to see.
There is one key question, however, that will take priority over all others.
How much are you going to pay us for our oil, fella? This is all very obvious when it comes to such things as oil and mineral deposits. These are national assets and if a nation wishes to exploit them it will extract the best possible price that it can get for them from the people who do the actual job of getting them out of the ground and on to the market.
The times they are a'changing, however. There is more to national assets now than just oil and gold. We have, for instance, the electro-magnetic spectrum above our heads, filled these days with the unseen and unfelt but very real electronic impulses of modern communications.
There are limits everywhere to how much of the spectrum is available for this purpose to the people who live below and, as the limits are reached, which they now increasingly are, it becomes an ever more valuable asset for these people.
So why not treat it now in the same way as we would treat oil and gold? Why not sell it? Other countries are beginning to do this. Why don't we? It is a question that the Office of the Telecommunications Authority (Ofta) should consider as it works out licence terms for the coming third generation (3G) of mobile phones which can carry multimedia content as well as voice.
Ofta now expects to invite applications for 3G networks in the third quarter next year and grant licences by the fourth quarter or early in 2001.
There is only a 60 MHz gap available in the spectrum for these networks, however, and, at 15 MHz per operator, that gives us a maximum of only four operators. These licences, in other words, will be extremely valuable assets.
Ofta could legitimately have taken the view a few years ago that the mobile phone market was still in its formative stages and the best way of fully developing it was to award licences for free but set strict conditions requiring operators to build out their networks so that they covered all of Hong Kong.
Things have altered. The ratio of mobile phones to population over 15 years of age is now more than 60 per cent, which means an average of more than one mobile per household. Perhaps Finland has greater penetration but we certainly cannot be far behind the No 1 spot. This is a mature market.
Ofta may also argue that selling the spectrum is not like selling oil because it is not sold abroad. It can only be used in Hong Kong and, whether we benefit in higher public revenues or lower mobile rates, Hong Kong people are still the beneficiaries.
True but even then it distorts the market. The best way to ensure that this now scarce resource of the spectrum is most efficiently used is to auction it off and let the market decide who can use it most efficiently.
There is still plenty of time to debate this issue before licences are awarded. It is time we started doing so before it's too late.
Your response, please, Ofta.
2mon10gbz
