China Mobile

Hong Kong mobile firms oppose any 3G spectrum grab

In paper outlining opposition, city's four network service providers fear being overmatched by cash-rich mainland firm

PUBLISHED : Wednesday, 13 March, 2013, 12:00am
UPDATED : Wednesday, 13 March, 2013, 5:21am

Efforts by Hong Kong's four leading mobile network service providers to renew their 3G spectrum is shaping up to be a battle of wills against China Mobile, the world's largest wireless network operator.

The four local operators have pointed out that the situation could fan the flames of negative public sentiment "towards mainland Chinese investments and purchases in Hong Kong".

A position paper drawn up this month by CSL, SmarTone Telecommunications, Hutchison Telecommunications Hong Kong and PCCW's HKT said the government's plan to seize and auction off chunks of their existing 3G spectrum would benefit China Mobile.

"A government policy to favour Chinese state-owned enterprises at the expense of Hong Kong consumers cannot be conducive in the current divisive climate," according to the paper, a copy of which was obtained by the South China Morning Post.

It said the public had already reacted strongly against mainland buyers driving up property prices and buying most of the supply of milk powder.

In the initial industry consultation held by the Communications Authority last year, the government presented three options on what it may do with the four mobile network operators' 3G spectrum licences when they expire in October next year. These involved renewing them at a reasonable fee, putting the spectrum up for public auction, or taking a third from each of the operators' 3G spectrum allocation and auctioning them off.

The Post reported yesterday that the government might already have decided on the third, so-called hybrid option, which may spur the four operators to mount a legal challenge.

The operators said China Mobile had taken "an opposing stance against the rest of the Hong Kong [telecommunications] industry" by "demanding that [the four] mobile network operators sacrifice" a third of their respective 3G spectrum for the planned auction.

"We believe a state-owned enterprise should support and abide by the one country, two systems principle in Hong Kong," the operators said in the paper. "The industry believes that if the government accepts this request from China Mobile, it would be grossly unjust and would have [adverse] ramifications."

The operators suggested that if China Mobile won in the auction, the high cost of acquiring the 3G spectrum would be passed on to consumers. It could also charge services below cost, "which would constitute predatory pricing", to squeeze the competition and dominate the market.

They warned that China Mobile's success would encourage other state-owned network operators, such as China Unicom and China Telecom, to enter Hong Kong. Local mobile operators "will be devastated with no room to survive".

Legislator Charles Peter Mok said that he and Sin Chung-kai tried on Monday to get the 3G spectrum issue tabled for Legislative Council discussion.

The Communications Authority will decide in October what to do with the 3G spectrum licences. A public consultation on the issue will close on April 11.