3G mobile spectrum renewal still an option for government

City's leading mobile operators have until the end of today to make their arguments against the government's planned bandwidth carve-up

PUBLISHED : Thursday, 11 April, 2013, 12:00am
UPDATED : Thursday, 11 April, 2013, 5:28am

Efforts by Hong Kong's leading mobile network operators to keep all of their 3G mobile spectrum allocations will likely come down to the final cases they present to the public consultation on the matter, which closes today.

SmarTone Telecommunications, CSL, Hutchison Telecommunications Hong Kong and HKT were expected to make their submissions to the Office of the Communications Authority (OFCA), the industry regulator, at about the same time later today, sources said.

The operators hope to convince the government to follow long-standing industry practice worldwide and automatically renew their 3G spectrum licences on the 1.9-gigahertz to 2.2GHz band, licences that are due to expire on October 21, 2016.

But the government plans to implement a so-called hybrid option in which a third of each operator's 3G mobile spectrum will be seized and auctioned off.

Phillippa Marks, a director at London-based Plum Consulting, said the government had some room to reconsider its options amid the strong opposition of operators against its 3G spectrum re-assignment plan.

"The government has given itself a Plan B and it's called renewal, which they still have on the table," said Marks, who advised the government on its spectrum policy framework in 2007. "This Plan B allows them to come to a clearer, more reasonable view about spectrum fees and the cost of spectrum reassignment."

Plan B allows them to come to a clearer, more reasonable view about spectrum fees and the cost of spectrum reassignment

Plum was recently hired by the city's four leading mobile network operators to analyse and advise them on the government's plan to redistribute their 3G spectrum allocations. It said the government underestimated the potential service disruption and likely high costs caused by taking away and re-auctioning chunks of 3G mobile spectrum in use.

A study released by Plum last month showed the service degradation included dropped calls, low data rates at peak hours and poor roaming. The operators' high investment costs to maintain service quality would be passed on to consumers, it said.

At the March 28 meeting of the Legislative Council's panel on information technology and broadcasting, Ha Yung-kuen, OFCA deputy director general, reiterated the government's estimate that average 3G data download speeds would drop 18 per cent in the transition period after parts of the existing 3G spectrum were redistributed.

The four mobile network operators at the same meeting argued that the loss in 3G download speeds would be about 40 to 50 per cent with less amount of spectrum in use.

Alex Arena, group managing director at HKT, the city's biggest telecommunications network operator, said earlier that the government's plan would increase spectrum prices "by 500 per cent". That situation could add HK$20 to HK$30 to a mobile subscriber's monthly bill.

China Mobile, the world's largest wireless network operator, supports the government plan and has indicated its intention to bid for the reassigned spectrum. It provides 3G services in Hong Kong by leasing network capacity from HKT and CSL.