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  • Apr 20, 2014
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Mobile operators to challenge OFCA's 'muzzle'

Stern notice on regulator's website over competition concerns taken as threat to silence criticism of plan to sell off part of 3G spectrum

PUBLISHED : Friday, 10 May, 2013, 12:00am
UPDATED : Friday, 10 May, 2013, 5:31am

Hong Kong's leading mobile network operators are poised to issue "a strong response" to a veiled attempt by government to put a muzzle on critics of its 3G spectrum reassignment plan, sources say.

The Office of the Communications Authority (OFCA) on Monday posted on its website a circular letter that put the operators on notice about their criticism, which the regulator alleged as bordering on a breach of the industry's competition rules in the ordinance.

Hutchison Telecommunications Hong Kong, CSL, SmarTone Telecommunications and PCCW's HKT have warned of a severe degradation of mobile network services and higher cost of these services to consumers if the government pushes through with its plan to redistribute chunks of 3G spectrum in use.

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

The government, however, 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 to promote more competition in the industry. The public consultation on that plan concluded on April 11.

Gary Shiu, the director-general of communications, said in the circular letter that the 3G spectrum licence-holders "one after another, publicly announced their future pricing plans", including the timing and magnitude of possible price movements.

While it encouraged operators "to freely express their views", the OFCA considered their recent conduct as potentially going "beyond the normal operation of the market and raises a legitimate concern that the relevant competition provisions of the Telecommunications Ordinance, which the operators are subject to, may be engaged", Shiu said.

He pointed out that Section 7K of the ordinance stipulates: "A licensee shall not engage in conduct which, in the opinion of the [Communications] Authority, has the purpose or effect of preventing or substantially restricting competition in a telecommunications market".

A licensee shall not engage in conduct which, in the opinion of the [Communications] Authority, has the purpose or effect of preventing or substantially restricting competition in a telecommunications market

None of the city's four 3G mobile network operators had commented on the OFCA letter "because their lawyers are carefully studying the ordinance", a source said. Another person familiar with the matter said the operators were expected to issue "a strong response" to the government, which is "suppressing opposition to its 3G spectrum plan".

China Mobile, the world's largest wireless network operator, has expressed support for the government's plan and its interest in bidding for the reassigned 3G spectrum. The government's final decision will be announced this October. HKT, the city's biggest telecommunications network operator, said in March that the plan would increase spectrum prices "by 500 per cent".

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