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Warning of disruption to mobile users over expansion of 3G telecom market

Consumer chief raises fears over idea to expand city's 3G market, saying that splitting services to allow in another operator could be detrimental

PUBLISHED : Sunday, 13 October, 2013, 12:00am
UPDATED : Monday, 14 October, 2013, 2:00pm

Hong Kong's top consumer rights advocate has described a possible shake-up in the city's 3G mobile market as her "top concern" and questioned the idea that more competition would be a good thing.

Consumer Council chief executive Gilly Wong Fung-han says the potential disruption from splitting services among more operators was worrying because of the huge number of mobile users it could affect.

Speaking publicly for the first time on the issue, Wong told the Sunday Morning Post in an exclusive interview: "Right now we have two different stories - from the telecom operators, who say it will be very detrimental, producing a 27 per cent degradation in service, and the government, which says 9 per cent.

"There is a huge difference between the two figures presented to the public."

State-owned giant China Mobile, the world's biggest mobile operator with 750 million customers, said it would be interested in seeking a licence to capture a slice of the 11 million-strong 3G and 4G Hong Kong market.

But the big four 3G mobile operators - HKT (PCCW), SmarTone, CSL (one2free) and 3 Hong Kong (Hutchison Telecom) - have come out against more competition.

One option is to keep the status quo, the second is to put the whole spectrum up for public auction and the third would see an equal share taken from the operators and put to auction, paving the way for a new player.

If more competition is granted, mobile users could be the big losers, facing higher prices and poorer network signals.

The Office for the Communications Authority (Ofca), the industry regulator, will decide whether more competition and a fifth player - possibly China Mobile - is needed by the end of this month.

Wong said: "From a consumer protection standpoint, the school of thought is always having more competition, more choice for consumers and more innovation value.

"People have already said Hong Kong is a highly competitive market. But there is a question mark over whether we can accommodate one more player in the market."

The impact of a fresh competitor and the overhaul of signal distribution would be equivalent to converting the Cross-Harbour road tunnel for MTR use only.

Plum Consulting, a British firm hired by the telecom operators, said it arrived at the 27 per cent figure - weighted across the four networks - after assessing all their infrastructure capacity.

In a worst-case scenario, the operator most reliant on 3G services faced a 39 per cent loss in network signals. But technical experts said the impact on signal quality depended on whether operators were using all available space for 3G services. HSBC research revealed SmarTone "has deep broad-spectrum holdings and significant excess network capacity". SmarTone declined to comment.

Disruption to output would affect all users connected to 3G, including on 4G, as when it is not available the signal is downgraded to 3G automatically.

It could take 70 seconds longer to download a YouTube video and calls would be prone to more dropouts and static interference.

Peter Koo Heung-shing, a partner at professional services firm Deloitte China, said the mobile market looked "a little saturated". Koo said that with 1.5 phones per customer, the market was already "highly penetrated".

Operators have warned that bills will rise. Alex Arena, group managing director at HKT, the biggest telecommunications operator, previously estimated bills would rise by HK$360 a year.

Users are already experiencing patchy services on the city's 3G network. One2free 4G customer Josh Tam Siu-hay, 32, said he relied on the 3G network at home in Yuen Long.

"I've had calls drop, and my iPhone says 'call failed,'" Tam said. "A big impact in my service quality would be devastating."

Wong said: "If the direction is to auction some of the spectrum, all measures to minimise the impact to consumers are very important and we have voiced this to the government already."

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RuthEnnis
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sandersonc
China Mobile should continue operating as a virtual operator leveraging an existing operators' infrastructure. I think having four big players in the 3G market is enough. Just look at India where there are 12 and all the problems associated with 12 operators trying to build out networks to cover an entire country. Besides who wants to use China Mobile? They probably route all your voice calls and internet traffic via Shenzhen for monitoring and logging ready to line you up for some re-education :)
johnyuan
blue:
Please explain 'So adding another player will cause service quality to degrade across the board.'
Likewise if we subtract one, service quality will improve -- lightning speed or double the lightning speed? No?
blue
You guys don't seem to understand how mobile bandwidth works. It would be bad if China Mobile entered this space. It would without a doubt cause a degradation of the quality of mobile service because there is only a little amount of bandwidth available. So adding another player will cause service quality to degrade across the board.
impala
If we take your argument to its logical conclusion, it would make sense to have only one provider.

While there is indeed a physically limited resource here (the frequency spectrum), I don't see how anyone can justify that three (or four, or five) licensed providers is the right number, and that one more or one less would degrade quality of service, or improve it.

It is entirely sensible, especially from a consumer interest point of view, to periodically re-auction the licenses, or shake up the market in other ways. The last thing any consumer should want is a static oligopoly.
chuchu59
I never expected a CC chief to say something like this. Should a new player enter the market there is bound to be some chaos initially but once it gains a foothold the benefits of competition will kick in and hopefully lower prices and better services for consumers. That's the beauty of a free market. Only the fittest survive so if the new player or the older players are unable to compete they are kicked out. Simple as that. It may take several years but I do believe consumers will reap the benefits of more competition regardless of what the current players and their advocates say.
johnyuan
So everybody is aware now that there are two different stories – 27% versus 9% degradation in service. So what is your next step as the chief executive of the Consumer Council? Accepting them or do your own research?
……
Let the public focuses on Wong and her action.
……
I will not accept her saying that "People have already said Hong Kong is a highly competitive market. But there is a question mark over whether we can accommodate one more player in the market." It means nothing. Pricing and technical ability of one more service in the mix can be reliably and scientifically had for the Consumer Council to make a recommendation for the benefit of consumer. Or I am totally off the mark?
commdent_ladyhku
They just want to raise their service charge.
vic.au.7
China, leave us alone.
chaz_hen
Yes! Hong Kongers want to be fleeced by Hong Kongers!
johnyuan
It is lamentable that Hong Kong is still carrying its colonial baggage with laws and regulations that protect the vested interest. It is an irony that the Basic Law allows Hong Kong to exist after the hangover without change. Nevertheless the Basic Law has not forbid Hong Kong to undo unjust law and regulation.
……
Most of the social conflicts in Hong Kong could have surfaced in the open if allowed during the colonial time. Hong Kong must recognize its colonial culture in part as social baggage.
impala
Right. Only in Hong Kong can you see a -supposed- consumer advocate come out in favour of vested interest and against more competition.
johnyuan
Ofca has a poor consumer service track record. A decade ago when fax machine was in use, it can’t effectively take control of junk fax traffics. Unavoidably Ofca can be accused in collusion with the phone operator allowing it a viable profitable business with its ineffective rule. Numerous people including my letter writings to SCMP complained but all in vain. For a one-man office, I was burning up two expansive fax paper roles a month. And with my phone constantly being tied up for real business.
……
The idea that business can be self-regulating has proven to be bias – consumer interest is totally ignored and suffered.

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