• Thu
  • Dec 25, 2014
  • Updated: 12:04pm

Hong Kong reassigns 3G spectrum amid fears of service degradation

Four current operators express disappointment and warn of poorer services for consumers

PUBLISHED : Friday, 15 November, 2013, 7:54pm
UPDATED : Saturday, 16 November, 2013, 3:19am

Hong Kong's telecommunications sector is headed for a shake-up that could test the patience of consumers and local network operators, after the government's decision to reassign the existing 3G mobile spectrum.

Industry regulator the Communications Authority yesterday said the government would auction off a third of the 3G spectrum currently held by each of the city's four incumbent 3G mobile network operators in the fourth quarter next year.

But the government will also offer the operators - SmarTone Telecommunications, CSL, Hutchison Telecommunications' Three Hong Kong and PCCW's HKT - right of first refusal to be reassigned two-thirds of the spectrum they now hold. Their licences are due to expire in October 2016, when each operator will make HK$151 million in royalty payments.

Ambrose Ho Pui-him, chairman of the authority, said this "hybrid" approach would "encourage competition and allow new investment to enter the local market. It is more likely to promote innovative services from new 3G spectrum assignees and the incumbents".

China Mobile, the world's largest wireless network operator, has expressed an interest in bidding.

The four operators expressed their disappointment late yesterday, as they raised the spectre of service degradation when chunks of their spectrum are removed from service in October 2016. SmarTone said the government forecast up to one-third reduction in mobile download speeds in busy areas.

"The government is doing the public a disservice by opting for a solution that degrades service quality to all mobile users and, due to the high spectrum fees, essentially creates a new and regressive tax on consumers," Alex Arena, the group managing director at HKT, said.

Hutchison Telecom accused the government and in particular, the Communications Authority, of total disregard for the public's interest.

"The unreasonable arrangements … suggest they have simply gone their own way and ignored public views, as well as the voice of the telecoms industry. It also seems that they have adopted a pre-determined stance," Hutchison Telecom said.

An industry source said the operators' lawyers and advisers would review the decision before considering their options, which may include litigation.

Additional reporting by Emily Tsang


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Dai Muff
The matter is that mainland providers want to break into the local market. It's not brain surgery.
Clearly HK needs a holistic view of spectrum management, from Radio->TV->3G. On the one hand some existing operators in the TV space trade spectrum, and are now being fined ... now there's a potentially disruptive claw-back at the 3G end. Why is a holistic spectrum management need now? Because wide area, building penetrating, wireless broadband data (a primary driver of 3G), is undergoing another technical revolution *within the TV band* -- called 'SuperWiFi' (erroneously) or 'White Spaces radio' with proposals such as 'IEEE 802.11af' or 'IEEE 802.22' used in WSDs (White Space Devices). Google it. It would be a real pity HK didn't innovate in this space as a developer, but also as a 'user' e.g. if we're not able to make full use of 'SuperWifi' given that we've autioned off and fragmented the spectrum based on our existing view of the world. I would think it actually wise to claw back the spectrum, but not for another 3G operator, not for pure 'competition' purposes -- rather to allow for technical innovations of a kind that we've yet to imagine with this new tech. Perhaps a HK-wide wireless data provider that uses the 3G+white space spectrum to provide a mix of new services and old ones. Now that's 'competition'... oops sorry... 'innovation'.
Dai Muff
Watch it go to a mainland company, probably China Mobile, and you will be well aware why the government liberalises THIS medium at considerable inconvenience to its users, while stitching up the TV licenses.
Lets all Kowtow to China..........this is the only reason for this decision to give bandwidth to the only operator without their own 3G spectrum.......China Mobile! All this competition in Mobile and almost none in Broadcasting. Who cares if the existing 3G customers suffer a poorer data service, so long as China Mobile benefits.
Once again the HK Government bows to their leader in China to give their Mobile Company, China Mobile a 3G license to the detriment of Hong Kong 3G customers. If China Mobile wanted a license it should have bid for it along with the other operators when it was auctioned.
meanwhile, given they (HK Govt) have to dice and slice the available spectrum to allow another competitor but they cannot let HKTV (or rather its major JL sponsor?) have a controlled licence albeit the Govt hierarchy are now shown to be divisive perverting liars devoid of any trust, when can we expect a ban on the opening of new restaurants, clinics, karaokes + similar competitive ventures that survive or crash according to their offers and capabilities ?
Simply, we are governed by divisive two faced puppet morons.
Our current four-operator system has not attracted a single word of criticism for lacking competitiveness, so what justification for adding another at the expense of technical degradation for all? Watch the 5th licence go to a Beijing-friendly outfit and you'll have the answer.
Johnyuan - your recollection of events is not accurate.
HK Gov, forced an end to C&W's long distance monopoly.
For the consumer, overseas phone call costs quickly dropped roughly from $8 to 25 cents per minute.
The loss of LD profit is what triggered the sale of HKT to PCCW using PCCW shares ( not cash).
In the following year PCCW share price dropped, and C&W absorbed a substantial haircut.
Today's mobile rates in HK are very competitive, when compared to most other countries' rates. My worry would be that the new entrant will not try to improve rates or services but will
instead try to motivate its competitors to raise the minimum rates, in order to pay down its start-up costs more quickly.
You are being silly by suggesting the mainland does not trust either THREE or PCCW (father & son)

It is not a speculation but a done deal that a mainland wireless telecommunication service will be operating in Hong Kong. For those who are upset and see it as a disruption must realize wireless mobile services are no less strategic sensitive but even more so to national security. Cable and Wireless was forced to give up its business with a buyout from China. What we all should realize is that a one third market as proposed for a mainland operator is a sign of goodwill from Central Government that the remaining operators still can be trusted.
For the common folks, the imperative of the new mix is that if the cost of mobile services wouldn’t be raised and services slipped. The silver lining to this exercise is that there might be a chance that a cheaper rate may materialize in order to capture more users. We shall see.
This time, at least it is not the repetition of creating PCCW to monopolize the market and making everyone paying through the nose. I still can’t get over burning two rolls of fax paper monthly with mostly junk mails. Central government needs not to thank LKS for taking over a strategic operation in Hong Kong all by himself this time.


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