The mobile communications market will see costs spiral up for both consumers and service providers under the government's plan to seize and auction off chunks of 3G spectrum currently in use, according to SmarTone Telecommunications.
"It doesn't have to happen like this. But if it does, we're all going to pay more," SmarTone chief executive Douglas Li said. "The only ones benefiting are the government and the [telecommunications equipment] vendors. They must be bloody opening champagne now, aren't they?"
The city's four leading mobile network operators - SmarTone, Hutchison Telecommunications Hong Kong, CSL and PCCW's HKT - have called on the government to follow international practice by renewing their respective 3G spectrum allocations in the 1.9 to 2.2-gigahertz band, which are due to expire in October 2016.
In the industry consultation conducted by the Communications Authority last year, the regulator presented three options on what it might do: renew the 3G spectrum at a reasonable fee; put them up for public auction; or take a third of each of the operators' 3G spectrum allocation and auction these off.
The government is due to decide on the matter in October after its public consultation ends on April 11.
Li said SmarTone would start investing in new infrastructure this year to make up for lost spectrum "to the extent that we can" should the government carry out its plan and the price of licence fees balloon. The rise in operating costs will be passed on to consumers. "If the network quality deteriorates, consumers should lay the blame at the government's door," he said.
China Mobile, the world's largest wireless network operator, has expressed interest in bidding for the 3G spectrum the government plans to reassign. It now provides local 3G services by leasing network capacity from CSL and HKT.
Li said the industry was "not against competition because any Tom, Dick and Harry with money can come into the market". But he added that "existing spectrum being efficiently used should not be taken away and re-auctioned".
He said China Mobile did not participate in 2001 when the 3G spectrum at issue were auctioned off by the government. "It had a chance to get new 3G spectrum when the government auctioned off spectrum in the 850-megahertz and 900MHZ bands in 2011, but lost. Now it wants to take spectrum from me and everybody else. How is that fair?"
The South China Morning Post reported last week that the four operators might mount a legal challenge to the government's plan.