Hong Kong’s mobile networks call for more spectrum as they prepare for 5G introduction

PUBLISHED : Wednesday, 24 May, 2017, 10:08pm
UPDATED : Wednesday, 24 May, 2017, 10:59pm

Hong Kong mobile operators have called for the government to release more mobile spectrum and even overhaul the current spectrum management plan as operators prepare for the roll-out of 5G technology.

On Wednesday, operators HKT and SmarTone urged the government to provide a clear road map for additional spectrum, amid the imminent roll-out of 5G in 2020 and a growing demand for mobile data by consumers.

The two operators, as well as Hutchison Telecom’s 3 Hong Kong, have submitted their views to the Communications Authority in response to its second consultation paper proposing methods for setting up the spectrum utilisation fee in Hong Kong.

“There are fundamental flaws in how the government manages spectrum, they are getting it so wrong,” Alex Arena, group managing director of HKT, told reporters on Wednesday, adding that support for 5G technology such as the internet of things and smart city applications will require a lot more spectrum than operators have at present.

According to HKT, the proposed price for 1,800 megahertz (MHZ) right-of-first-refusal spectrum – spectrum that is allocated to operators – could be as high as HK$67 million per MHz.

He described as “shameful” the government’s decision to not release any new mobile spectrum until 2019, especially since countries such as China plan to increase spectrum by 38 per cent by 2019 to 722 MHz from 522 MHz in 2016. Hong Kong currently has 582 MHz of spectrum.

Arena also slammed the government’s policy of re-auctioning spectrum when the licence term ends, pointing out that it causes business uncertainty for operators and could potentially cause disruptions in service, leading consumers to suffer.

HKT has urged the government to overhaul the pricing framework, stating that charging operators on a per megahertz basis for spectrum is expensive and unsustainable. The high spectrum prices mean that operators will not be able to offer services at an affordable price point, Arena said.

The company also proposed the government allow spectrum trading among operators, and for the government to charge operators by taking a cut of mobile revenues in what HKT calls a “win-win” for both parties.

SmarTone chief executive Anna Yip on Wednesday told reporters that the company believes a hybrid approach – whereby 40 per cent of the 200 MHz spectrum up for reassignment is allocated to the existing operators with the remaining 60 per cent assigned through auction – is best for Hong Kong and fair to all operators.

The firm also called on the government to set conservative prices for spectrum reserve saying high prices depressed operators’ incentives to invest and compete, resulting in lower quality and higher prices for consumers.

In a statement, Hutchison Telecommunications chief executive Cliff Woo said an exorbitant spectrum utilisation fee is equivalent to a type of “spectrum tax”.

“Hong Kong’s economy relies heavily on high quality and low cost telecoms services. To suffocate the development of the telecoms industry with excessive spectrum utilisation fee will adversely impact on consumer benefits and is indirectly damaging local economic development.”