PERSONAL Communications Services (PCS) are 'a future type of wireless telephone system that uses light handsets to communicate via low power antennas', according to Andersen Consulting. They operate on higher frequencies than existing mobile services. In Hong Kong, operators will be granted initial blocks of 2X5 MHz between 1.7 and 2GHz. Because they are on a higher frequency, congestion which has plagued the traditional services should not be a problem. Prices are sure to be competitive because operators are convinced there is a big, unsatisfied demand for mobile services in Hong Kong. The Office of the Telecommunications Authority (OFTA) believes new mobile systems, including PCS, will attract hundreds of thousands of new users over the next few years, with one in five people using a mobile phone by the end of 1997. About 10 per cent of the population is now wired for mobile. There are about 490,000 mobile customers on a mix of digital and analogue services. Hong Kong has the highest penetration rates in the world for mobile and paging services, with demand for cellular growing by 30 per cent a year. This was the spur for the introduction of PCS in Hong Kong, which followed a consultation process on the best way to develop the Hong Kong market. OFTA received 14 proposals to operate PCS services in Hong Kong. OFTA has said it will issue up to six PCS licences, but those bidders expecting an announcement by the end of the month will be disappointed. The likelihood now is that the licences will not be awarded until some time in September, although OFTA may indicate who the winners are. As with the fixed network licences issued on July 1, the approval of the Chinese side in the Joint Liaison Group is required before final approval can be given. Late in August, a spokesman for OFTA said the licences would be awarded after August 30. They will be chosen on a points basis linked to the feasibility of their networks and the proposed tariff structure. Bidders are understandably anxious for the licences to be announced. Investment plans are already being implemented by some companies. Late in July, OFTA was forced to deny a series of articles in Chinese language newspapers which claimed the winners had been already been chosen. Those articles, which contained 'gross inaccuracies' according to OFTA, said the winning consortia included Hutchison Telecom, Hong Kong Telecom, China's Guangdong Mobile Telecommunications Co, First Pacific, Vodafone, New World Telephone and TelecomAsia PCL of Thailand. To users, it will not matter that PCS operates on a higher frequency than existing mobile phones or that their smaller cell size requires a more intricate base station network; the test will be in their performance, and customers will gravitate towards the better performers as they have done with existing mobile. One company looking forward to the announcement of the winning PCS bids is Chevalier (Telepoint,) which is operating a CT2 service and is keen to help its customers migrate to cellular. Chevalier managing director Neil Montefiore, writing in the recently released Official Guide to Telecommunications in Hong Kong, said no single service provider had all the answers regarding PCS. As for CT2, he said its infrastructure and functions could be developed until they matched cellular. 'To do this, however, it would have to deliver 95 to 98 per cent coverage of the entire 1,000 square kilometres of the territory; provide two-way services with hand-off, and offer roaming with compatible networks in neighbouring countries.' Mr Montefiore has since said that his group needed a PCS licence because CT2's price advantage would be squeezed by PCS, which was likely to be cheaper than existing cellular. CT2 customers are mainly in the 18 to 25 age group and on fairly low incomes. Mr Montefiore said four per cent of a person's salary was the price barrier for mobile communications, meaning $400 per month was the most people earning about $10,000 would spend on a mobile service. Cellular charges are now about double that level, but PCS is bound to offer cheaper alternatives.