Licences for the third generation of mobile phones should be sold to the highest bidder, the SAR's largest operator said yesterday. The call from Hutchison Whampoa, which came less than a month after the company appeared to come out against auctioning, could help swing the debate in favour of such a system. The Office of the Telecommunications Authority (Ofta), which is in charge of issuing the new licences, has said it is not in favour of an auction, because it believes costs will be passed on to consumers. It intends to issue four to six licences by the end of the year, allowing the winners to start services as early as next year. Third-generation mobile services will combine multi-media with access to the Internet, which will also enable users to shop online and watch videos. Canning Fok Kin-ning, managing director of Hutchison Whampoa, said yesterday auctioning of third-generation licences was a worldwide trend. Mr Fok, speaking as the first round of consultation on the issue closed, said licences should be awarded on a competitive basis and not through negotiations between businessmen and government officials. Hutchison is the only mobile operator to announce support of an auction plan. As recently as last month, Mr Fok said he believed methods other than an auction would best suit the local environment. 'Operators would incur higher operating costs by auctioning,' he said. 'The cost would still eventually be transferred to customers in Hong Kong.' But a Hutchison spokesman said Mr Fok had not 'committed' to a view on how to grant the licences. Mr Fok's comments follow his company's success in winning a third-generation licence in Britain at an auction that raised GBP22.5 billion (HK$261 billion) for the Government. Hutchison paid GBP4.38 billion for its licence. There has been pressure for the SAR to stage a similar auction, which analysts say could realise up to $60 billion. Analysts said they were not surprised by Hutchison's stance. 'Every company is on equal ground on a merit-based approach, the so-called 'beauty contest' system,' an analyst said. 'But for auctioning, the company which has the deepest pockets will win.' Cash-rich Hutchison reported the biggest profit in Hong Kong's corporate history with earnings of $117.34 billion in the year to December 31. 'We must win a licence,' Mr Fok said yesterday. Ofta said it had received 35 submissions during the consultation. The submissions will be put on its Web site by Friday. Ofta expects to introduce a formal proposal in July for a second round of consultation and plans to invite applications by the end of this year. The other five mobile-phone firms - Cable & Wireless HKT, SmarTone Telecommunications, New World Telephone, Peoples Telephone and Sunday Communications - said they had submitted proposals to Ofta. All have backed plans to award the licences via a 'beauty contest'. Under this system, the companies are asked to submit details of investment and planned service, and the licences are granted to those considered to have the best plan. Overseas companies have also offered proposals to Ofta. United States-based Lucent Technologies, a telecoms equipment supplier, said the SAR should allocate at least one licence for a new entrant to the market. Major political parties and groups said they were not in favour of an auction, saying it would be a bad deal for consumers. Democratic Party legislator Fred Li Wah-ming said open tendering would allow the Government to find out about companies' investment plans and technological support. Chan Kam-lam of the Democratic Alliance for the Betterment of Hong Kong said telecom companies might have to pay a high price for the licences through auction, adding the cost might be passed on to consumers. 'It's not suitable for us to follow the British Government's step,' he said. Both the parties supported the Government issuing six licences rather than four, saying the more competitors the better.