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Ben Kwok

Watchdog denies extra licence will create excess competition

Government officials yesterday hit back at claims that an additional third-generation (3G) mobile-phone licence would create too much competition, saying the market would be the final arbiter.

Hutchison Telecom,  which will have its CDMA licence  seized to pave way for the auction, also weighed in on the matter for the first time yesterday, saying the government was diminishing  incentives to invest in the telecommunications sector.

Last week, the Office of the Telecommunications Authority (Ofta)  said it would auction a new mobile-phone licence next year after retrieving two licences from Hutchison and CSL after they expired.

'Competition is never too much,' said John Tsang Chun-wah, the Secretary for Commerce, Industry and Technology, whose portfolio includes Ofta.

Hutchison yesterday said the  new licence would make for  one too many 3G permits in the tiny Hong Kong market.

Hutchison and CSL, which are also 3G licence holders, are studying their legal rights to continue their business under the licences to be seized, openly questioning the benefits of Ofta's pro-competition approach.

Ofta is taking back Hutchison's CDMA licence and CSL's TDMA permit because the spectra has not been fully utilised.

Hutchison  senior legal counsel Oswald Kwok Tze-wing said: 'The health of the mobile market is in danger. With a new competitor, the market is going to melt down because the new guy ends up cutting prices to win market share.'

Mr Kwok  said the government was in no position to determine the level of competition in Hong Kong, as  this should be left  to the operators to decide.

'If operators think there will not be enough business under five licences, they will have to decide themselves,' he said.

Stephen Ng Tin-hoi, chairman of Wharf T&T, a possible bidder for the new licence, said the mobile market was competitive but many operators, including SmarTone Telecommunications and Peoples, were profitable nonetheless.

However, he could not say how new 3G services would reshape the mobile-phone sector. 'My crystal ball is no bigger than yours,' he said.

Wharf is studying whether to enter the mobile market.

In 2001, the government awarded four 3G licences to CSL, Hutchison, SmarTone and Sunday. At that time, Ofta promised not to grant another 3G licence before 2005.

Hutchison managing director Agnes Nardi said  revoking  Hutchison's CDMA licence would hurt Hong Kong's reputation in the eyes of overseas investors.

She said Ofta's decision to put the licence back up for auction had hurt its CDMA business plans, although she did not say what those plans were or how much it intended to spend.

Since 1995, Hutchison has poured more than $1 billion into its CDMA network - the first in the world.



Ofta leaves market as final 3G arbiter