There is little doubt the bruising, bare-knuckles competition in Hong Kong's mobile-phone sector has been good for consumers. Thanks to inexpensive voice tariffs, the market penetration rate is 106 per cent, among the highest in the world. Hong Kong users are also talkative, chatting an average of 570 minutes a month, compared with just 166 minutes in Japan. As the result of a price war waged by the six voice operators, consumers have saved more than $70 billion between 1996 and 2002, according to some estimates. Now the Office of the Telecommunications Authority (Ofta) hopes to repeat this success in mobile data services. To promote competition and spur demand, the agency proposes a fifth third-generation mobile-phone licence. Not surprisingly, the city's present 3G licence holders - who pay for inexpensive voice plans with lower profit margins - are reluctant to fight another round. They say a fifth player will create too much competition in a market where economies of scale are difficult to achieve, inhibiting investment in new services at the expense of the consumer. 'We believe that following the old policy approach ... is not the right lever to boost multimedia services,' Sunday Communications said. The most vocal opponent has been Hutchison Telecommunications, the only one of the four 3G licence holders to roll out the advanced services. To make room for the new licence, Ofta proposes taking back Hutchison's 2G CDMA permit upon its expiry next year, making the spectrum available for a new 3G player who would probably use CDMA 2000 technology. In response to the agency's second round of consultations on the matter, Hutchison said: '[The] entry of yet another competitor into an already overcrowded market will retard the development of mobile data service by fragmenting content supply and user demand.' What is clear is the Hong Kong mobile sector is unlike any other in the world. Six operators compete for just seven million users compared with just four operators in Japan's far larger market and three in South Korea. Yet despite the hyper-competitive environment, all six operators are profitable. Because of Hong Kong's high population density, the cost of building and running a mobile-phone network is lower than more dispersed and geographically larger markets. The Telecommunications Management Group said Hong Kong could support robust competition in data services as well. It said the argument against a fifth 3G licence was 'fallacious and serves the interests only of some of the current 3G operators rather than the interests of Hong Kong consumers'. In a paper accompanying an Ofta submission by the CDMA Development Group, the group said a CDMA 2000 network would be less costly to build than one running on the WCDMA standard. This is because a CDMA 2000 cell site operating in the 800Mhz frequency to be retrieved from Hutchison can cover a radius of 29.4km compared with 13.3km for WCDMA equipment in the 1,900Mhz band. The 3G licence holders have concluded five operators are too many but proponents of competition want the market to decide. No one will bid for the new licence if it is not economically viable to do so. However, Hutchison argues Ofta is, in fact, not letting the market decide the mobile sector's development because the agency favours CDMA 2000. Although it maintained a 'technology neutral' stance, Ofta had proposed terms for the new licence which would require the winner to adopt the technology standard. '[Ofta] is 'genetically engineering' the competitor it wants,' Hutchison said. Sunday was against letting Adam Smith's invisible hand decide as well, saying the market was inefficient, with some operators willing to spend the considerable resources of their parent companies in pursuit of long-term returns. 'Unfortunately, once they enter, they often destroy the industry,' Sunday said. 'It is difficult to rely on the market to determine the right number of players - that job goes to the regulator.' Content suppliers such as MAS Technology have lined up against Ofta's proposal, saying they would prefer to work with fewer network operators. The Hong Kong market was finite at seven million users but increasing the number of operators would add just one more party to negotiate with. 'One more operator means more resource spending but with likely no new business generated at the end of the day,' MAS chief technology officer David Tung said. Matchmaking and dating services provider LoverLover.com said the government could take other steps to promote the data industry, possibly by developing 'best practice guidelines' to stop operators abusing their relationship with content providers. When LoverLover approached one operator about adding multi-media messaging and location-based services to its dating product, the company was denied. The reason: the operator, which director Roderick Kar did not identify, was developing a rival service using the same technologies. 'Without proper governing rules in Hong Kong, our destiny is by and large controlled by the operators,' Mr Kar said. 'While there is a lot that the government can do to promote mobile data, issuing a fifth 3G licence certainly does not help.'