Operators call for review of 3G spectrum plan

HK's biggest network firm says government has not done its homework, warns of disruptions

PUBLISHED : Friday, 12 April, 2013, 12:00am
UPDATED : Friday, 12 April, 2013, 5:43am

The Hong Kong government has failed to appraise fully the negative impact that its plan to reassign 3G spectrum in use and impose a significant increase in license fees would have on mobile services, say local network firms.

PCCW's HKT, the city's largest telecommunications network operator, and SmarTone Telecommunications called on the government to conduct a sweeping review of its plan with help from expert consultants, according to their respective submissions to a public consultation that closed yesterday.

SmarTone said: "Hastiness is no substitute for good public policy."

HKT, SmarTone, CSL and Hutchison Telecommunications Hong Kong earlier closed ranks to try to convince the government to follow international practice and automatically renew all their 3G spectrum allocations in the 1.9-gigahertz to 2.2GHz band, which are due to expire in October 2016.

The Office of the Communications Authority, the industry regulator, has drawn up a hybrid approach called "Option 3" in which a third of each operator's 3G spectrum allocation will be seized and auctioned off.

A decision on what steps the government will take with the expiring 3G spectrum is expected by October. That would give at least three years' advance notice of any change to those operators.

HKT said the government has not conducted the requisite impact assessment for its plan, which would include a cost-benefit analysis. It said the government's first consultation paper last year offered no credible analysis.

"Their rationale for adopting Option 3 is based on many 'possibles' and 'maybes'. This is not analysis," HKT said.

One example the operators cited is the government's claim that there would be only an 18 per cent reduction in service quality under its plan to redistribute chunks of existing 3G spectrum.

SmarTone estimated that service degradation would be more than 33 per cent, while HKT calculated about 40 per cent. With mobile networks congested due to less spectrum being in use, consumers would have to deal with dropped calls, low data rates and poor roaming.

The two operators also said the government's proposed 3G spectrum licence fee increase to about HK$80 million per megahertz was "unacceptable". They said the government did not clearly explain the benchmarks it had used to derive that number.

HKT said the so-called spectrum utilisation fee (SUF) should be lower rather than higher.

"High SUFs limit the ability of operators to invest and lead to higher prices," it said. "Low SUFs enable investment, innovation, efficiency, competition and substantial benefits to both users and the economy."