The Hong Kong government’s latest plan to reassign a huge batch of mobile frequency spectrum has renewed calls for the adoption of spectrum trading among the city’s telecommunications network operators. HKT, the city’s largest operator of fixed-line and mobile networks, has again thrown the spotlight on the much-delayed implementation, following industry concerns the government’s new spectrum reassignment proposal could disrupt mobile network operations and significantly raise the cost of mobile communications services in the city. Spectrum trading is the ability to trade the rights and obligations in radio spectrum, which is used for a variety of communications needs, including mobile telecoms, broadcasting, and the emergency services. Industry regulator the Communications Authority (CA) and the Secretary for Commerce and Economic Development, Gregory So Kam-leung, jointly launched a public consultation in February on what the government should do when the licenses of the city’s incumbent mobile network operators in the 900-megahertz and 1800MHz bands expire. Of the total 552 megahertz of spectrum currently assigned for use in mobile communications services, the existing assignments for chunks of spectrum in the 900MHz and 1800MHz bands will expire between November 2020 and September 2021, according to the CA. The government’s three options include: renewing the licenses of the incumbent mobile network operators; taking back the entire assigned 900MHz and 1800MHz spectrum, and auctioning them off; or retain 20 per cent of the spectrum for the incumbent operators and auction off 80 per cent of that. A second round of public consultation is planned in the third quarter, after the first consultation closed on May 18. In its submission, HKT said the amount of mobile spectrum targeted for reassignment made up 36 per cent, or 198.6 MHz, of the total assigned by the regulator. “It is the largest amount of spectrum ever assigned in one go, and the frequency bands are critical blocks for the provision of 3G, 4G and future 5G services,” HKT said. The telecommunications arm of billionaire Richard Li Tzar-kai’s PCCW Group, HKT said the lack of new spectrum releases in Hong Kong “could be interpreted to reflect an intention by the administration to extract monopoly rents from the operators by creating an artificial scarcity of spectrum”. It estimated the government’s new spectrum auction will extract billions of dollars from the operators, which could lead to a raise in monthly [mobile] charges by up to HK$36 per household, or HK$12 per subscription. This is regressive tax, excessive, unnecessary and inconsistent with global best practises HKT submission “This is regressive tax, excessive, unnecessary and inconsistent with global best practises,” HKT said. Since the CA indicated in March there will be no further spectrum available for release in Hong Kong, spectrum trading could help meet the requirements of mobile network operators amid huge consumer data traffic. In its published review of spectrum trading in March, British law firm Preiskel and Company said voluntary spectrum trading should be allowed to promote the efficient use of spectrum over time. “By doing so, trading can support higher service volumes, lower cost and better quality services,” Preiskel said. “Efficient trading should also be supported by a stable and predictable licensing and regulatory framework.” While spectrum trading does not increase the overall spectrum supply, HKT said it does provide mobile operators with the flexibility to acquire spectrum from other operators as and when they need it. Preiskel said the major markets that Hong Kong often uses as a policy reference all allow spectrum trading. These include Britain and most European Union countries, the United States, Canada, Singapore, Taiwan and Australia. In response to an inquiry by HKT, the Commerce and Economic Development Bureau said in a letter dated April 27, 2016 that spectrum trading was again on its agenda, and a consultant would be asked to re-visit the issue. The consultancy study is planned to be completed next year. HKT estimated that the total mobile spectrum eyed by the government for reassignment was significantly more than the amount each held by SmarTone Telecommunications, with 112.6 MHz; Hutchison Telecommunications Hong Kong, which has 129.4 MHz; and China Mobile Hong Kong, with 116 MHz. Only HKT has more than 154.6 MHz of total assigned spectrum, which was made possible by its US$2.43-billion acquisition of CSL New World Mobility in 2014. According to the CA, voice-centric 2G services are still being provided over the 900MHz and 1800MHz spectrum. There were 3.1 million 2G services subscribers in Hong Kong as of November last year.