3G to hit Hong Kong by the end of the month

21 Jan 2004

Hutchison Whampoa yesterday confirmed that it would launch Hong Kong’s first 3G wireless service next week (27 January), pricing its services competitively against the 2.5G services offered by rivals in the country’s competitive mobile market. Hutchison said subscription packages – all with bundled voice and video calls, text and multimedia messaging, and data usage – would start at HKD263 (USD34) per month, with the cheapest 3G handsets being priced at HKD3,980 (USD512). The cellco is trying to encourage users to sign up for its HKD520 (USD67) premium subscription packages by offering unlimited text and multimedia messaging for the first two months of the contract. Hutchison is the self-styled pioneer of 3G, and its Hong Kong operations were originally due to have been launched last year alongside its Australian, Austrian, Swedish, UK and Italian services, but the group blamed handset shortages for the rollout delay. It is hoping that the Hong Kong market will warm to the new technology faster than much of the rest of world, where it has comprehensively failed to meet subscriber targets.

Hong Kong is crowded, both in terms of inhabitants and mobile network operators, with the seven million-strong population having no fewer than six networks to choose from. Of the six second-generation network operators – Telstra CSL, Hutchison Telecom, SmarTone Mobile, Sunday Communications, New World Mobility and People’s Telephone – the first four are also holders of the 3G licences, awarded by the regulator Ofta in September 2001. The market is further complicated by the addition of six MVNO licensees, namely Trident Telecom Ventures, China Motion Telecom, China Unicom, Shell & Sunday Mobile Communications, i100 Wireless (Hong Kong) and China-Hongkong Telecom. These companies will be looking to take advantage of legislation which guarantees that 30% of 3G frequencies must be made available to MVNOs.

For the past couple of years the market has been nearing saturation, with mobile penetration standing at over 95% by the start of October 2003. Hutchison Telecom (71%-owned by Hutchison Whampoa) currently operates three networks in Hong Kong: a CDMA-based system launched in October 1995, a GSM-900 network and a dual-band GSM-900/1800 network launched in September 1998; the latter operates under the Orange brandname. With a combined total of 1.75 million subscribers at the end of September 2003, it controlled just under 26% of the market.

With little room for increasing customer numbers, operators have turned to developing innovative data services as a way of increasing revenues. However, at present the Hong Kong mobile market faces the problem of low awareness of data-based applications, and despite marketing efforts to stimulate change from voice-centric behaviour, only a small percentage of total mobile market revenues come from data services. Nonetheless, operators believe that Hong Kong leads the way in terms of its readiness to exploit the potential afforded by 3G technology, having already embraced the two components necessary to make UMTS services work – namely the internet and 2G mobile usage.