OFCA decides on 3G re-auction plan

18 Nov 2013

Hong Kong’s Office of the Communications Authority (OFCA) will proceed with a plan to re-auction one-third of the 3G UMTS (2100MHz/1900MHz) mobile spectrum band ahead of the expiry of four existing 2×15MHz licences in October 2016, the regulator’s chairman Ambrose Ho announced at a briefing on Friday. The four current W-CDMA/HSPA network operators using the 2100MHz band – CSL, Hutchison (3), SmarTone and the mobile arm of PCCW (HKT) – have opposed the proposals in previous consultations, while the fifth mobile network operator in the territory, China Mobile Hong Kong, is in favour of the plan as it stands to gain extra bandwidth to augment its existing 2G/4G services (with a total of 2×20MHz up for grabs). The frequencies will be reassigned on a technology-neutral basis making them usable for any 3G, 4G or other service. According to OFCA’s plan the four existing 2100MHz operators will have priority rights over the other two-thirds of the spectrum band (i.e. 2×10MHz each, or a total of 2×40MHz).

On Friday, OFCA published on its website an independent report supporting the reallocation of the 2100MHz/1900MHz paired band, in a document compiled by Network Strategies, dated 29 August 2013. The report states that it is unlikely that there will be substantial interest from any new market entrants in the spectrum, while also saying that it is ‘unlikely’ that China Mobile will bid for the entire 2×20MHz of re-auctioned spectrum. The report identified the four ‘most likely’ outcome scenarios as follows:

- one 3G incumbent loses its re-auctioned spectrum to another incumbent;

- two incumbents lose re-auctioned spectrum to two other incumbents;

- one incumbent loses its re-auctioned spectrum to the operator without 3G spectrum [China Mobile];

- two incumbents lose re-auctioned spectrum to China Mobile.

Network Strategies’ research concluded that none of the ‘likely’ re-assignment scenarios would have the effect of worsening service quality.

One of the incumbent 3G operators PCCW (HKT) released a statement which disputed this, saying: ‘The government has acknowledged that its decision will degrade mobile services provided to consumers. HKT cannot support a decision that will harm users … In addition, this decision will result in a substantial cost increase that must eventually be borne by users.’