Hong Kong’s Office of the Communications Authority (OFCA) on 19 September 2014 published an invitation to participate in an auction of 2×49.2MHz of mobile spectrum in the 1900MHz-2200MHz (2100MHz) band, scheduled for December 2014. OFCA set out the minimum spectrum utilisation fee (SUF), i.e. the reserve price for the spectrum auction, the auction rules and the key elements of the licensing framework.
The unified carrier licences will be valid for 15 years from 22 October 2016, i.e. following the expiry of the existing Hong Kong operators’ 2×118.4MHz allocations in the 2100MHz band (previously issued under 3G UMTS licences). By way of background, the Communications Authority (CA) decided in November 2013 that the then-four incumbent 2100MHz licensees – PCCW-HKT, CSL, Hutchison (3) and SmarTone – would be offered first refusal on two-thirds of their existing licensed block, while the remaining one-third, amounting to 2×39.2MHz, would be re-assigned through auction. Subsequently, in April 2014 the CA approved the acquisition of CSL by HKT on condition that the merging companies effectively divest 29.6MHz of spectrum in the 2100MHz band by not seeking the spectrum re-assignment, while also being barred from participating in the upcoming spectrum auction. All three incumbent licensees, HKT (including CSL), 3 and SmarTone, accepted the reassignment of the maximum combined 2×69.2MHz in August 2014, resulting in a total of 2×49.2MHz being available for re-assignment via the December auction.
New entrants to the mobile market as well as the incumbent spectrum assignees (barring HKT) may participate in the auction. The 2100MHz spectrum on offer will be divided into five frequency bands, each with a bandwidth of 9.8MHz or 10.0MHz. An individual spectrum cap of 40MHz will be imposed, while the reserve price is set at HKD48 million (USD6.19 million) per MHz, with the final SUF payable to be determined during the auction. Network and service rollout obligations will be imposed only on new entrants to the spectrum band. China Mobile Hong Kong (currently without any 2100MHz frequencies) is widely expected to participate in the auction.