Hong Kong 3G cellcos to pay for spectrum via royalties

date: 14th February 2001, source by: telecomasia.net

Hong Kong’s future 3G operators will be required to open 30% of their capacity to mobile virtual network operators (MVNOs), and will pay a turnover-based royalty instead of a lump sum for their licenses, according to a government announcement yesterday.

In handing down details for its 3G licensing procedure, telecoms regulator OFTA announced that 3G licensees will be required to open up at least 30% of their networks to MVNOs – a requirement that has been under such heavy contention from potential bidders since OFTA first proposed the rule last year.

In the original proposal, OFTA had suggested that 3G licensees would have to open as much as 50% of their capacity to MVNOs.

OFTA said access should be based on commercial negotiations, but it said it would step in if negotiations fail “to make a determination based on fair interconnection principles.”

OFTA also clarified the bidding process for the four licenses, which are to be issued by way of a prequalified spectrum auction. Under the proposed framework, operators must pay a guaranteed minimum portion of their bid upfront, but may pay the rest through royalty fees based on turnover after six years of operation.

A spokesperson said the pre-qualification process, which would set minimum criteria on areas such investment, network rollout, service quality and financial strength, would be “relatively light”.

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