Hong Kong fifth 3G license gains support

June 24, 2004

It is looking increasingly likely that Hong Kong would issue a fifth 3G mobile phone license after one of the four 3G license holders indicated it would not object to an extra operator providing advance wireless services.

SmarTone Communications said it would remain neutral on whether the Office of the Telecommunications Authority (OFTA) should issue a new licence. The OFTA is considering whether to revoke TDMA and CDMA licenses from CSL and Hutchison Whampoa respectively. The regulator felt both spectrums were under-utilised and that the bandwidth taken up by CDMA should be auctioned off to another operator.

In additional to CDMA services, Hutchison is also providing mobile phone services with GSM and WCDMA technologies.

Analysts expect the fifth 3G license would be issued in 2006 at the earliest, but would also cost more than the price paid in the 2001 auction since equipment costs are falling and the technology is more mature.

"Under no circumstances should the reserve price for the new licence be lower than the reserve price for the existing 3G licences, as that will constitute an unfair advantage for the new licensee," SmarTone said.

Hutchison is trying to persuade the OFTA to extend its license for CDMA technology for another five years before the regulator auctions off the spectrum.

In its submission to the OFTA, Hutchison said it had "legitimate expectations" that its existing CDMA mobile licence would be renewed upon its expiry next year and warned that the OFTA could violate the Basic Law if it refused to renew the licence.

"Hutchison has a legitimate expectation that its CDMA licence would be extended or renewed in accordance with its constitutional rights guaranteed by Article 105 of the Basic Law," it said.