Hong Kong should use regional benchmarks to price mobile spectrum

The Hong Kong government should use regional benchmarks to establish pricing for spectrum for mobile communications services ahead of their expiry in 2020 and 2021 while freeing up more spectrum for innovation purposes and allowing spectrum trading, telecommunications giant HKT has said.

A report by consultancy firm Network Strategies, commissioned by HKT, found the proposed reference auctions by the Communications Authority to set pricing for reassigning chunks of spectrum, which is the radio frequency bands over which wireless network services are provided, were “very high” when compared to auctions overseas and should instead be set using regional benchmarks.

Alex Arena, executive director and group managing director of HKT, the city’s largest operator of fixed-line and mobile networks, said Hong Kong’s position as the leader for telecommunications was at risk if the government did not reassess its pricing structure for spectrum and increase the amount of spectrum available to meet growing demand.

“Prices for consumers are very, very low in Hong Kong, yet we pay the highest spectral prices in the world. This is not an industry problem, the industry is not broken. The whole issue here is [the Office of the Communications Authority] and its consultation paper is focused on one thing and one thing only, that’s maximising money.”

The Communications Authority and the Commerce and Economic Development Bureau launched a public consultation in February on what the government should do when the licences of the city’s incumbent mobile network operators in the 900-megahertz and 1800MHz bands expire. The regulator is expected to launch a second consultation on the issue with a final decision to come in November next year.