HK cellcos state the obvious to fight OFCA plan

21 Oct 2013

ITEM: Hong Kong cellcos have commissioned yet another study – the third this year – making the case against local regulator OFCA’s plans to take away a third of their 3G spectrum in 2016.

This time, they’ve appealed to directly to public opinion. However, the survey seems unlikely to sway OFCA’s decision – due later this month – if only because the results could be filed under “tell us something we don’t already know”.

At issue is a scheme by OFCA to reallocate a third of 3G spectrum to new players when current 3G licenses expire in 2016. Hong Kong cellcos oppose the plan, citing two previous studies conducted on their behalf by Plum Consulting. Those studies predict – among other things – that download speeds and service performance for existing cellcos will suffer drastically as a result, and at far greater levels than OFCA predicts.

The new study – commissioned by CSL, HKT, Hutchison Telecom and SmarTone, and conducted by Policy 21 – sought opinions from mobile consumers about the policy. Its conclusion:

The vast majority of mobile users disapprove of slower speeds and degraded service quality – especially whilst riding Hong Kong’s underground trains.

Which sounds really, really obvious. And it is – who enjoys crap service or slow download speeds? So it’s fair to wonder what the point of this survey was.

HKUST Business School Professor Xu Yan, who presented the survey results at a press conference Friday, explained that if OFCA is going to implement a policy that affects one of the most highly penetrated mobile markets in the world (almost 200%), it should have more input from the general public on the issue.

“The proposed spectrum policy is relevant to the general public, because according to our survey, 91.2% of those interviewed said that mobile services are either somewhat or very important to them, but so far their voice hasn’t really been heard,” Xu said.

OFCA has published the proposal on its web site for public consultation, and comments are publicly available, but according to Xu, most comments on the spectrum policy have come either from operators, vendors or the Chamber of Commerce. “Only three individuals have submitted comments,” Xu said.

Fair enough, although the lack of public commentary is likely a product of most people either not knowing about the proposal, or – even more likely – not understanding the policy or even how spectrum works. Which is why the Policy 21 study frames the issue by asking people what they think about potential service performance issues predicted by Plum.

Naturally, most of the 500 respondents (69%) said they would find them unacceptable. (If you’re wondering, that doesn’t mean the other 31% think degraded service is a good thing – the figures reflect lower-end users who don’t use data services all that much.)

Whether that makes any difference to OFCA’s decision on 3G licenses – due later this month – remains to be seen. I can’t see how it will.

The Plum studies offer some compelling reasons to reject OFCA’s plan besides the impact on service quality. One says OFCA’s proposed spectrum usage fee for the 3G spectrum cellcos would keep is staggeringly overpriced, while the other cellcos will have to spend millions of dollars on network upgrades to minimize the impact of reduced capacity. Those expenditures will inevitably be passed on to consumers to the tune of almost $2 billion, Plum claims.

So given all that, it’s hard to imagine OFCA officials looking at the Policy 21 study and saying, “Gee, we never realized so many people were opposed to lower service quality. Better rethink this, boys.”

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