HK 3G spectrum plan could cost consumers $2b

Dylan Bushell-Embling
06 Sep 2013

The Hong Kong government's proposal to take away a third of operators' current 3G spectrum holdings after 2016 is “seriously flawed” and could cause major service degradation, according to a new report.

UK telecom industry consultancy firm Plum Consulting has published a report into the proposal and its anticipated impact.

The report was commissioned by Hong Kong's 3G incumbents, CSL, PCCW-HKT, Hutchison and SmarTone – which have been united in their criticism of regulator OFCA's proposal.

OFCA in February proposed three options for dealing with the reallocation of 3G spectrum upon the expiry of existing licenses in late 2016. Options 1 and 2 involve alternately reallocating all of the spectrum for a predetermined fee or reauctioning all of the spectrum.

But Option 3, reported to be the regulator's favored plan, would involve reallocating two thirds of the spectrum but taking back a third for an auction perhaps to let a new 3G entrant into the market.

OFCA has admitted that the plan would result in service degradation, but estimates that the impact would be modest, putting the reduction in data speeds at around 9%.

But Plum's report alleges that the impact could be up to three times as high as OFCA is expecting – a 27% degradation in 3G data speeds and capacity.

The 3G operators would be forced to spend a combined HK$708 million on necessary 3G upgrades just to minimize the impact on consumers.

The report also argues that there would also be significant costs to both consumers and 3G operators as a result of the proposal. The 3G operators will be unable to keep up with the anticipated growth in data demand, while users would be forced to migrate to 4G networks.

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