Hong Kong’s largest telecoms operator HKT continued its long-running campaign against the territory’s telecoms regulator, issuing four statements late last week claiming, among many other things, that Hong Kong is falling behind in 5G development because it lacks a “forward looking government spectrum policy”.
Since late November the company, which operates the CSL and 1010 mobile brands, has issued a dozen press releases boldly criticising the Office of the Communications Authority’s (OFCA) spectrum management policy and warning Hong Kong risks “becoming a third-class citizen in mobile service development”.
In its latest missive, HKT applauded Ofcom, the telecoms regulator in the UK, for taking “immediate action to make spectrum available” to enable the development of true 5G technology. Ofcom last week set out its timeline for spectrum allocation and anticipated deployment of 5G, which includes plans to make the 700MHz band available.
HKT expressed its displeasure with OFCA’s plans not to release more spectrum unitl after 2019 and warned that without more spectrum other countries, including China, could move onto 5G services well before Hong Kong. It said the failure to release new spectrum will “choke and stifle the growth of Hong Kong’s dynamic mobile services sector and will have negative knock-on effects in all sectors of Hong Kong’s economy”.
It also complained that despite the government saying in 2007 it intended to introduce spectrum trading, it has taken no action on that front.
On the defensive
OFCA in mid-Janaury responded to HKT’s media blitz, which it called reckless and unreasonable. The regulator defended its actions by saying the allegation the government artificially withholds spectrum from the market disregards the facts, citing the territory has 552MHz of spectrum available for mobile communications services, all of which has been assigned to four operators.
The regulator went on to explain there is currently about 35MHz of spectrum available that no operator is interested in, which it argues shows there isn’t unmet demand.
Regarding the availability of 5G airwaves, the agency said it is closely following the work of WRC and after harmonisation of the spectrum plan at the international and regional levels, it will immediately allocate the applicable portions for 5G service. In the meanwhile, it said it will issue permits for vendors and operators requesting to test 5G technology, and has already given permission for trials in the 15GHz band.
More than spectrum
HKT also expressed frustration at what it says is the government’s refusal to meet to discuss the issues, as OFCA would rather deal with everything through the 900/1800MHz consultation process. The government held a public consultation in March 2016 and is expected to soon launch a second round on the spectrum utilisation fee (SUF) and the arrangements for the 900MHz and 1800MHz bands after the expiry of current assignments in 2021. It earlier proposed raising the SUF paid by mobile operators when the spectrum comes up for renewal. The expiry will affect nearly 40 per cent of the total amount of spectrum currently assigned.
Late last year HKT, which has a 37 per cent share of mobile connections in Hong Kong, commissioned a survey on consumers’ thoughts on the need for the government to raise spectrum prices and, not surprisingly, found that 70 per cent of those contacted felt an increase in spectrum prices would lead to higher MTR, tunnel, licensing and administration fees. However, the proposed government plan is projected to translate to just a HK$12 ($1.55) per month increase per subscriber. It also grumbled that Hong Kong’s spectrum costs are the most expensive in the world and its spectrum policies focus on maximising the financial “windfall” gains to the government’s consolidated revenue, rather than on “proactively managing spectrum availability so that Hong Kong can continue to lead in mobile services globally”.
But let’s not forget Hong Kong offers some of the lowest priced data plans in the developed world – ARPU is just HKD137 a month for a generous allotment of 4G data and usually unlimited voice. Unlike in some markets, this rate increased only marginally over the past 12 months, according to GSMA Intelligence.
While the government should be more transparent by providing a detailed spectrum roadmap as operators scramble to prepare for the launch of 5G service in 2020, HKT’s aggressive PR drive is certain to agitate the government and make long-term negotiations on spectrum availability and trading more challenging. The other three players – 3 Hong Kong, China Mobile and SmarTone – are all pursuing a more diplomatic approach behind the scenes, which is more likely to lead to an amenable resolution.
Let’s first wait to see how OFCA reacts to HKT’s latest volley of assertions and allegations. No doubt the market leader will issue another paper in the coming days.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.