The Hong Kong communications regulator came under fire after announcing a plan to auction some of the 3G spectrum held by existing operators when it comes up for renewal late in 2016.

In a statement, the Communications Authority said that each of the four incumbents – CSL, HKT, Hutchison and SmarTone – will be offered first right of refusal on two-thirds of their existing frequencies.

The remaining portion, as well as a currently un-assigned unpaired block which has been idle since 2001, will be put up for auction, which the regulator said will enable operators to “review and optimise” their spectrum holdings, while opening the market to a potential new entrant.

In a statement, SmarTone said it is “disappointed” with the decision, arguing that it is “not in the public interest”.

“For operators losing the spectrum, they will incur higher costs for infrastructure in mitigating the service quality degradation. Consumers will suffer lower quality service and increased costs. The government consultant’s report released today states there will be an up to one-third reduction in speed at busy areas,” it said.

“For operators retaining the spectrum, through the auction process, they will likely have to pay more, again increasing their costs and ultimately mobile service charges for consumers,” SmarTone continued.

HKT echoed this sentiment, arguing: “The Government has acknowledged that its decision will degrade mobile services provided to consumers. HKT cannot support a decision that will harm users. In addition, this decision will result in a substantial cost increase that must eventually be borne by users.”

This operator said that it will “review the government’s decision in detail and assess its next steps”.

Some observers noted that the main beneficiary of the deal will be China Mobile, which is likely to be the only serious bidder for the spectrum made available at auction – and which has deep pockets, which could see prices driven up should an existing operator look to bid.