The Communications Authority ("CA") and the Secretary for Commerce and Economic Development ("SCED") today (3 February 2016) jointly launch a public consultation on the proposed arrangements for the re-assignment of 200 MHz of frequency spectrum in the 900 MHz and 1800 MHz bands ("900/1800 MHz Spectrum") upon expiry of the existing assignments and the related spectrum utilisation fee ("SUF").
The 900/1800 MHz Spectrum consists of 50 MHz of spectrum in the 900 MHz band and 150 MHz of spectrum in the 1800 MHz band. It accounts for 36% of the 552 MHz of spectrum already assigned to the industry for the provision of pubic mobile telecommunications services. The existing assignments of the 900/1800 MHz Spectrum to four mobile network operators ("MNOs") are due to expire between November 2020 and September 2021.
In terms of spectrum deployment, the 900/1800 MHz Spectrum was initially used for the provision of second generation ("2G") mobile services with voice-centric application. Under the technology-neutral principle the CA adopts in spectrum management, the MNOs have refarmed parts of the 900/1800 MHz Spectrum to third and fourth generation mobile services.
"Taking into account the sustained robust growth in mobile data traffic and the intrinsic characteristics of the 900/1800 MHz Spectrum, the CA considers that there are likely to be competing demands for the 900/1800 MHz Spectrum. Accordingly, following the guiding principle of the Radio Spectrum Policy Framework promulgated by the Government in 2007, a market-based approach should be adopted for its re-assignment unless there are overriding public policy reasons to do otherwise," a spokesperson for the CA said.
The CA notes that 2G services can only be provided using the 900/1800 MHz Spectrum, and that, as at November 2015, there were still 3.1 million 2G services subscribers in Hong Kong. By 2020/21, there may still be local mobile subscribers and visitors to Hong Kong who would prefer to access mobile voice services and inbound roaming services respectively with 2G handsets. Against this background, an important issue to be considered by the CA when assessing the following re-assignment options is whether there is likely to be a need to ensure the continuity of 2G services beyond 2020/21 and on this the CA would wish to listen to the views and comments from the industry and affected persons through this consultation -
| (a) Option 1: | a full-fledged administratively-assigned approach that re-assigns all the spectrum to the incumbent spectrum assignees through the offer of the right of first refusal; |
| (b) Option 2: | a full-fledged market-based approach that re-assigns all the spectrum by way of auction; and |
| (c) Option 3: | a hybrid approach that re-assigns 40 MHz or one-fifth of the 900/1800 MHz Spectrum to the incumbents through the offer of the right of first refusal and the rest by way of auction. |
Option 3 is put forward on the basis that the outcome of the public consultation indicates that there will likely be a continuation of 2G services post 2020/21 to meet the service needs of local users and inbound roamers until 2G services are phased out from Hong Kong altogether.
"The CA will choose the option that would best meet the four objectives in spectrum re-assignment, viz. ensuring customer service continuity, efficient spectrum utilisation, promotion of effective competition, and encouragement of investment and promotion of innovative services," the spokesperson continued.
The SCED proposes in this joint public consultation the methods for setting the SUF of the 900/1800 MHz Spectrum in the new 15-year term of assignment under the three spectrum re-assignment options. The aim is to ensure that the SUF of spectrum, which is a scarce public resource, will be set to reflect as close as possible its full market value so that spectrum assignees would put the spectrum to its most efficient use.
To allow sufficient advance notice to be given to the incumbent spectrum assignees on any possible variation to their existing assignments of the 900/1800 MHz Spectrum, the CA and the SCED will endeavour to announce around November 2017 their respective decisions on the arrangements for spectrum re-assignment and the related SUF, following two rounds of public consultation.
The CA and the SCED invite the telecommunications industry and affected persons to give their views on the proposed arrangements for spectrum re-assignment and the related SUF on or before 18 April 2016. The consultation paper can be downloaded from the websites of the CA and the Commerce and Economic Development Bureau at the links below:
http://www.coms-auth.hk/filemanager/en/content_711/cp20160203_e.pdf
http://www.cedb.gov.hk/assets/resources/ccib/consultations-and-publications/900_1800MHz_Spectrum_first_consultation.pdf
Communications Authority
Commerce and Economic Development Bureau
(Communications and Creative Industries Branch)
3 February 2016