With the publication of an Information Memorandum (IM) which sets out the detailed auction rules and conditions today (August 31), the Government invites applications to bid for the radio spectrum for the provision of CDMA2000 mobile services (CDMA2000 services).

     "CDMA2000 is one of the main mobile communications standards in the world capable of delivering high speed data services. There are more than 350 million mobile subscribers in 85 economies, including 39 million on the Mainland, adopting this standard," a spokesman of the Office of the Telecommunications Authority (OFTA) said.

     "Apart from facilitating overseas and Mainland visitors and business travellers to continue to use CDMA2000 services while in Hong Kong, Hong Kong consumers will benefit by having a new choice of third generation (3G) mobile services and may be able to enjoy roaming services in those countries which offer CDMA2000 services including the United States, Japan and Korea without changing handsets.

    "This service will contribute to the harmonisation of popular mobile services with the Mainland as well as other parts of the world, thereby helping to strengthen Hong Kong's strategic position as a world city and the gateway to the Mainland," the spokesman said.

     The auction will be the second in Hong Kong for the assignment of radio spectrum since the auction of the radio spectrum for 3G mobile services in September 2001. The IM sets out the auction rules, the minimum Spectrum Utilisation Fee (SUF) i.e. the reserve price, the terms and conditions of the licence and other elements of the regulatory framework.

     "One licence will be issued for the provision of CDMA2000 services starting from November 20, 2008. Radio spectrum with a bandwidth of 7.5 MHz x 2 in the 850 MHz band will be assigned to the licensee. The use of such radio spectrum will be subject to a one-off lump sum payment of SUF, the amount of which is to be determined in the auction exercise," the spokesman said.

     "The local and international market conditions have changed substantially since the licensing of 3G services in 2001. In setting the reserve price for the auction of the radio spectrum for CDMA2000 services, we have taken into account the current market conditions, international benchmarks and technological developments. We are also mindful that a reasonable reserve price should be set to reflect the fact that radio spectrum is a scarce public resource."  

     "Taking into account the advice of consultants, and considering all the relevant factors, the Government has decided to set the reserve price at $76 million. We believe the reserve price represents a reasonable and fair balance of all the relevant factors and is in line with global trend," the spokesman said.

     "This will be a multiple round ascending auction. Similar to the auction held in 2001, this auction will be held with a high level of confidentiality such that the identity of the bidders and their submitted bids in each round of the auction will not be disclosed during the auction. This arrangement is intended to prevent collusive behaviour and manipulation of the auction process.

     "New entrants and existing licensees may participate in the auction. They may participate on their own and/or co-operate with others. The co-operation may be in the form of joint venture or other types of agreements. While prior consent from the Telecommunications Authority is not required for any form of co-operation, existing licensees should ensure compliance with the competition provisions in the Telecommunications Ordinance, for example, the prohibition of anti-competitive conduct," the spokesman said.

     Parties interested in the auction will have six weeks to prepare their applications and the deadline of application is October 12. The auction is intended to be held around late October or early November. The new licensee will have about one year lead time to roll out its network before beginning to provide CDMA2000 services from November 20, 2008.

     A full copy of the IM can be downloaded from OFTA's website  (http://www.ofta.gov.hk/en/3g-licensing/licensing850mhz.html).

Background

     The current spectrum assignment for CDMA services will expire on November 19, 2008. In order to maintain Hong Kong as a regional telecommunications hub and the gateway to the mainland of China, the Telecommunications Authority decides to make available the spectrum for provision of CDMA2000 services and issue a licence for such service for  15 years starting from November 20, 2008.

Ends/Friday, August 31, 2007
Issued at HKT 12:46

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