The Office of the Telecommunications Authority ("OFTA") today (11 November 2011) published an Information Memorandum inviting interested parties to participate in the auction of radio spectrum in the 2.3 GHz band for the provision of broadband wireless access ("BWA") services in Hong Kong. The Information Memorandum sets out the minimum spectrum utilization fee ("SUF"), i.e. the auction reserve price for the spectrum auction, the auction rules and the salient elements of the licensing framework.

"Over the past two years, mobile data service continues to flourish, spurring the growth of the telecommunications market in Hong Kong. Having considered the response to OFTA’s invitation for expression of interest in December last year, the Telecommunications Authority ("TA") has decided to release 90 MHz of radio spectrum in the 2.3 GHz band through auction in order to meet the industry’s demand for additional radio spectrum," a spokesman for OFTA said.

OFTA’s statistics indicate that the local mobile data usage recorded a total of 3,175 terabytes, or an average of 426 megabytes per 2.5G/3G mobile user, in July 2011. This represents 1.6 times and 7.3 times the mobile data usage over the same period in 2010 and 2009 respectively.

"The available radio spectrum is divided into three frequency bands, each with a bandwidth of 30 MHz. Both new entrants and incumbent operators may participate in the auction and bid for any one of the three frequency bands. The maximum amount of spectrum that may be assigned to each bidder or a group of connected bidders in the auction (i.e. the spectrum cap) is 30 MHz. We have set the auction reserve price at HK$150 million for each of the frequency bands. The actual amount of SUF payable will be determined by the auction," the spokesman added.

The frequency bands will be assigned to the successful bidders under the unified carrier licences to be granted by the TA, with a validity period of 15 years. The successful bidders will be required to provide mobile services coverage to a minimum of 50% of the Hong Kong population, or fixed services coverage to at least 200 commercial and/or residential buildings within five years from the licence grant.

The Information Memorandum can be downloaded from OFTA’s website at (http://www.ofta.gov.hk/en/industry/2.3GHz/im.pdf). OFTA will accept bidding applications on 9 and 10 January, 2012. The auction is scheduled to be held in February 2012.

Background

The TA held an auction of radio spectrum for the provision of BWA services in January 2009. In that auction, a total of 195 MHz of radio spectrum were made available for bidding, including 90 MHz of radio spectrum in the 2.3 GHz band and 105 MHz of radio spectrum in the 2.5/2.6 GHz bands. While the 90 MHz of radio spectrum in the 2.5/2.6 GHz bands were successfully auctioned off to three successful bidders, the remaining 15 MHz of radio spectrum in the 2.5/2.6 GHz bands and 90 MHz of radio spectrum in the 2.3 GHz band were unassigned in that auction.

OFTA received enquiries on the release of the leftover spectrum in the 2.3 GHz band in the second half of 2010. To gauge the market demand on the concerned radio spectrum, OFTA initiated an expression of interest exercise in December 2010. Having considered the feedback from the respondents, the TA has decided to conduct a fresh auction for assigning the radio spectrum in the 2.3 GHz band in 2011-12.

Office of the Telecommunications Authority
11 November 2011