The Office of the Telecommunications Authority ("OFTA") today (10 December 2010) published an Information Memorandum inviting interested parties to participate in the auction of radio spectrum in the 850 MHz, 900 MHz and 2 GHz bands for the provision of public mobile telecommunications services in Hong Kong. The Information Memorandum sets out the minimum spectrum utilization fee ("SUF") for each frequency band, the auction rules and other salient elements of the licensing framework.

"The mobile data service market is booming. To meet the demand and to sustain the momentum of growth, the mobile industry needs to invest in additional network capacity. The timely release of new radio spectrum to the market as a key enabler to network capacity expansion is thus crucial to the healthy and further development of the mobile industry," a spokesman for OFTA said.

OFTA’s statistics indicate that the number of mobile users capable of gaining access to mobile data services has increased 100% from 2.9 million in December 2007 to 5.8 million in July 2010, representing a population penetration rate of 82%. During the same period, the volume of mobile data usage has increased 38 times from 32 terabytes ("TB") to 1,236 TB.

The radio spectrum available in the auction is divided into four frequency bands, namely frequency band A (832.5 – 837.5 MHz paired with 877.5 – 882.5 MHz; 10 MHz in total), frequency band B (885 – 890 MHz paired with 930 – 935 MHz; 10 MHz in total), frequency band C1 (2010.0 – 2014.8 MHz; 4.8 MHz in total) and frequency band C2 (2014.8 – 2019.7 MHz; 4.9 MHz in total). OFTA will auction the frequency bands using the simultaneous multiple round ascending method with an Internet-based software platform.

"Both new entrants and incumbent operators can participate in the auction and choose to bid for any one to all of the four frequency bands. We have set the minimum SUF, i.e. the auction reserve price, at HK$30 million for each of the frequency bands A and B and HK$15 million for each of the frequency bands C1 and C2. The actual amount of SUF payable will be determined by the auction exercise," the spokesman added.

The frequency bands will be assigned to the successful bidder(s) under unified carrier licences to be granted by OFTA, with a validity period of 15 years. The successful bidder(s) will be required to provide service coverage to at least 50% of the Hong Kong population for each of the frequency bands assigned to it or them within five years from the grant of the licence.

Meanwhile, the successful bidder for the frequency band B will be allowed to use the frequency band only in base stations located outside those designated areas comprising country parks and specified remote areas. This is because frequency in those designated areas has already been assigned to existing mobile network operators for improving their service coverage. In addition, part of the radio spectrum in the frequency band B will be assigned on a shared basis with the railway operator(s) for the communications and control relating to cross-border railway operations. The successful bidder of frequency band B will be required to coordinate with these parties to avoid causing harmful mutual interference.

The Information Memorandum can be downloaded from OFTA's website at (http://www.ofta.gov.hk/en/industry/850/im.pdf). OFTA will conduct an industry briefing for interested parties on 6 January 2011 and accept bidding applications on 31 January 2011 and 1 February 2011. The auction is scheduled to be held in February 2011, after the Chinese New Year.

Office of the Telecommunications Authority
10 December 2010