850MHz spectrum auction in Hong Kong
In 2011 OFTA awarded Hutchison and SmarTone a total of 20 MHz of additional radio spectrum in the 850 MHz and 900 MHz bands, for a total sum of HK$1.952 billion. SmarTone won half the available spectrum in ‘Band A’ (832.5MHz-837.5MHz paired with 877.5MHz-882.5MHz, giving 10MHz in total) for SUF of HK$875 million. Hutchison is due to pay SUF of HK$1.077 billion for the remainder in ‘Band B’ (885MHz-890MHz paired with 930MHz-935MHz).
Five mobile network operators and one fixed network operator took part in the spectrum auction. The losers were China Mobile Hong Kong (Peoples), CSL and PCCW as well as local fibre network operator Hong Kong Broadband Network (HKBN). Conducted on an Internet-based software platform, the auction was completed after a total of forty one bidding rounds over four days.
OFTA cited a continued boom in mobile communications, in particular in mobile data that is driving the need for additional spectrum. Total mobile data usage has witnessed an explosive growth with a year-on-year increase of 189%, from 638 terabytes in December 2009 to 1,847 terabytes in December 2010 after the number of mobile data subscribers approached six million in mid-2010. The assignment of the radio spectrum through the auction enables the successful bidders to make use of the newly acquired spectrum to expand their existing networks with additional network capacity to meet the market demand.
The operators were granted 15 year licenses for the spectrum, and are required to cover 50% of the population within five years from the grant of the licences.
For information on the telecommunications markets in Hong Kong, see separate reports: Hong Kong
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