Hong Kong 3G Too Crowded?
By John Alderman, Thu Mar 25 01:00:00 GMT 2004

There was backlash today from Hong Kong’s dominant telcos, responding to a government proposal to clear the current CDMA and TDMA spectrum to make room for a new 3G license, based on CDMA2000.

Liquidating the spectrum would make room for a new round of 3G licenses to be auctioned as the current group of four 3G operators struggle to make their services profitable. The licenses called into question, belonging to market leaders Hutchison Whampoa (which uses CDMA) and CSL (TDMA) are being underused, said the Office of the Telecommunications Authority, known as OFTA.

Hutchison claimed that by revoking the license the government would scare off investors, according to The Standard, Managing director Agnes Nardi was quoted saying Hutchison's CDMA network has cost the company about $128 million. While attracting investment is important for Hong Kong’s ambition of becoming the regional mobile hotspot, its hard to make the case that these licenses are about to pick up steam, as OFTA figures show that Hutchison's CDMA subscribers fell to about 40,000 in 2003 from 280,000 in 2000; and CSL's TDMA subscribers down to 30,000 from 140,000.

Although complaints about the unfairness of closing the licenses were expected, the real fears were of increased competition in the island’s newly born 3G space. Telecom Asia reported CSL chief executive Hubert Ng Ching-wah asking the government to reconsider expanding the number of 3G licenses.

Hong Kong’s mobile market is already very competitive, with carriers targeting specific regions of the city to penetrate. (One carrier is even reported to go as far as targeting particular school districts.) In 3G alone there are currently four license holders. All this density may be a good thing for incubation, but balancing competition with payoff may prove to be difficult task.

NTT Docomo announced today that it would liquidate its investments in Hutchison’s UK, Hong Kong, and British Virgin Islands business. according to Forbes. This is unrelated to the license issue as the companies were already in discussions about pricing the sellout.