The Communications Authority (CA) and the Secretary for Commerce and Economic Development (SCED) today (May 2) jointly launched a public consultation on the assignment arrangements of the 200 MHz of spectrum in the 3.4 – 3.6 GHz band (3.5 GHz band) for the provision of public mobile services and the related spectrum utilisation fee (SUF). Views from members of the industry and interested parties are invited.
The 200 MHz of spectrum in the 3.5 GHz band, for assignment from April 1, 2020, will be the first batch of spectrum to be made available to the market in Hong Kong for the provision of the fifth generation (5G) public mobile services. It will substantially increase, by 36%, the 552 MHz of spectrum already assigned to mobile network operators (MNOs) for the provision of public mobile services.
“As there are likely to be competing demands for the 200 MHz of spectrum in the 3.5 GHz band, we propose that a market-based approach by way of auction for participation of all interested parties (including incumbent MNOs and new entrants) should be adopted to assign the spectrum,” a spokesman for the CA said.
As to the related SUF, similar to other spectrum assigned for public mobile services where there are competing demands, it is proposed that the use of the spectrum in the 3.5 GHz band should be subject to payment of SUF that reflects the full market value of the spectrum. The SUF should be determined by auction and the auction reserve price is to be set by the SCED nearer the time.
“This would help ensure that spectrum, being a scarce public resource, is put into the hands of those who value it the most and who will consequently put it to the most efficient use, thereby benefiting the public at large,” a spokesman for the Commerce and Economic Development Bureau (CEDB) said.
“The SCED further proposes that spectrum assignees be given a choice to pay the SUF either by lump sum payment upfront or annual instalments so as to afford them a greater flexibility to make the necessary financial arrangement,” the spokesman continued.
The auction is proposed to comprise a bidding stage and an assignment stage. The CA proposes to divide the 3.5 GHz Spectrum into ten frequency blocks (each with a bandwidth of 20 MHz) and impose a spectrum cap of 100 MHz on any successful bidder in the auction. To ensure the provision of competitive 5G services to the end customers, the CA further proposes to impose an open network access requirement on the successful bidders to enable mobile service providers to have access to the capacity of future 5G mobile networks operating in the 3.5 GHz band.
Similar to previous auctions of new spectrum for provision of public mobile services, the CA is also inclined to require each of the successful bidders to roll out its network and service to achieve a minimum coverage of 50 per cent of the population within the first five years from the date of issue of the licence. A performance bond should be lodged to ensure its compliance with the rollout obligation.
“In reallocating the 3.5 GHz band for deployment of public mobile services, mitigating measures will need to be put in place for co-existence of existing satellite equipment operating in the 3.4 – 4.2 GHz band and new mobile equipment operating in the 3.5 GHz band. To ensure the effective implementation of these mitigating measures, the CA proposes specific licensing requirements for MNOs using the 3.5 GHz band to safeguard protection of satellite earth stations for telemetry, tracking and control of satellites in orbit, and the introduction of a subsidy scheme to be financed and administered by the relevant successful assignees to support the upgrading of existing satellite master antenna television systems,” the CA’s spokesman continued.
After taking into account views and comments collected in the consultation exercise, the CA and the SCED will issue a Joint Statement to promulgate their respective decisions on the relevant arrangements for assignment of the spectrum in the 3.5 GHz band and related SUF around the end of 2018. It is expected that auction would be conducted towards end 2019 at the earliest should it be adopted as the arrangement for assigning the spectrum.
The consultation paper can be downloaded from the websites of the CA and the CEDB. Views and comments can be sent by email to consult-3.5GHz@ofca.gov.hk, by fax to 2116 3334, or by post to Principal Regulatory Affairs Manager (R13), Office of the Communications Authority, 29/F Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong on or before June 13, 2018.
Commerce and Economic Development Bureau
(Communications and Creative Industries Branch)
2 May 2018