Hong Kong consumers oppose spectrum fee hike

PCCW’s HKT is opposing a proposal by the SAR government to raise the spectrum utilization fee for all mobile operators, publishing research indicating that a wide majority of consumers oppose the suggestion.

Research commissioned by HKT and conducted by Policy 21 suggests that 72.8% of consumers believe a fee increase that the operator said would be likely in the event the government raises spectrum prices would be unacceptable.

Hong Kong mobile users currently pay a fee of HK$18 per month covering contributions towards mobile license, administration and MTR and tunnels expansion costs, and operators are likely to raise this fee if their spectrum costs increase.

Of the remaining 17.4% of respondents who consider a fee increase acceptable, 84.7% would only accept an increase of HK$10 or less per month.

The government’s proposed fee increase would be implemented on the expiry of existing 900-MHz and 1800-MHz licenses, and would affect 40% of the total amount of spectrum currently assigned to mobile operators.

HKT presented the findings yesterday at an industry forum organized by the Hong Kong General Chamber of Commerce. Consultancy firm Network Strategies also used the event to unveil a study into the optimal price of spectrum in Hong Kong.

“In comparison with international benchmarks, the reference prices are very high. Use of these reference prices for setting reserve or fixed prices may lead to artificially high SUFs which may have a distortionary effect on the market,” Network Strategies director and founder Dr Suella Hansen said at the forum.

“With efficient spectrum pricing and sufficient spectrum allocation, incumbent operators may minimize costs to produce retail services efficiently, continue to invest and develop innovative services and products, all of which promote social efficiency. However, consumer welfare will not be promoted if the price of spectrum does not reflect its true market value.”