H.K. May Ask Bidders for 3G Licenses to Pay Down-Payment
Feb 22, 2001 - 19:06:01 HKT
Quamnet News Service
The Office of Telecommunications Authority, Hong Kong's telecoms regulator, may ask bidders for the city's four third-generation mobile phone licenses to pay a down-payment before they enter their auction, said Anthony Wong, director-general of the OFTA.
The payment will be returned to the companies following the auction, but it could be forfeited under certain circumstances, he said, without being more specific. He added that more details on the auction will be released in April.
The government said earlier this month that it plans to issue four 3G mobile phone licenses through a hybrid method, which combines a beauty contest and an auction.
It said it will screen the potential bidders with a light beauty contest, which is a pre-qualification process involving setting certain minimum criteria on investment, network rollout, service quality, financial capability, etc. The successful applicants will then enter a first round of auction where the four licensees will be identified.
The government has chosen a royalty-based proposal which requires the bidders to pay a certain percentage of their annual 3G revenue determined by the auction, making Hong Kong the first in the world to adopt such a method. The royalty payment will be subject to a guaranteed, minimum payment.
The four winners will then enter a second round of the auction, where the exact allocation of the frequency bands may be determined via a lump-sum cash bid.
The 3G licenses will be issued as scheduled around the middle of the year, and the government said it won't issue new 3G licenses before 2005. It also said it will conduct an industry consultation on whether to require existing 2G operators to pay a premium when they renew their licenses.
The 3G licensees will be required to pay a fixed rate for their licenses during the first five years of their operation, because telecoms companies will find it hard to distinguish their 2G revenue from 3G's during the period, it said. From the sixth year onwards, the companies will pay either a basic rate or a certain percentage of their revenue as licensing fees, whichever is higher.
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