Hong Kong Alters Wireless Auction Rule, Yields to Objection
By Kenneth Wong
Hong Kong, June 16 (Bloomberg) -- The Hong Kong government, which plans to auction four high-speed wireless Internet licenses this year, agreed to lawmakers and operators' demands for a more transparent bidding process, suggesting it will raise less money.
The government will now finish the auction, in which bidders sit in sealed rooms and can see the prices offered, when the there are four bidders left for the four licenses. Before it had proposed that bidders continue bidding even after the fifth bidder withdraws.
The change means the government will likely raise less money from sale of the licenses, which allow mobile handsets to access moving pictures on the Internet and hold video conferences. That's good news for Hong Kong's six mobile phone operators, including Hutchison Whampoa Ltd. and Pacific Century CyberWorks Ltd., who claimed the government was trying to unfairly squeeze from successful bidders.
``Having considered very carefully the implications of the ``fifth leaver'' methodology, we agree to accede to (legislature) members' request,'' the Information Technology and Broadcasting Bureau said in a statement.
The city failed to sell its so-called third generation licenses by mid-year as planned as it couldn't get the legislation in place in time. The government will now sell the licenses in September, if lawmakers sign off on the laws next month. It meets with the legislature on Monday.
Unlike many European countries, Hong Kong asks those who participate in the auction to bid a percentage of future revenue instead of cash lump sums, so that they don't have to borrow heavily as their European counterparts did last year.
The government insists on a ``dark room'' auction, another controversial arrangement, claiming confidentiality is ``a measure to minimize collusion and preserve the integrity of the auction.''
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