Time we caught up in next-gen race

Editorial | Mary Ma 22 May 2019

Our traditional rival Singapore has opted to replace the conventional practice of auctioning spectrums with an innovative approach known as "Call for Proposal," as the Lion City gets set to launch commercial 5G services.

Will Hong Kong follow suit when its 5G spectrums are put up for tender this year?

The SAR administration had better do if it wants to make Hong Kong more than a smart city at a pace at least parallel to that of the mainland and other competitors. While innovation and technology secretary Nicholas Yang Wei-hsiung has been slow in bringing about an IT revolution, adherence to red tape by the rest of the administration would put the SAR squarely behind others.

The thing about 5G is it's all about speed, and its economic implications go far beyond the concept of a smart city as understood by laymen. Otherwise, a trade war would not have erupted between the United States and China, and the mainland's 5G leader - Huawei - wouldn't have been singled out for sanctions by US President Donald Trump's administration.

While an escalation in the trade war will greatly inhibit Huawei's access to overseas markets, it only makes sense for Beijing to double down and accelerate building the 5G network domestically in the face of restrictions elsewhere.

Aren't there reports in the mainland that commercial application of the 5G technology would begin on National Day on October 1? That would be months sooner than anticipated.

The concern is that in Hong Kong, the practice of auctioning spectrums will inevitably blow license prices sky-high. Past auctions have confirmed the trend, which should be worrisome.

Singapore's revised approach for 5G licenses goes beyond price. Operators are asked to submit proposals, with 15 percent of weighting accorded to the offered price, 40 percent to network design and resilience, 30 percent to network roll-out and performance, and 15 percent to ability to fund the roll-out.

In addition, the winners have to provide wholesale 5G services to smaller operators upon request.

That sounds great, but it would only be nice if our commerce and economic development chief Edward Yau Tang-wah, who oversees the launch of the 5G services, is prepared to follow suit. However, it's less than certain he would do so.

While newcomers shouldn't be preempted, currently active in the local market are four major network operators, namely HKT, Three, SmarTone and China Mobile. It's expensive to build 5G stations, and a high entry cost - comparable to a land sale - just to secure the spectrums would mean less money for investment in developing the services.

Yau should look to strike a balance if he finds it too difficult to copy a selection process, like the Singaporean model, that would yield less for public coffers. At the very least, he may lower the reserve prices that have gone up more than 700 percent in past auctions since 2009.

As officials move to create a smart city, they should learn to be smart too.

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