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HongKong Government Sees New 3G Standard(CDMA2000) Replacing CDMA,TDMA Spectrum
Friday March 19, 7:14 am ET


HONG KONG -(Dow Jones)- The Hong Kong government Friday said it proposes to issue a new third-generation telecommunications license for the spectrum vacated by two older technologies when the licenses for that spectrum expire next year.
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The telecommunications regulator, the Office of the Telecommunications Authority, known as OFTA, wants to replace the two older standards with CDMA2000, a 3G standard with bandwidth big enough to offer video telephony and other data-intensive services.

"This will allow consumers to enjoy services and mobile phones or devices that have become successful and popular in places like Japan and South Korea," said Marion Lai, the Deputy Secretary for Commerce, Industry & Technology ( Communications & Technology).

Hong Kong already offers a 3G technology, however. The Hutchison Communications unit of Hutchison Whampoa Ltd. offers a 3G technology called W-CDMA, or wideband code division multiple access, developed in Europe and backed by Nokia Corp. (NYSE:NOK - News) .

Hutchison currently offers it in Australia, Italy, Hong Kong and the U.K. Other mobile phone service providers in Hong Kong plan to roll out their own W- CDMA 3G networks.

By comparison, CDMA2000 is used only in Japan and Korea and was developed by QUALCOMM Inc. (NasdaqNM:QCOM - News) of the U.S.

OFTA wants to use the freed-up spectrum for the delivery of big-bandwidth data services, bigger than any technology currently used in Hong Kong, it said.

The expiry of the older licenses will force about 70,000 users of the older technologies - called CDMA and TDMA - to buy new phones as their service providers' licenses expire and aren't renewed.

Against their loss, the thrust of the government's point of view is that the greater community's need to use that spectrum for high-speed data transmission is greater than the need of those relatively few users for their outmoded services.

About 70,000 people in Hong Kong use CDMA and TDMA, compared with a population of about 6.8 million people in a city with a mobile phone penetration rate of 94%, among the highest in the world.

One of the two spectrums currently provides CDMA services to just 40,000 customers. The service, code division multiple access, is a digital wireless technology that increases network capacity while improving call quality by providing better and more consistent sound than earlier technologies. Like CDMA2000, it was developed by QUALCOMM.

The CDMA license, owned by Hutchison, expires in November, 2005.

The second spectrum is devoted to TDMA, or time division multiple access. This is a digital wireless technology that allows a number of users to access a single radio-frequency channel without interference by allocating unique time slots to each user within each channel.

The TDMA license is owned by mobile phone company CSL, a unit of Australia's Telstra Corp. , which has just 30,000 subscribers. That license expires in July 2005.

"We are of the view that the spectrum under the two licenses should be vacated on expiry for better utilization, which will in turn benefit the consumer at large," Lai said.

As a consequence of the government's aim to offer "advanced and innovative" mobile services, it will impose conditions on the new licensee for the freed-up spectrum.

"More stringent conditions on the new license will be imposed particularly in terms of quality and variety of service," Lai said. "Examples are requirements for data transmission rate higher than existing 3G licenses and dedicated network capacity for mobile data services."

OFTA invited public comment on this and other proposals, setting a deadline of April 30 for submissions.

For the issue of the CDMA2000 license, OFTA suggested conducting a royalty auction subject to a minimum guaranteed payment. The auction would be conducted with one round of sealed bids. Only companies passing a prequalification examination would be permitted to bid.

-By John Ryan, Dow Jones Newswires; 852-2802-7002; [e-mail]


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