3G Licensing in Hong Kong: A Unique Approach

Xu Yan

Department of Information and Systems Management

Hong Kong University of Science and Technology

Tel: (852) 2358 7640, Fax: (852) 2358 2421

E-mail: [**xuyan@ust.hk**](mailto:xuyan@ust.hk)

> *\[Abstract\] The auction of 3G licenses in Europe has raised
> tremendous controversies. However, it is not the auction itself that
> should be blamed because commercialisation of spectrum might be the
> only solution to manage this increasingly scarce resource. What
> matters is the scheme of commercialisation. By taking the late-mover
> advantage, Hong Kong took n effective and unique approach in issuing
> its 3G licenses.*

On 19 September 2001, four 3G licenses were finally issued by the Office
of Telecommunications Authority (OFTA) - the regulator of
telecommunications in Hong Kong. Instead of auctioning the upfront
payment for the spectrum to be used for 3G services, as did by
regulators in many other economies, OFTA took a unique approach by
auctioning the royalty, e.g. the percentage of 3G revenues that the
bidders are willing to pay. Licensees are also obliged to open at least
30% of their network capacity to Mobile Virtual Network Operators
(MVNOs).

Although response to the auction was not enthusiastic due to the
slowing-down of economy and the burst of IT bubbles, this scheme has
raised attention from regulators in many other economies. Importantly,
the 11-month-long policy consultation on 3G licensing framework has
trigged intensive debate among all interested parties. This paper, based
on the author's research report for International Telecommunications
Union[^1], will provide a comprehensive review of these debates and give
an introduction to the overall 3G licensing scheme in Hong Kong.

I. Policy Objectives of Hong Kong Government in 3G Licensing

To provide an efficient telecommunications infrastructure for the local
economy and the public by means of deregulation and liberalisation has
been a consistent policy stance of Hong Kong government since the
mid-1980s. According to the Information Technology and Broadcasting
Bureau (ITBB) - the policy-making body of Hong Kong government, these
policy objectives remain unchanged for 3G licensing. [^2]

The policy-making process of 3G licensing in Hong Kong is relatively
open, transparent and subject to full debate. On 21 March 2000, OFTA
issued an industry consultation paper on the licensing framework for 3G
mobile services. This first consultation paper identified and discussed
several key issues on the licensing of 3G mobile services and consulted
with the industry and interested parties on these issues.

Based on the first round public consultation, OFTA issued its second
consultation paper on 3 October 2000. This triggered off another round
of debate and discussion. OFTA also organised an industry workshop on 5
January 2001 explaining its "Open Network" regulatory framework.
Questions such as the definition of MVNO and the measurement of network
capacity to be made available were furiously debated. On 13 February
2001, the government finally announced the licensing framework for 3G
services in Hong Kong SAR.

Key issues that were discussed during the 11 month long consultation
include the following:

-   Choice of technical standards,

-   Allocation of radio spectrum

-   Licensing options

-   Open network requirement

Each of these issues is considered in turn as follows.

II\. Choice of Technical Standards

Hong Kong's economy is service-based rather than manufacturing-based.
Using the telecommunications market to enhance the development of the
domestic manufacturing industry is therefore not necessarily a policy
priority. This has enabled OFTA to adopt a technology-neutral approach
in licensing since 1996, when seven PCS mobile communication licenses
were first issued.

Due to the fact that IMT-2000 is a family of 3G standards (WCDMA,
CDMA2000, and TD-SCDMA) instead of a single standard, the question was
whether Hong Kong should adopt a commonly agreed 3G standard or multiple
3G standards. On the one hand, the government realised that the
mandatory use of a single 3G standard would reduce the flexibility of
operators in evolving their 2G networks to 3G and limit consumers'
choice of terminal equipment. On the other hand, the government is
interested in promoting the adoption of technical standards that are
compatible with each other from the users' point of view, so that
subscribers are not locked-in by any single operator. As with number
portability, this will have the effect of reducing the switching cost
when subscribers migrate from one operator to another. Another objective
is to maximise the convenience of users in accessing roaming services
without having to change handsets when they travel to places outside
Hong Kong, particularly to the more popular destinations. This question
is especially critical given that the time scale of the commercial
application of software-defined radio is still uncertain[^3].

Based upon these considerations, OFTA intends to offer to prospective
operators the use of any 3G standards within their assigned 3G frequency
bands, subject to OFTA being satisfied that various technical standards
are compatible with each other from the user's point of view. The main
consideration is to ensure that customers can easily switch from one
network to another and obtain similar services, and to maximise the ease
and practicality of roaming services without having to change mobile
terminals.

The principle proposed by OFTA has received the support of those parties
who have commented on the issue. New World PCS Limited, for instance,
emphasised the following:

> "...with 6 existing operators operating 11 networks of different
> standards in Hong Kong, a technology neutral approach allows a smooth
> migration from the existing 2G services to 3G services in the future
> ... The technology neutrality approach, which is consistent with the
> policy adopted by OFTA in previous licensing process, also encourages
> operators to explore new services available under respective
> standards"[^4].

However, former Cable & Wireless HKT (CWHKT) suggested that the adoption
of multiple standards in Hong Kong might result in the requirement for
guard bands between bands used by networks of different 3G standards,
thus reducing the amount of usable spectrum. Also, it is unlikely that
mobile terminals which are compatible with more than one 3G standard
adopted by the ITU would be available in the initial years. The CWHKT
strongly suggests that only the Universal Mobile Telecom Service (UMTS)
of Europe, i.e., W-CDMA, should be adopted in Hong Kong[^5].

Currently, there are a total of four 2G standards being used by the six
operators in Hong Kong. It is expected that from the launch of 3G
services, 3G mobile terminals would have to incorporate a dual mode
design to enable backward compatibility with 2G networks. Thus, the
availability of backward compatible equipment with existing 2G networks
would be a constraint in the selection of 3G standards.

In this case, OFTA affirms that the prospective operators should be
permitted to use any 3G standard adopted by the ITU within their
assigned frequency bands for 3G mobile services, subject to standard
compatibility from the user's standpoint. OFTA expects that the
operators would take these requirements into consideration when choosing
a 3G standard[^6].

III. Allocation of Radio Spectrum

The allocation of radio spectrum is relatively a simple issue in Hong
Kong, as most of the IMT-2000 defined spectrum is not presently being
occupied. Only a portion of the spectrum is now being used for the
operation of Microwave Multipoint Distribution Systems (MMDS) and
microwave fixed links. At OFTA's request, users of this band have agreed
to relinquish the spectrum by the end of May 2001 for the introduction
of 3G mobile services.

Perhaps the major concern lies in how to handle spectrum which is
currently used for 2G services. According to World Radio Conference in
Istanbul (WRC-2000), spectrums in 800/900 MHz (for GSM) and 1700/1800
MHz (for PCS) bands are allocated for implementing 3G services. In this
case, there is a necessity to clarify how to migrate current 2G services
to 3G services for current 2G license holders.

In line with its technology neutral policy stance, and in order to allow
existing 2G mobile operators to evolve their networks to 3G, OFTA
decided to allow existing 2G operators, whether they are successful or
not in obtaining 3G spectrum, to use any 3G standard within their
assigned 2G frequency bands for 3G services when equipment becomes
commercially available. This would be subject, once again, to standard
compatibility and the assurance that the interest of existing 2G
consumers is adequately safeguarded[^7].

However, this has raised concerns from the industry, especially for
potential applicants who did not hold a 2G licence, like New T&T Hong
Kong Limited. This is because the incumbent 2G operators would in effect
be "guaranteed" a right to offer at least some if not all 3G or
3G-compatible services even if they failed to obtain a 3G license or
decide not to apply for a 3G license. This is unfair to the other
license applicants and the problem would be exacerbated in the initial
phases of the service launch, as the full range of services would not
yet be available. Therefore, as suggested by New T&T, incumbent 2G
mobile operators should not be given any undue advantage or "guarantee"
of right[^8].

Another concern was that 3G spectrum would be auctioned whereas 2G
spectrum was assigned through different procedures and in most cases for
free. This might put potential 3G licensees in an unfair position,
especially those operators that are without 2G licenses. One submission
suggested that the incumbent operators should pay a premium, to be
channelled through a mechanism similar to the variation of land leases,
in return for the right to provide 3G services in the 2G bands. There
was also a view that, as 3G services would not be mature until 2005, the
incumbent operators could wait for equipment availability to provide
services in their 2G band. If 3G spectrum were granted to them, they
should return their 2G spectrum to OFTA[^9].

OFTA believes that allowing the incumbents to make use of 2G spectrum
for 3G services would be consistent with its policy of technological
neutrality. It is up to individual operators to decide which technology
is more efficient to use. Therefore, OFTA does not have any objection in
principle to existing 2G operators making use of their own 2G spectrum
for 3G services until their licenses expire. The resolution of the
spectrum issue in the future will be the subject of another round of
consultation prior to the expiry of current 2G licenses[^10].

IV Licensing Options

Next to 3G standards and 2G spectrum migration, the important issue is
licensing, notably the selection of operators. Hong Kong used to assign
spectrums to telecommunications licensees on the merits of applications.
The major concern in the past, according to OFTA, is providing the
opportunity to a maximum number of operators to enter the market and
allow market forces to determine the optimum number of operators, as
long as the spectrum is available[^11]. Although the auction methods was
suggested for spectrum allocation for 2G licenses, OFTA did not adopt
this method due to the concern that operators will eventually pass the
cost on to individual subscribers.

However, spectrum is said to be a scarce resource and as such, must be
used effectively. There should therefore be some financial pressure on
operators to encourage the efficient utilisation of spectrum. OFTA's
preferred method was to set up a performance bond. When issuing the
license, the regulator defined an array of milestones that the licensee
should meet, mainly on network coverage. Periodically, OFTA will review
the licensee's progress with reference to the defined milestones. If
licensees fail to reach the milestone, they are liable for the
performance bond. Before the license is issued, the bank will evaluate
the financial strengths of the applicant and guarantee the ability of
the applicant to pay for the performance bond if required. In this
manner, licensees are subject to financial pressure to rollout their
networks aggressively, while at the same time avoiding the need for a
lump sum upfront payment. This reduces the financial burden on
operators, particularly new entrants. The method has worked reasonably
well over the past years.

In 2000, the 3G licensing generated a spectrum auction fever in Europe.
The US\$47.5 billion licence fee in Germany and US\$33 billion license
fee in the UK encouraged governments in other countries to follow the
same approach in the expectation of obtaining similar windfalls.
However, the negative reaction from the stock market has led to a
decline of auction fees in these later-mover countries (Figure 1).

![](media/image1.wmf)

Nevertheless, the Pound Sterling 22.4 billion 3G auction fee that
surpassed the expectation of the UK authority has cast doubt on the
appropriateness of the comparative selection approach of OFTA. Emily
Lau, Legislative Councillor, commented on Radio 3 of Radio Television HK
(RTHK) on 14 May 2000 that

> "Although auctions could bring significant revenue to the government
> coffers, OFTA is concerned that such additional upfront costs to 3G
> operators would greatly increase their business risk. This in turn
> could adversely affect the development of the next generation of
> telecommunications and Internet services in Hong Kong. I don't think
> this argument is very sound. Regardless of how the licences are to be
> awarded, operators are likely to price their services according to how
> much the customers are willing to pay, and not according to the cost
> of providing such services ... Companies which have over-stretched
> themselves will suffer, some may even go bankrupt. But other companies
> will bid for their licences and carry on. This is capitalism at work
> and should not harm the development of the industry".

In addition to economic considerations, there are also some technical
considerations to take into account if OFTA follows its original
approach to allocate spectrum for 3G services. In his submission to OFTA
on the consultation paper, Xu expressed his concern that "it is very
difficult to define the milestone for 3G service due to the fact that
there is not a definite date that this service will be commercially
available. Nor did the business model. Even the GPRS (2.5G) is still
under trial, how can the regulator clarify the rate of deploying 3G
services? Wrongly defined milestones will leave the regulator in the
embarrassment, but not the operators". Xu was also concerned that if
operators are granted licenses for free in Hong Kong, some of them might
use Hong Kong revenues to cross-subsidise their customers in the market
where they have paid a huge license fees. Indirectly, Hong Kong's
consumers would become the victims of huge license fees in other
overseas markets[^12].

Some economists were in favour of auctions but pointed out that the
conditions need to be justified once again, in order to ensure that
spectrum fees are not artificially inflated. It was suggested that all
of the spectrum should be open for the auction and there should not be a
pre-determined number of licensees[^13].

However, there are some concerns about this. As was suggested by some
WRC-2000 delegates, allocating all spectrums to a single immature
technology might be risky and harmful for the development of other
innovative services[^14]. 3G is not the end of mobile communications, 4G
even 5G might appear in coming years. In this case, if all spectrums are
allocated to 3G, then operators might feel reluctant to upgrade their
technology when the new technology is available. For example, when GSM
was available, no licensees in Hong Kong reacted to it. It was OFTA who
issued a new license to SmarTone and clearly designated that GSM had to
be used that digital network began to appear in Hong Kong. As a result,
all incumbents had to change their system from analogue to digital.
Keeping some spectrum aside might give more flexibility and bargaining
power to OFTA in the future[^15].

Argument against auctioning the spectrum pointed out that, unlike some
other economies, Hong Kong does not need to raise revenue through
auctions. Proceeds from spectrum auctions imply a one-off revenue and do
not provide a steady base for ongoing government revenue. Also, the
spectrum auction process would only favour operators with deep pockets.
As such, companies that are more likely to propose high-quality
innovative services may fail to obtain licence[^16].

Ure worries that the large upfront payments increase the cost of
financing, and this acts as a disincentive to roll out networks to more
marginal areas. Indeed, it raises the margin. He also worries that the
huge upfront payment incubates industrial restructuring leading to
oligopoly and/or collusion. In his viewpoint, the upfront payment also
weakens the authority of the regulator, especially when large
multinational companies are involved who are under enormous pressure to
address the interests of their shareholders and financers, and keep an
eye on the price of their stock[^17].

Liu argued that 3G is a high-tech industry - its social benefits is much
larger than the commercial benefit and will generate tremendous
externalities. In an environment not favourable to high-tech investment,
the success of 3G might be enhanced if the government could share part
of the risk with investors. As this is a revenue risk but not a cost
risk, the government's total risk is close to nil. In this case, the
government is probably the most appropriate party to undertake the
risk[^18].

Taking into consideration of all of the views from the different
sectors, the government formally released its 3G licensing framework on
13 February 2001. The decision was taken to issue four licenses by way
of auction after conducting a pre-qualification exercise. The
pre-qualification process is intended to be relatively light, but will
involve setting certain minimum criteria on investment, network rollout,
service quality, financial capability, etc. As to the auction process,
the government has chosen a royalty-based proposal that requires the
bidder to pay a certain percentage of their annual 3G revenue turnover
determined by the auction. The royalty payment will be subjected to a
guaranteed, minimum payment. The government believes this method will
encourage market entry while keeping the financial burden on operators
at a manageable level[^19].

The particularities of the royalty auction are as follows:

> "Bidders would be asked to bid for a level of annual royalty by way of
> percentage of turnover from their 3G services network operations.
> Successful bidders who win the 3G licences at a certain royalty
> percentage bid would do the following:

(a) for the first five years of the license: They will pay a guaranteed,
    minimum royalty payment fixed by the government. They will pay the
    same fixed amounts for this period regardless of their actual
    turnover. This is because it will be difficult in these initial
    years of the 3G licences to distinguish between second generation
    mobile service (2G) and 3G network revenues, if the 3G licensee is
    also an existing 2G operator;

(b) from year six to the end of the licence period: They will pay
    royalties to the Government according to the royalty percentage
    determined by the auction. The same royalty percentage will apply to
    all licensees. The actual royalty payment will differ from licensee
    to licensee as their 3G revenue turnover will be different. However,
    the royalty paid by each licensee should not be less than the
    guaranteed, minimum royalty payment fixed by the Government. In
    other words, the Government collects the royalty based on actual
    turnover, or the guaranteed, minimum royalty payment, whichever is
    the higher; and

(c) throughout the whole licence period: They will need to provide a
    5-year rolling guarantee for each of their guaranteed, minimum
    royalty payment."[^20]

According to the Government, this proposed method best meets its policy
objectives. It is "pro-entry" as it alleviates the burden on successful
3G licensees, and allows the government to share the upside of the
future 3G services market. It is also an efficient method of allocating
licences to those bidders with the best business case, as the payment
will be in the form of royalty and therefore will depend on the actual
performance of each licensee. The guaranteed, required minimum royalty
payment will minimise credit risks for the Government, and reduce the
costs that may be passed on to consumers[^21]. Figure 2 illustrates the
royalty payment scheme.

![](media/image2.wmf)

This proposal has been very well received, despite the fact that there
are some controversies on the details of the auction design. For
example, the government would like to settle on the final price when the
fourth bidder from the bottom leaves the auction process, while the
industry insists that the final price should be established when the
fifth bidder from the bottom leaves[^22]. In this way, the price should
be lower and the cost of licensees will be reduced. The Government
finally reaches a compromise and agrees to establish the price when the
fifth bidder from the bottom leaves.

On 19 September 2001, the auction was conducted. Four applications for
3G licenses in Hong Kong were received and in accordance with the rules
set out in the Information Memorandum which provided guidance for the 3G
spectrum auctioning. The four bidders have each been awarded a license
at reserve price, i.e. five per cent royalty subject to a minimum
payment of HK\$50 million for each of the first five year, and rising
minimum payments from year six onwards.

V. The Open Network Requirement

Due to the limitation on spectrum, only four 3G licenses have been
issued. To enhance competition, OFTA proposed the concept of separating
service provision from network operation. This means that a service
provider need not at the same time be network operator, although that
possibility is not excluded. This is comparable to the European concept
of the Mobile Virtual Network Operator (MVNO). In this case, the MVNO
would not own a license to use radio spectrum, but would have access to
the radio networks of one or more of the mobile network operators and be
allowed to build and operate parts of the networks not requiring the use
of radio spectrum (e.g. elements of an intelligent network). These
service providers would then be able to offer 3G services to customers
without actually operating the radio networks. The regulator suggests 3G
licensees to open 30-50% of the network to MVNOs[^23].

Almost all incumbent operators expressed their concern about MVNO. The
major concern lies in the potential technical and financial difficulties
for physical network operators to meet this requirement. It was argued
that opening the networks to all competitors is technically inefficient
for the network operators to rollout and maintain networks with an
unknown requirement in terms of capacity just for the purpose of
offering it to service providers. The business viability of the network
operators would be jeopardised. The incumbent also argued that the
future 3G value chain would allow customers to access service and
content providers. The need for MVNO might not even exist[^24].

Some analysts argue that opening the network to MVNOs is akin to
permitting "free riders". As a result, some investors may not join the
bidding for 3G licenses; however, once the risk is undertaken by initial
spectrum bidders and 3G is proven to be successful, they would apply for
a MVNO license and begin providing services. This scenario is seen as
patently unfair to the 3G licensees[^25].

Supporters of the open network requirement stressed the importance of
non-discretionary access to networks by MVNOs and minimising collusion
among big players who were both network operators and service providers.
One submission suggested that as many as 20 MVNOs might be licensed by
way of auction, enabling a large number of companies in different
domains to enter the 3G services market[^26].

Based upon feedback, the government proposed a regulatory framework for
its open network:

a.  Successful bidders must open at least 30% of their 3G network
    capacity for use by non-affiliated companies to operate as MVNOs
    and/or content providers. More capacity could be opened up if they
    wish to do so by commercial agreement. However, to preserve the
    commercial incentive of 3G network operators to develop their
    networks, the regulator would not intervene for a MVNO or content
    provider if that operator/provider already has access to capacity
    equivalent to 30% capacity of a network operator.

b.  The wholesale prices for MVNOs' access should be negotiated
    commercially with the 3G licensees. However, if commercial
    negotiation fails, the regulator reserves the right to make a
    determination based on fair interconnection principles. A sufficient
    return on cost of capital will be allowed, reflecting the higher
    risk of 3G service investment, when regulator makes the
    determination to ensure that the investment incentives are
    preserved.

c.  Content providers will buy capacity at tariffs set by the 3G
    licensee, reflecting all relevant costs and the above-mentioned cost
    of capital. The regulator would only intervene in cases of unfair,
    discriminatory treatment or on anti-competitive grounds.

d.  Measurement by the regulator of the capacity sold to non-affiliated
    companies will not be necessary unless the 3G licensees refuse to
    supply the requested capacity. The licensee should then provide
    evidence to the satisfaction of the regulator that 30% of their
    capacity has already been opened up. The regulator is prepared to
    accept alternative methods of measurement proposed by operators
    including the simplest documentary proof of the total capacity sold,
    e.g. in the contracts or agreements with non-affiliated
    companies[^27].

In addition to the open network requirement and ensuring a level playing
field for both new entrants and incumbent operators in the 3G services
market, the government proposed a final requirement on certain
successful 3G licensees. Those licensees that are also 2G operators are
to provide roaming to successful non-2G licensees in locations not yet
covered by the latter's 3G networks during the initial years. This
mandatory requirement is crucial, because it takes time for new entrants
to roll out a network with coverage comparable to that of a mature 2G
network. These new entrants are expected to have rolled out their own
network and to satisfy the mandatory requirement over time. The
requirement will end on a "sunset" date, intended to be five years after
licences were issued[^28].

By the end of January 2003, there are six companies have obtained MVNO
licences in Hong Kong. These companies are: Trident Telecom Ventures
Ltd., China Motion Telecom (HK) Limited, China Unicom International
Limited, CITIC Telecom 1616 Limited, i100 Wireless (Hong Kong) Limited,
China-Hongkong Telecom Limited. They are going to targeting different
market niches. For example, both China Unicom and China Motion has begun
to use its MVNO license to provide economic and seamless services for
frequent travelers between Hong Kong SAR and mainland China, while
Trident is targeting overseas visitors. They are currently using 2G
technology for service provision, and are planning to migrate to 3G
technology once the networks are ready.

VI\. Summary

This study provided a comprehensive review of the debate in the process
of formulating 3G licensing policy in Hong Kong. It also gave an
introduction to the 3G licensing framework in Hong Kong.

3G imposes some challenges on Hong Kong SAR. Due to limited spectrum and
hence limited number of licenses, it is unclear whether the current
competitive 2G market in Hong Kong can be successfully transferred to a
competitive 3G market in the future. Also, OFTA's traditional licensing
and regulatory scheme for 2G services has been threatened by economic
and technical constraints of 3G services.

OFTA's 3G licensing framework, to a certain extent, relieved the
licensees from a heavy burden of paying huge upfront spectrum fee. This
might be able to accelerate the paces of rolling-out 3G networks in Hong
Kong. The open network obligation of the licensees may also enhance
competition in the 3G market in the fact that the spectrum can only
accommodate limited network operators.

Additionally, the commercialisation of spectrum may also pave the way
for free trade of spectrums among operators, although this issue has not
been on the top agenda of OFTA yet. In fact, as spectrums were assigned
for free in 2G services, OFTA has had to be fair by assigning the
spectrum to all licensees in an equal way, although this equally
assigned portion may be over-sufficient for small operators but
insufficient for large operators. Several applications for more spectrum
by large operators have been rejected by OFTA in the excuse of fairness,
and these operators have to increase the efficiency of spectrum by
investing on spectrum compression system, which has affected the service
quality, increased the operation cost and raised the price of services.
In the meantime, the small operators have huge surplus spectrum due to
their small customer base but they have been restricted to trade the
spectrum, as they have obtained the spectrum for free. This dilemma
scenario maybe changed under the new 3G licensing framework, as the
licensees, to some extent, owns the spectrum during the defined period
of the licenses.

3G mobile is not just an innovative technology and service, but it also
brings about new economic and regulatory dynamics. Whether or not the
innovative 3G licensing framework and open network requirement of the
Hong Kong Government will be successful remains to be seen.

[^1]: Xu Yan (2001) "3G Licensing Policy in China and Hong Kong SAR -- A
    Study for the International Telecommunications Union"
    http://www.itu.int/3G

[^2]: Press Release of ITBB on 13 February 2001,
    *http://www.itbb.gov.hk*

[^3]: OFTA (2000) *Licensing Framework for Third Generation Mobile
    Services -- An Industry Consultation Paper*, 21 March

[^4]: Submission of New World PCS Limited in response to OFTA's first
    consultation paper. March 2000

[^5]: Submission of CWHKT in response to OFTA's first consultation
    paper. April 2000

[^6]: OFTA (2000) *Licensing Framework for Third Generation Mobile
    Services -- Analysis of Comments Received, Preliminary Conclusions
    and Future Industry Consultation*, 3 October

[^7]: OFTA (2000) *Licensing Framework for Third Generation Mobile
    Services -- An Industry Consultation Paper*, 21 March

[^8]: Submission of New T&T Hong Kong Limited in response to OFTA's
    first consultation paper. 22 May 2000

[^9]: OFTA (2000) *Licensing Framework for Third Generation Mobile
    Services -- Analysis of Comments Received, Preliminary Conclusions
    and Future Industry Consultation*, 3 October

[^10]: *Ibid.*

[^11]: Au, M.H. (1998) Public Mobile Services in Hong Kong -- Updates
    and Future Development*, Proceedings of Asia-Pacific Mobile
    Communications Symposium*, pp. 33-38

[^12]: Xu, Y. (2000) Penal discussion at Telecom Asia summit, Hong Kong

[^13]: See Melody, W.H. (2001) Spectrum Auction and Efficient Resource
    Allocation: Learning from the 3G experience in Europe, *Info*, Vol.3
    No. 3, pp. 5-10

[^14]: ITU, Newsletter of WRC-2000

[^15]: Xu, Y. (2000) The debate between beauty contest and auction,
    *Hong Kong Economic Journal,* 19 May

[^16]: Au, M.H. (2000) The implementation of third generation mobile
    services in Hong Kong, *Proceeding of Asia-Pacific Mobile
    Communications Symposium: 3G and M-Commerce*, pp. 11-17

[^17]: Ure, J. (2000) Response to OFTA's consultation paper,
    *http://www.ofta.gov.hk*

[^18]: Liu, C.W. (2001) Payment method of 3G licensing: new taxing
    paradigm of new economy. Hong Kong Economic Journal Monthly, Vol.24,
    No.10, pp.32-34

[^19]: Press release issued by Information Technology and Broadcasting
    Bureau on 13 February 2001: The licensing framework for third
    generation mobile services

[^20]: *Legislative Council Brief: licensing Framework for third
    Generation Mobile Services,* File Ref: ITBB CR 7/23/10(01)

[^21]: *Ibid.*

[^22]: The time for 3G auction might be postponed, Hong Kong Economic
    journal. 30/05/2001

[^23]: OFTA (2000) *Licensing Framework for Third Generation Mobile
    Services: An Industry Consultation Paper*, 21 March

[^24]: OFTA (2000) *Licensing Framework for Third Generation Mobile
    Services -- Analysis of Comments Received, Preliminary Conclusions
    and Future Industry Consultation*, 3 October

[^25]: Hausman, J. (2001) Guest speech at Bloomberg Auditorium, Hong
    Kong, 23 May

[^26]: See http://www.ofta.gov.hk/frameset/home_index_eng.html

[^27]: *Legislative Council Brief: licensing Framework for third
    Generation Mobile Services,* File Ref: ITBB CR 7/23/10(01)

[^28]: *Ibid.*