But apparently not in Hong Kong, which has no foreign debt, though it ran a deficit in the fiscal year ending 1999 and is under pressure to shore up its eroding tax base. The territory is worried that the bids would get so outlandish that the winners would charge their customers sky-high fees. So the telecom regulators propose a reverse auction, in which a company promising the lowest rates will have a good shot at a 3G license. By encouraging a fierce bidding war, Britain risks holding back the development of its telecom, media and technology sectors. In choosing a reverse auction, Hong Kong is virtually giving away a valuable resource to companies that could mint big bucks from a new technology.
Every bidder gets to know the details of all the offers.
Each could then improve its bid in the next stage - or drop out. Britain conducted 150 rounds to produce the desired five licensees. Asian governments will do well to adopt the principles of transparency and open competition. This approach, which Hong Kong has wisely dropped, is not only open to corruption, but also assumes bureaucrats can pick winners. That is a command-economy mindset which can lead to disasters like China's decayed state enterprises.