Congrat! PCCW has been awarded the country’s fifth 3G license

Hong Kong’s PCCW has been awarded the country’s fifth 3G license.

According to OFTA, the Hong Kong regulator, the fixed-line incumbent emerged as the only bidder for the license to provide mobile services based on CDMA2000 technology.

PCCW will now have to pay a “spectrum utilization fee” of HK$76 million (US$9.8 million) to the Hong Kong government, as well as a so-called “performance bond” of HK$150 million ($19.3 million) to OFTA, before 27 November.

It will not be allowed to launch services before 20 Nov. 2008, although it is entitled to begin work on its network immediately.

OFTA says the license will allow “visitors to and residents of Hong Kong to enjoy advanced CDMA mobile services, including CDMA roaming.”

In awarding a license based on the CDMA standard, OFTA hopes to preserve links between mainland China and Hong Kong.

On the mainland, almost 40 million people are CDMA customers of China Unicom. At present they can use the 2G CDMA service provided by Hutchison when travelling to Hong Kong, but Hutchison’s license is set to expire in Nov. 2008.

The 850MHz spectrum currently used by Hutchison will be reallocated to PCCW when that happens.

Analysts had expected China Unicom to bid for the Hong Kong CDMA2000 license, but the operator reportedly ruled itself out after failing to reach a commercial agreement with a local partner.

CDMA roaming attraction
PCCW must reckon new revenues from CDMA roaming will outweigh the costs of launching a new network.

The operator already runs a 3G business based on the W- CDMA standard through its mobile subsidiary Sunday, which had signed up 130,000 3G customers by the end of June.

Sunday remains the smallest of Hong Kong’s four W-CDMA operators, with Hutchison, CSL and SmarTone catering for the rest of the island’s 1.67 million 3G customers.

With mobile penetration in Hong Kong topping 130 percent, those operators are slashing prices and bundling new services in an effort to attract mobile customers to pricier 3G packages.

CDMA2000 is unlikely to give PCCW any advantage in this environment. Most analysts say W-CDMA has emerged as the dominant 3G standard worldwide, giving it an economies-of- scale advantage over CDMA2000.

And after recent advances in HSPA, W-CDMA appears to have caught up with CDMA2000 on bandwidth performance.

Prepared by Iain Morris