Subject: [NEXTEL-1] Hong Kong Mobile Industry Unfair

From: Marcelrf <[email-masked]>
Date: Fri, 02 Apr 2004 08:10:36 -0500

http://www.3g.co.uk/PR/April2004/6891.htm

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Hong
Kong Mobile Industry Unfair

1st April , 2004

ASIA
: Canning Fok ( Inset ), Hutchison Whampoa Limited
Group Managing Director, met with press today and expressed the Company's
concerns on OFTA's second consultation paper on 2G licence renewal.
The following is a summary of the Company's views:

Unfair
withdrawal of CDMA licence

Nowhere
else in the world has a government withdrawn a licence from a 2G operator
with a fully built operational network.

Hutchison
has invested substantially in its CDMA network in accordance with
the CDMA licence terms. Hutchison has also fully complied with its
licence conditions. OFTA has never notified us that a certain minimum
number of subscribers and spectrum utilization rate need to be met
for licence renewal.

With
the recent development of roaming for CDMA in China, Hutchison in
fact has plans and has incurred expenditure to further promote CDMA
services. With the uncertainty resulting from OFTA's proposals, these
plans are now severely affected and there is immediate loss of revenue.
Hutchison will take whatever action it can to safeguard its investments
and customers' interests.

Hutchison
rolled out the world's first CDMA network and has received numerous
awards as a CDMA operator. From the above chart, you can see the deterioration
in CDMA subscriber number is a direct result of strong GSM development
versus CDMA .

With
growth in total number of traveling mobile users, roaming abilities
have become important. Until recent CDMA development in China, roaming
on CDMA was only possible in Japan, Korea, and North America. In addition,
CDMA handsets were not SIM-card based and are lacking in variety.
It is therefore clear that the drop of CDMA subscriber numbers was
a result of market force, through no fault of Hutchison.

Process
of consultation is fundamentally flawed

OFTA
failed to give any concrete factual, economic or technical basis for
its arbitrary proposals to take back Hutchison's licence.

OFTA
failed to carry out a dialogue with existing operators. No consideration
was given to the adverse financial impact to existing licencees following
withdrawal of licence, not to mention the immediate impact to business
and customers upon OFTA's announcement of its intention to withdraw
the licence. It is unthinkable that our Government can publicly state
such intentions without a prior dialogue with existing operators who
have demonstrated their commitment to the Hong Kong market through
very substantial investments.

From
our own experience in Israel and India, where Hutchison operates telecom
services, dialogue with the regulators have resulted in extensions
of the term of the licences well before their expiry dates.

Indeed,
the regulator in France has as recently as last week announced its
policy to renew all existing 2G licences expiring in 2006 for further
terms of 15 years.

OFTA's
approach regarding telecom projects obviously deviates from international
practices and is discriminatory to the CDMA operator. Hutchison reserves
the right to pursue all possible recourses to safeguard its investments.

3G
investors misled

It
is totally unthinkable for OFTA to withdraw an existing licence in
order to make spectrum available for a new 3G licence. This is even
more so when Hutchison is the only 3G operator to have fully rolled
out its 3G service in Hong Kong.

When
government invited bidding for 3G licences in 2001, no indication
was given by OFTA of its intention to issue a 5th 3G licence based
on CDMA technology.

At
that time, our decision to bid and take up the 3G licence was based
on the then assessment that there would be no further spectrum available
for a 5th licence.

OFTA
destroying mobile industry

Hong
Kong, a small city economy with a population of 6.8 m has ridiculously
more mobile operators than any larger national economies in the world.

Examples

Japan - 127.5M pop - 3 operators

South Korea - 47.9M pop - 3 operators

China - 1.3B pop - 2 operators

US - 280M pop - 5 operators

The
mobile industry is already overcrowded and operators are struggling
for survival.

Such
a competitive environment together with the government's ad-hoc, non-transparent
and arbitrary decision-making process for the industry will only exacerbate
the deterioration of the industry.

Hong
Kong Mobile Industry Unfair

Canning
Fok, Hutchison Whampoa Limited Group Managing Director, met with press
today and expressed the Company's concerns on OFTA's second consultation
paper on 2G licence renewal.

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