Hong Kong has awarded mmWave frequencies to its four mobile network operators, but it has so much spectrum at its disposal that it is not charging for the privilege.

The Office of the Communications Authority (OFCA) on Tuesday said it will hand over 1.2 GHz of spectrum in the 26 GHz and 28 GHz bands in the third quarter of this year, having looked at applications submitted by the telcos earlier this year.

The bulk of the award will go to HTCL – that’s Hutchison, operating as Three Hong Kong – which will pick up 600 MHz of frequencies, while China Mobile HK, Hong Kong Telecom, and SmarTone will each get 200 MHz. Essentially, the regulator is levelling the playing field; HTCL currently has no 26 GHz/28 GHz spectrum, while the other three have 400 MHz each (see chart below). The previous mmWave award, back in 2019, was also made at no charge to the telcos.

Giving away spectrum without padding government coffers is a move often discussed in this industry, but rarely implemented. The thinking behind it is that it frees up more cash for the telcos to use to roll out their networks quickly and efficiently, which should be good for consumers and the market in general.

“The spectrum assignment will enable the MNOs to further expand their 5G networks and enhance capacity, particularly in providing better 5G services at locations with high traffic demand to meet the public expectation for high-speed and reliable mobile services, while also promoting the development of various innovative applications, thereby fostering the development of Hong Kong’s smart economy,” said an OFCA spokesperson, in a canned statement.

There’s not a lot to go on there; it’s exactly what you would expect a national regulator to say. But OFCA has in the past talked up the benefits of assigning spectrum as it has just done, rather than adopting a potentially more lucrative approach.

And the results seem to speak for themselves. While the topography of Hong Kong makes it difficult to compare with other international markets, it does perform well in terms of 5G rollout. The GSMA recently shared Ookla data that identified Hong Kong as a stand-out performer on 5G availability, being the only country to exceed 40% 5G availability – 42.3%, to be precise – in the first half of last year. The analyst firm put that down to high coverage and smartphone penetration rates, but that’s not to say that a measured spectrum policy did not play a part, particularly with regard to the former.

Indeed, Hong Kong’s first major 5G spectrum auction came in 2020 and saw the MNOs collectively pay just over HK$1 billion for 3.5 GHz frequencies. By comparison, Italy’s operators paid €4.3 billion for 3.7 GHz spectrum the previous year; at current exchange rates, the Hong Kong figure comes in at just under €120 million. There are variables aplenty, of course, including market competition and availability of spectrum, but the point is still worth making.

That same Italian auction brought in around €164 million for 26 GHz frequencies, incidentally.

Part of the reason for the mmWave giveaway – now and five years ago – is the abundance of spectrum in that band though.

OFCA has just allocated 1.2 GHz of 26 GHz/28 GHz frequencies, but there were actually 2.5 GHz available, leaving a fair chunk unallocated. An auction would not have yielded significant competition.

There will be a spectrum auction in Hong Kong in the near future though. The 850 MHz/900 MHz and 2.3 GHz bands will go on the block in the fourth quarter of this year, alongside the newly-introduced 6 GHz/7 GHz band; a total of 510 MHz will be available to bidders.

That sale process will arguably serve as a better gauge of the regulator’s restraint and the telcos’ appetites for spectrum spending.

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