Governments around the world have treated the upcoming rollout of 5G networks as an opportunity for billion-dollar paydays, auctioning off precious blocks of radio spectrum. Today, Hong Kong regulators said they will take the opposite tack by offering 5G-ready carriers free spectrum — a strategy designed to keep consumer costs low and speed the rollout of next-generation wireless services.
As reported by the South China Morning Post, the suggestion to give away 5G radio spectrum has been championed by Hong Kong Secretary for Commerce and Economic Development Edward Yau Tang-wah, who concluded that there was no need to auction the “abundant supply” of spectrum. “That means it will greatly reduce the cost and also shorten the time involved” for 5G deployments, he said, acknowledging the key challenges carriers now face when offering 5G in any region.
Hong Kong plans to give away 4,100 megahertz of radio spectrum across the 26 Ghz and 28 Ghz millimeter wave bands, plus 200 megahertz of spectrum in the medium-frequency 3.3 GHz and 4.9 GHz bands. The spectrum would be assigned to existing carriers and new market entrants for use starting in 2019, though commercial 5G services would likely commence in 2020.
While the plan will likely incentivize carriers to move faster, actual cost savings for consumers remain a question mark. Hong Kong’s Communications Authority says that spectrum costs typically only account for 3 to 4 percent of carriers’ operational expenses and that subscription prices are more heavily influenced by individual data usage and competition within the marketplace. However, if the government’s plan works, more carriers will compete to offer 5G services in Hong Kong, driving prices down.
Carriers in other countries — especially within Europe — have been struggling to afford the high costs of 5G rollouts, which involve spectrum auctions, massive equipment deployments, and the development of new service offerings. European carriers are now confronting “drastic cuts” just to afford their 5G rollouts. Hong Kong’s solution will cut up-front government revenues but may also reduce the need for carrier bailouts in the future.