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LCQ11: Allocation of spectrum

     Following is a question by the Hon Sin Chung-kai and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (June 17):


     In 2013, the Government decided to re-assign one-third of the 2 x 59.2 MHz of paired spectrum in the 1.9 - 2.2 GHz band (3G Spectrum) by way of auction upon the expiry of the existing assignments in October 2016 on the ground that there were intense competing demands in the telecommunications service market for the 3G Spectrum. On the other hand, when the Government decided last month that the domestic free television programme service licence (TV licence) of a television station be renewed for 12 years, it concurrently decided to administratively assign broadcasting spectrum to that television station. Some views query that the Government has adopted double standards in allocating the 3G Spectrum and the spectrum for television broadcasting. Such a situation has deterred potential investors from investing in the telecommunications or television industries. In this connection, will the Government inform this Council:

(1) whether it has assessed if managing the spectrum for television broadcasting by way of administrative assignment has violated the principle of fair competition;

(2) how the authorities will assign the 1.5 digital multiplexes to be vacated by Asia Television Limited next year following the expiry of its TV licence; whether the authorities will consider allocating some parts of the spectrum to existing or prospective TV licensees by way of auction to encourage competition; if they will not, of the reasons for that; and

(3) given that one of the existing television stations has been alleged of re-running its programmes frequently, thereby wasting the precious spectrum, whether the authorities will consider charging a spectrum utilisation fee to promote the efficient use of spectrum; if they will not, of the reasons for that?



     My reply to the three-part question is as follows:

(1) and (2) Following the Chief Executive (CE) in Council's decision, made on April 1, 2015, of not to renew the existing free TV licence of Asia Television Limited (ATV), the Communications Authority (CA) gave notice to ATV on April 20, 2015, informing the latter that the CA would exercise its power under sections 32G(1) and 32H(3) of the Telecommunications Ordinance (Cap. 106) (TO) and withdraw all existing spectrum assigned to ATV following the expiry of its free TV licence (i.e. after April 1, 2016).

     The CA has the statutory duty to, inter alia, promote the efficient allocation and use of radio spectrum as a public resource of Hong Kong under section 32G(1) of the TO. Having regard to the above statutory duty and the prevailing landscape, the CA considers that only licence holders under the Broadcasting Ordinance (Cap. 562) (BO) shall be eligible for assignment of spectrum, as only they are in a position to use the spectrum concerned expeditiously, efficiently and effectively for the provision of their licensed free television services for the benefit of the viewing public and for the avoidance of spectrum idleness or its wasteful hoarding.

     In addition, according to section 4(4) of the Communications Authority Ordinance (Cap. 616), in performing its functions, the CA must have regard to the promotion of competition in the communications market for the benefit of consumers. In this connection, when the CA discharges its statutory duty to promote the efficient allocation and use of the radio spectrum, another major consideration is that the amount of broadcasting spectrum assigned to licensees shall meet their service requirements as stipulated in their licences, which means that it shall be commensurate with the number of television channels offered by them. Given the very limited supply of broadcasting spectrum in the next few years until the switch-off of analogue television services by the Government in 2020, it is particularly important that the assignment of broadcasting spectrum shall be commensurate with the service requirements as stipulated in the licences. Such a situation may be alleviated after the implementation of analogue switch-off by the Government.

     Before deciding on the spectrum assignment for the 1.5 digital multiplexes to be vacated by ATV, the CA will take into careful consideration all relevant factors, including the objectives and provisions of the TO, the CA's statutory duties, the prevailing free TV landscape, the Radio Spectrum Policy Framework promulgated by the Government in 2007 and the views of the Commerce and Economic Development Bureau.

(3) Spectrum is a scarce public resource. The introduction of a spectrum utilisation fee (SUF) is meant to reflect the market value of spectrum as a limited public resource for promoting its efficient use. As for telecommunications spectrum, a market mechanism and SUF have been in place in Hong Kong whereby, generally speaking, spectrum is assigned to telecommunications service providers capable of putting it to the most economically efficient use, with a view to ensuring the optimal utilisation of such spectrum.

     As regards broadcasting spectrum, a "public trustee" model has long been adopted in Hong Kong by which the broadcasting spectrum is entrusted to the licensees to deliver their licensed services by following an administratively-assigned approach, without the need for the licensees to pay SUF. The reason for this is that they are required to perform unique social functions as compensation to the community, which involves significant public interests. Such unique social functions include: being the most significant source of free entertainment, education and information for the general public; performing unparalleled social and public functions, catering for the needs of the masses and the minorities; and being an essential platform to widely disseminate messages to the masses free of charge in case of emergency. Therefore, the assignment of spectrum has been conducted in an administrative approach, and the licensees will not be charged any SUF for the spectrum assigned to them.

     Broadcasting arrangements for individual programmes and re-run of programmes are scheduling and editorial decisions laid with the licensees. The CA has all along respected the editorial independence of licensees and will not interfere with their editorial decisions. Considering that the fulfillment of positive programme requirement (PPR) by repeat programmes broadcast by licensees will defeat the original purpose of ensuring their provision of entertainment, information, education as well as diversified and balanced services to the general public, the CA, in processing the application of Television Broadcasts Limited (TVB) for renewal of its free TV licence, proposed to the CE in Council that the PPR must be fulfilled by TVB by first-run programmes. As for the broadcast of programmes other than positive programmes, TVB may continue to make arrangements based on its editorial discretion and the market-driven approach. The above proposal has been approved by the CE in Council.

Ends/Wednesday, June 17, 2015
Issued at HKT 14:01