Fast-talking auctions for 3G

The long-awaited auction of Hong Kong third-generation (3G) telephone licences should take just a matter of hours.

Director-general of the Office of the Telecommunications Authority (Ofta) Anthony Wong Sik-kei said the auction of a total of four licences would be in a fashion symbolising Hong Kong's working style.

The auction will adopt a royalty fee approach.

"If a company wants a licence, they will bid for the licence - nice and quick," Mr Wong said. "It will take just a few hours to determine who the winners are."

Auctions around the world have taken much longer. The British round lasted 14 weeks while in Germany it took three weeks to decide who would win the licences.

Under the rules for the Hong Kong auction - yet to be fully disclosed - qualified bidders who join the auction will be locked in individual rooms where they will make secret bids, known only to the regulator.

As the bids increase, each company will be told how high they need to raise their stake in order to stay in the game. Eventually some will fall out, leaving four eventual licence holders.

Bids will be a function of the fixed five-year up-front charges and the percentage of revenue operators are willing to share in the next 15 years.

Rules would be set in a way that minimised collusion among bidders, as evidenced in other European 3G auctions, Mr Wong said. Shortening the auction interval also minimised chances for collusion.

As a further measure to prevent groups working together, a bidder will be disqualified if it uses more than one entity in which it holds 15 per cent or more to participate in the auction. Under the rules, family relationships do not constitute connected bidders.

Ofta is holding a two-week consultation period for the connected-bidders rules and the auction is on schedule to be completed by mid-year. Ofta hopes Legco will pass the 3G approvals between April and May. Details of the auction rules will be released immediately afterwards and it will take eight weeks before the auction is completed.