Another slightly puzzling story about Hong Kong business. And guess what - it involves a Li Ka Shing company!

A long time ago, there was a mobile phone operator (whose name escapes me) offering services on the TDMA network. Eventually they sold the business to Hong Kong Telecom CSL, who rebranded it as 1+1 and then seemingly forgot about it. Even if you had been into a CSL shop in the last 2-3 years, you would probably still never have known this network existed.

Around the same time, Hutchison Telecom had a CDMA network (with a funny name that I have also forgotten) that never really took off. Like CSL they acquired a PCS network and started offering dual-band phones (using the Orange brand name), and the CDMA network was left high and dry.

Now the Office of the Telecommunications Authority (Ofta) is planning to revoke both these licences and re-advertise them. Hutchison and CSL (now owned by Telstra) are complaining:

Hutchison Telecom senior legal counsel Oswald Kwok said Ofta needed to consider how its decision would impact on local and overseas investors. Hutchison said yesterday that its legal team was prepared to fight for the licence. Kwok said if Ofta unilaterally revoked an operating licence, the move would only scare off prospective investors, ultimately defeating the government's aim of developing Hong Kong into the region's mobile services hub.

``I don't think Ofta has given any consideration as to whether it has given investors a fair chance to break even on their investment,'' Kwok said. Managing director Agnes Nardi said Hutchison's CDMA network has cost the company about HK$1 billion.

On Tuesday, CSL chief executive Hubert Ng said Ofta did not have the right to stop his company from using the 800 MHz frequency, the band on which both TDMA and CDMA operate.

Hutchison has allowed subscriber numbers on its CDMA network to fall to about 40,000 (compared to 280,000 in 2000), and CSL's TDMA network now has only 30,000 subscribers.

Ofta, reasonably enough, thinks that it would make more sense to use this part of the radio spectrum for newer 3G services. So, rather than extend the licences when they expire next year it has announced that it plans to revoke them. Why are CSL and Hutchison upset? Presumably because this move may allow another operator into the market to compete with them.

What they need to remember is that if they were still actively marketing these services and had more than a handful of subscribers the licences would almost certainly have been renewed (as will happen with the existing GSM & PCS licences). They brought this upon themselves, and no amount of incoherent babbling about this "setting a bad precedent" will make any difference. Typical of so many Hong Kong companies, I'm afraid.