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Fresh Licensing Storm Hits Hong Kong

Yet another communications licensing controversy has erupted in Hong Kong, this time over TV licenses.

At the center of it all is Hong Kong Broadband Network Ltd. (HKBN) founder Ricky Wong, who is planning legal action over the government's refusal to grant him a license. The two new free-to-air licenses have instead gone to Richard Li's communications service provider PCCW Ltd. (NYSE: PCW; Hong Kong: 0008) and i-Cable, the city's biggest two pay-TV players and Wong's former broadband rivals.

Wong, who sold off his HKBN stake 18 months ago in order to pursue the TV business, said the government had not given any reason for its decision (See Media Shift Triggers City Telecom Sale.)

He had filed his license application in 2009 at the invitation of a senior official, he said. His company, HKTV, was the only one to miss out on a license. (See City Telecom Seeks TV License.)

Following the decision two days ago, Wong has announced the layoff of 320 HKTV staff.

There has since been a groundswell of public support for Wong. More than 300,000 have signed a Facebook petition calling for the decision to be overturned, while he packed out an auditorium in one of the city's universities on Thursday.

Wong told broadcaster RTHK that an official study two years ago had found that HKTV had met all the criteria to win a TV license, and under a longstanding policy that should be enough. Because of this, he believed the legal ground for a judicial review of the decision was "quite strong."

The communications regulator, Ofca, has declined to issue details of the reasoning behind the decision, but industry sources told the South China Morning Post that Executive Council decision-makers believed the market did not have room for an extra three players, and considered PCCW and i-Cable to be financially stronger than HKTV.

Currently, Hong Kong has two free-to-air broadcasters, TVB and ATV, each operating a Cantonese and English channel.

i-Cable, the city's sole cable operator, and PCCW, which runs an IPTV service, offer dozens of channels across their pay-TV platforms, including their own news and financial news.

HKBN (also known as City Telecom), which Wong co-founded in 1993, is the second-largest ISP and offers some of the world's best consumer broadband deals, with a 1Gbit/s service available for as little as HK$278 (US$35.82) per month.

The TV license imbroglio comes just as Ofca is due to make a final decision on its plan to force 3G operators to surrender some of their spectrum. (See Spectrum Strife in Hong Kong.)

A consultancy hired by the four operators has predicted they would lose on average 27 percent of network capacity. A government study found they would lose 9 percent but, as in the TV licensing case, Ofca is unwilling to release the full study.

With the 3G spectrum rights due to expire in October 2016, the regulator is required to make a decision by the end of this month.

— Robert Clark, contributing editor, special to Light Reading

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