The South China Morning Post’s Jake van der Kamp warned last week against opening the Hong Kong telecoms market up to a fifth mobile network. In his view, consumers’ interests will be best served by allowing the existing four operators to renew their licences in 2016; that way, the four have a continued incentive to invest in their networks and compete hard on pricing for market share. If a fifth player wants to get in, it can pay the going rate for one of those licences. That’s how other countries do it. Because the 3G radio spectrum is full, the only way to issue a fifth licence is to take bandwidth away from the existing operators – and then one day your bills go up and you can’t get a signal on the MTR.
If this is so, why would the Hong Kong authorities issue a fifth licence? Because, the columnist says, powerful state-owned China Mobile wants a slice of the action here. (It currently has to lease capacity from the other four service providers to provide roaming service to the millions of Mainlanders passing through town on their binge-shopping trips.) In other words, this is Beijing leaning on the Hong Kong government in an area where the latter is supposed to have full autonomy.
There’s another way of looking at it. MarketWatch’s Craig Stephens sees this as an altogether more palatable-sounding ‘eviction of the tycoons’. Three of the mobile licences are held by the Hutchison, Sun Hung Kai and New World empires – all among the top four members of the property cartel – and the fourth is held by Hutchison owner Li Ka-shing’s son Richard. (Their domination of telecoms is something of an aberration; they obviously thought the sector would be a guaranteed cash cow, like their cartelized grips on retailing, housing, transport, electricity, construction materials, the air you breathe, etc. Instead, no doubt to their extreme discomfort, they have ended up having to compete. It is probably one of the few leading segments of the domestic economy where the consumer doesn’t get legally and systematically shafted.)
Seen this way, the issuing of a fifth licence could increase competition, lower prices for consumers and upgrade the network technology. And, as a nice thick helping of icing on the cake, a handful of our most overbearing and exploitative plutocrats get a long-overdue kick in the teeth. What could possibly be wrong with that?
In the background is something far bigger and potentially more sinister. As both the columnists indicate, this is about powerful Mainland state tentacles slithering into the local economy. Jake van der Kamp mentions the displacement a while ago of certain existing chains’ gas stations in Hong Kong by branches of state-run Petrochina and Sinopec. He has also written about the long-term prospects of China Light and Power’s electricity monopoly in Kowloon-NT falling into Beijing-connected hands now it has been pressured into an onerous long-term commitment to buy Mainland (indeed, Petrochina) gas supplies. (CLP was founded and is owned by Iraqi Jews rather than sons of the Celestial Kingdom, we may note.)
One of the conspiracy theories surrounding Communist loyalist Leung Chun-ying’s surprise appointment as Hong Kong’s Chief Executive last year concerns just this sort of economic ‘Mainlandization’. It’s Gotterdammerung for the property tycoons, as well-connected Mainland companies run by princelings and/or the state take over. Starting with the property sector – hence the arrest and forthcoming trial of Sung Hung Kai’s Kwok brothers on corruption charges and plans to build new towns near the border. History repeats itself: recall how old British hongs like Hutchison came into the clutches of Li Ka-shing and other local tycoons back in the 70s and 80s.
Do Mainland conglomerates have a big incentive to muscle into Hong Kong? On the one hand, if the Mainland and the Big Lychee were a unified economy, this city would account for one dollar of GDP for every 29 produced in the rest of the country. Not bad for 7 million out of 1.3 billion people, but hardly a huge gold mine. And overt bullying will only arouse international concerns and make life harder for corporate China as it tries to enter new markets in the rest of the world. On the other hand, it must be pretty crowded up there with Li Peng’s daughter, Zhu Rongji’s son, Wen Jiabao’s nephews and the rest all trying to grab their slice of the pie. And if you’re going to expand overseas, where better to start than an international city where you can help yourself to a niche with a phone call to Comrade CY?
To the extent that the conspiracy theorists are correct, there is nothing we can do about it. In theory, the Legislative Council will decide on the telecoms licence, and it will be interesting to see who votes which way in a tycoons vs Mainland fight (here’s the consultation paper, China Mobile’s case and Hutchison’s case). Ultimately, the Communist Party has tanks, and we don’t. So perhaps it’s best to look on the bright side either way. If Hong Kong resists Mainland incursion into commanding sectors of the local economy, that’s one up for ‘One Country, Two Systems’; if it doesn’t, we see our favourite tycoons crushed, and it couldn’t happen to a nicer bunch of people – indeed, the devil in me wonders if it wouldn’t be worth it.