With tens of thousands of people protesting HKTV's license debacle outside the SAR government headquarters last week and vowing to return, the controversy has escalated into a raging political storm. The government needs to come up with a sensible solution in order to quell the storm, restore public order and maintain investor trust. Otherwise I can only foresee a bumpy and rocky ride ahead for the present administration.

After all, the decision to issue more free-to-air TV licenses has been long-awaited by a public exasperated with the rotten productions of the city's two TV operators, and TVB's virtual monopoly of the TV market. The audience wants more competition to break TVB's stranglehold on the entertainment scene and rejuvenate the lackluster broadcasting industry. After waiting for so long, it is hardly surprising the public vented their shock and rage when HKTV, which appeared as the most ambitious applicant, was kicked out of the picture. Instead of issuing three free-to-air TV licenses, the government has decided to grant only two licenses to PCCW's Hong Kong Television Entertainment (HKTVE) and i-Cable's Fantastic TV.

Not all Hongkongers favor HKTV. But they are still not convinced that the government has played by the rules and followed procedural justice in assessing HKTV's bid. Hong Kong prides itself on being a rules-based society that provides a level playing field for investors. Failure to uphold such principle would be damaging to investor confidence.

Little wonder the city is rife with conspiracy theories; from government wanting to protect the vested interests of the existing TV stations, to succumbing to political considerations after being intimidated by Ricky Wong Wing-kay's untamed ambitions. Some reports have also said the chief secretary, financial secretary, secretary for justice and certain Executive Council members supported the issuance of three licenses instead of two, as opposed to the Chief Executive (CE) Leung Chun-ying.

The explanations offered by Secretary for Commerce and Economic Development Gregory So Kam-leung are less than sufficient and satisfactory. The application process for the licenses took place during the previous administration under Donald Tsang Kam-yuen and it had long been understood that the government would issue three. The then Communications Authority proposed in July 2011 to ExCo that three licenses should be issued. Wong's side of the story posits the licensing game rules were changed in the middle of this year. He originally submitted his bid in 2009. But after investing more than HK$900 million in start-up preparations, the HKTV chairman was suddenly told by the government in May that only two free-to-air TV licenses would be issued first and his plan to operate 30 channels was infeasible.

A new government is not required to stick to all decisions by a previous administration. But when the present administration decides to change the rules of the game it must also conform to procedural justice and so uphold a level playing field, one of the cornerstones of Hong Kong's success. Bidders should also be informed of any rule change and given reasonable time to respond to make the process more competitive. If the government suddenly changes the licensing policy and kicks out an applicant without ample justification, it would set a bad example to overseas investors regarding large-scale investment in the city.

The author is a current affairs commentator.

(HK Edition 10/31/2013 page1)