| Vision, Mission and Values |
| Message from the Director-General | Highlights of the Year 2006/07 |
| Eye on the Future | Having Faith in the Market |
| Consumer Interest – Our Main Concern | Managing the Radio Spectrum and Ensuring Technical Excellence |
| Close Communications with the Industry and the Community | Committed to Service Excellence |
Consumer Interest – Our Main Concern
Sufficient Information for Making Choices
The market cannot properly function without a sufficient flow of information to enable consumers to make informed purchasing decisions. In this respect, it is important that the information provided by operators is accurate. Under the Telecommunications Ordinance, operators are prohibited from engaging in misleading or deceptive conduct in promoting their services and products. OFTA will take enforcement action against operators in breach of the law.
In addition to law enforcement, we conduct consumer surveys to get a grasp of the general public's understanding of and satisfaction for the telecommunications services they use. The survey results also indicate what, and how, customer information should be made available to the public. With the survey results in hand, we, together with the industry and related organisations, engage in dialogue to establish ways in which the market can improve the flow and availability of information to consumers, as well as develop best practice indicators for the advertising and marketing of telecommunications services.
Customer Information concerning Broadband Internet Services
In May 2007, the TA issued a statement on "Survey on Residential Broadband Internet Access Services". The survey, which was conducted by the Social Science Research Centre of the University of Hong Kong in the second half of 2006, was the first of its kind commissioned by OFTA to study the level of consumer awareness of broadband Internet access services and to identify any deficiency in the availability of information to consumers in the market.
The background to this survey was the historically high level of consumer complaints, which had accompanied the wider availability and uptake of broadband Internet access, together with earlier proposals for publishing certain technical performance indicators.
The survey showed that some 87% of the respondents were satisfied with the broadband services they were using. It also showed that service reliability is the most significant factor that consumers take into account while making their purchasing decisions. This factor was followed by download speed, quality of customer service, price and customer service hotline, in descending order of importance.
Helping consumers to make informed choices with regard to broadband services, adequate and relevant service information must be made available to consumers in a meaningful manner.
While around 62% of the respondents considered that there was sufficient information available for them to make an informed choice with regard to a broadband service provider, others wanted unambiguous information on the price, transmission speed and quality of service of individual service providers.
Addressing the need for information among consumers, we have been working with the industry and the Consumer Council on how best to make necessary information available to consumers. OFTA will also develop a number of best practice indicators concerning advertising and the provision of pricing information to potential customers.
The survey results also showed that many problems encountered by residential broadband users were not connected to the service quality delivered by Internet service providers. Rather, many residential Internet users do not yet have an adequate grasp of the technical issues facing them in the home. To improve benefits to consumers using broadband services, we are seeking the cooperation of the industry, the Consumer Council and other relevant Government organisations, on the feasibility of launching an education programme to the broader Hong Kong community on how to become smart information technology users.
Investigating Misleading or Deceptive Conduct
Between 1 April 2006 and 31 March 2007, we looked into 47 complaints concerning alleged breaches under section 7M of the Telecommunications Ordinance, which prohibits misleading or deceptive conduct by telecommunications licensees. After investigation, two of these allegations were confirmed during the year as established breaches. The TA imposed financial penalties of $80,000 and $100,000 respectively on the two telecommunications operators found in breach of the Ordinance.
As a general observation, following the issuance of the TA's report on "Mis-selling of Fixed-line Telecommunications Services to Consumers in Hong Kong" on 29 March 2005 (the Mis-selling Report), complaints in relation to misleading or deceptive sales practices have dropped on a year-on-year basis. Nonetheless, OFTA has continued to monitor direct sales practices in the market and has, through regular contacts with operators, encouraged them to adopt the best practice indicators set out in the Mis-selling Report with a view to raising the standard of sales for the benefit of consumers, as well as minimising the risk of an offence under section 7M of the Telecommunications Ordinance.
New Reporting Mechanism for Internet Service Outage
In the light of the earthquakes which occurred in the Luzon Strait on 26 December 2006, there was an urgent need to review the outage reporting mechanisms for cable-based External Fixed Telecommunications Network Services (EFTNS) providers and Internet Service Providers (ISPs). OFTA worked closely with the industry and formulated new guidelines for reporting submarine cable system outages, external telecommunications service outages and Internet service outages, with a view to strengthening communication and coordination among concerned parties. The new guidelines came into effect on 28 February 2007. In general, in the event of a major submarine cable system outage or disruption in external telecommunications or Internet services, the operators concerned are required to make a report to OFTA within 2 hours of confirmation of the incident or within 4 hours after the incident occurs. We will then assess the significance of the impact of the reported incident on the territory and determine whether a public alert is warranted.
Improved Mobile Network Coverage in Country Parks
To improve the coverage of mobile networks in country parks and other remote areas, we coordinate the setting up of mobile base stations with mobile network operators in these areas. These stations are normally shared by participating mobile network operators, unless there are physical constraints.
To provide further incentives to operators to extend their service coverage into country parks, we decided in early 2006 to allow the use of Government hilltop sites for the setting up of new base stations at a nominal annual rental of HK$1 for each site. Use of the frequency spectrum for these purposes will also not incur any spectrum usage fees. These measures have proven to be effective as five new base stations were built in 2006. They were at Cloudy Hill in Tai Po, Shek Uk Shan in Sai Kung, Woodside near the Tai Tam Country Park, Tsuen Kam Au near Tai Mo Shan and Robin's Nest near Sha Tau Kok. With these new base stations, the total number of base stations covering country parks increased to 12. Several other new base stations are being planned and they will serve to improve mobile network coverage in southern Lantau, Tai Lam Chung and eastern Sai Kung.
During the year 2006/07, OFTA completed a comprehensive survey on the coverage of mobile phone networks along popular hiking trails, totaling over 600 km in length. Based on the survey's results, a total of 147 digital maps (as at the end of March 2007) covering the same number of popular hiking trails were produced and published on our web site for public information. Covering most of the popular hiking trails in Hong Kong, these digital maps provide useful information to hikers on whether emergency calls made with a mobile phone at a particular hiking trail may be connected to at least one of the local mobile networks.
Unimpeded Access to Fixed Network Services
To enable the public to have unimpeded access to fixed network services offered by local operators in an efficient and orderly manner, the TA has granted local fixed network service operators the legal right to access the "common parts" of private buildings to lay cables and install equipment, under section 14(1) of the Telecommunications Ordinance.
Since 2000, OFTA has been coordinating fixed network operators' access to buildings and liaising closely with property management offices, Incorporated Owners and property owners on matters related to operators' right of access. In 2006/07, we attended 70 liaison meetings with property owners and management companies and conducted seminars and workshops for interested parties on this subject. At the same time, our hotline 8102 4100 answers enquiries on network facilities inside buildings while providing advice and assistance to property owners and management companies.
We have issued a Code of Practice providing guidance on the installation and maintenance of in-building telecommunications systems and in-building access by telecommunications network operators. The Code also ensures that in-building telecommunications systems are installed properly and disturbance to residents kept to a minimum. In 2006/07, we conducted sample checks on 278 buildings to ensure that operators' installations comply with the Code.
Regulating Resale of Telecommunications Services
In view of the rapid development of the telecommunications market and the various thriving resale activities, we see the merit of bringing resellers of telecommunications services under regulation for better protection of consumer interests. After two rounds of public consultation conducted in 2004 and 2006, the TA decided to create a Class Licence for services falling within the scope of section 8(1)(aa) of the Telecommunications Ordinance in September 2006. Under the new regulation, resellers will automatically become class licensees without any requirements for individual licence applications or registrations.
The new Class Licence covers the resale of any public telecommunications service, including local and international voice services, fixed and mobile, as well as prepaid and post-paid services. The regulation is light-handed and class licensees are only subject to licence conditions which aim at consumer protection, such as the provision of basic information to customers, maintenance of billing or charging accuracy and obligations to not to engage in misleading or deceptive practices. The Class Licence commenced operation in February 2007.
Backup Power Supplies for Local Fixed-line Telephone Services
In April 2006, the TA revised the Code of Practice for the Provision of Backup Power Supplies for Local Fixed-line Telephone Services. According to the revised Code, all the network equipment of fixed network operators and service-based operators involved in the provision of basic telephone-line services must be supported by backup power supply systems. In particular, network equipment installed in customer buildings must be backed up by power systems with at least one hour's capacity, unless constraints in the physical environment render the provision hazardous or technically unfeasible. These backup systems allow emergency calls and other "lifeline" services to be maintained even when the public electricity supply is disrupted. Operators are obliged to inform their customers and to provide regular reports to the TA if backup power supplies are not available due to physical constraints or other reasons.
Universal Service Obligation under Review
PCCW-HKTC, the incumbent operator in the local fixed-line telephone service market, is obliged under its Fixed Carrier Licence to provide universal basic telephone services at a reasonable cost and on a non-discriminatory basis to everyone in Hong Kong. In turn, the company is entitled to receive a Universal Service Contribution (USC) to meet this obligation. Currently, USC is paid by External Telecommunications Service (ETS) providers (including service providers licensed under the FTNS/Fixed Carrier Licence and the Public Non-exclusive Telecommunications Service (PNETS) Licence) to cover PCCW-HKTC's costs in the provision of basic telephone services to uneconomical customers. The USC level is updated on an annual basis using the methodology developed in 1998 and 2000. The last update was conducted in November 2006.
In the light of developments in the telephony service market, such as the introduction of VoIP services, the wider availability of alternative fixed networks to the public and the declining profit margins of ETS, we conducted a consultation in December 2006 to solicit views from the public and the industry on a proposal to review the current universal service arrangement.
Meeting the Demand for New Numbers
While the demand for fixed telephone numbers remains steady, the demand for mobile telephone numbers is still high. In order to make available sufficient numbers to meet the need, a working group was established under the Telecommunications Numbering Advisory Committee (NAC) in late 2006. The working group consists of representatives of network operators and other industry members. It explored different options to expand the number supply for mobile services in the near term and for other services in the longer term. Recommendations made by the group will be presented to the NAC for further consideration and endorsement.
Monitoring Accounting Practices
Under section 7H of the Telecommunications Ordinance, a licensee shall adopt the accounting practices that the TA specifies.
Major FTNS and fixed carrier licensees, including PCCW-HKTC are directed by the TA to comply with the accounting practices and reporting requirements specified in the Accounting Manual for FTNS Licensees revised in January 2006. While other fixed carrier licensees are exempted from the full reporting requirements, the Authority reviews the situation regularly and may impose the full reporting requirements if the need arises.
3G mobile carrier licensees are directed by the TA to comply with the accounting practices and reporting requirements specified in the Accounting Manual for Third Generation Mobile Carrier Licensees and Other Reporting Parties issued in August 2005. OFTA has started reviewing 3G licensees' procedures manuals and regulatory reports to ensure proper accounting separation and reporting of network turnover for the purposes of, inter alia, the calculation of 3G spectrum utilisation fees.
Broader Measures to Deal with Unsolicited Electronic Messages
Unsolicited electronic messages are distributed through various electronic means to consumers. They include unsolicited messages sent by e-mail, fax, phone, Short Messaging Services (SMS) and Multi-media Messaging Services (MMS).
On 12 July 2006, the Government introduced the Unsolicited Electronic Messages (UEM) Bill to the Legislative Council with a view to containing the problems caused by unsolicited electronic messages. The Bill's proposed regulatory measures cover all electronic communications of a commercial nature but exclude person-to-person video or telephone calls with no pre-recorded elements. The UEM Bill was passed on 23 May 2007. OFTA acts as the enforcement agency for the majority of the provisions of the Unsolicited Electronic Messages Ordinance with provisions involving fraudulent acts being enforced by the Police.
In the meantime, non-statutory measures were strengthened to combat junk fax messages and promotional telephone calls generated by machines. With regard to junk fax, on 4 July 2005, we revised the voluntary Code of Practice "Procedures for Handling Complaints against Senders of Unsolicited Fax Advertisements" for fixed-line service providers. The revision has proven to be effective in combating junk fax. Under the revised procedure, the threshold to terminate service to a junk fax sender, by fixed-line service providers, has been lowered. As a result, the number of service termination cases by fixed-line service providers against junk fax senders recorded a significant increase, from 237 in 2005/06 to 318 in 2006/07. In the same year, the number of junk fax complaints received by fixed-line service providers also dropped from 41,966 in 2005/06 to 19,012.
Another Code of Practice, "Handling Complaints about Inter-operator Unsolicited Promotional Telephone Calls Generated by Machines", was issued on 5 June 2006 for voluntary compliance by fixed-line and mobile telephone service providers. According to the Code, service providers will take action to suspend or terminate the telephone services of a sender if two or more complaints, within five days, have been established against him/her for sending unsolicited promotional telephone calls generated by a machine (junk calls). All service providers offering telephone services to consumers have pledged to comply with the Code to handle customer complaints about junk calls. Since the launch of the Code, service providers have handled more than 380 valid complaints and terminated 49 phone numbers, as at the end of March 2007. The Code has proven to be an effective tool in tackling the problem of junk calls and helped to reduce the number of junk calls in the market by more than 80%, compared to before the implementation of the Code.
Handling Consumer Complaints
In 2006/07, we handled 203 consumer complaints against Hong Kong's telecommunications operators. Under our existing complaint handling procedures implemented in August 2006, complainants are required to lodge complaints in writing to help us accurately and efficiently assess whether the complaints involve possible breaches of the Telecommunications Ordinance or licence conditions. If a consumer complaint falls outside our remit, we refer it to the operator concerned for review and ask the operator to reply to the complainant directly. Where complaints warrant our investigations, we pledge to issue interim replies to complainants within three working days, and to provide full replies or advise on progress within 27 working days.
The decrease in the number of complaints over the year, as compared to the 282 complaints handled in 2005/06, is possibly due to enhanced public awareness of OFTA's role and powers in resolving disputes between operators and customers as well as operators' improved customer services. Of the 203 consumer complaints handled in 2006/07, only one case was found to be in breach of the Telecommunications Ordinance. A financial penalty was imposed and a report was published on our web site.
Consumer Education
A publicity campaign was launched in October 2006 advising the public to "Be Prepared for Your Outing; Know more about Communications in Country Areas". Through announcements on TV and the radio, members of the public were encouraged to obtain information about mobile network coverage along individual hiking trails from the digital maps at OFTA's web site before going hiking. Other tips for communications in country areas included "dialling 112 with a mobile phone in an emergency". Apart from TV and radio announcements, posters, note cards and bookmarks carrying these messages were distributed to country parks, schools, universities and community centres to reach hiking groups and potential country park visitors.
A series of 11 print advertisements offering "Smart Tips for Consumers by Red Tone and Blue Tone" was kicked off in February 2007. The print advertisements were published in two local newspapers and on our web site. The advertisements provided useful advice to consumers on a weekly basis, covering various topics such as the proper use of communication equipment, tips for buying calling cards, points to note before switching telecom operators, etc. Concluding the programme, an on-line quiz, tying in with the advertisements, was launched on our web site.
A number of publicity materials, including leaflets and posters, covering the following themes were produced in the past year, keeping the public updated on the latest telecommunications information in a timely manner: