LCQ3: Termination of telecommunications service contracts
Following is a question by the Hon Paul Tse and a reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (October 15):
It has been reported that earlier on, a 19-year-old teenager, suspected to be aggrieved by the continued demand for fee payment by the i-Cable Communications Limited (i-Cable) even after his family member had terminated the telecommunications service contract (the contract) with the company, stormed into the Cable TV Tower with knives and demanded to meet the company's management. A security guard and two staff members of i-Cable were injured in the incident. Subsequent to that, there have been a spate of media reports about disputes over termination of service contracts with the company. Some editorials even criticised the company and other telecommunications service operators (TSOs) for "abusing their power to bully customers" and "behaving like street bullies", and the Office of the Communications Authority (OFCA) for "harbouring network operators and thus being the biggest accomplice". I have also repeatedly received from members of the public complaints and requests for assistance in relation to termination of contracts with i-Cable. In this connection, will the Government inform this Council:
(a) whether it has studied the reasons why many members of the public have complained about and the media have one after another criticised the arrangements for contract termination by TSOs; if it has, of the study outcome and the improvement measures; if not, the reasons for that;
(b) whether it knows if OFCA has reviewed whether the existing policy and the Industry Code of Practice for Telecommunications Service Contracts can effectively prevent TSOs from deliberately adopting complicated and time-consuming procedures to make it difficult for customers to terminate their contracts, thereby forcibly seizing their market shares; if it has reviewed, of the details and the improvement measures; if not, the reasons for that; and
(c) as TSOs which have strong financial backing can engage legal professionals to prepare telecommunications service contracts which are favourable to them and, owing to the costly litigation fees, members of the public often can only give up settling their disputes with TSOs over contract termination through legal means, what measures the authorities have in place to safeguard the legitimate rights and interests of members of the public, especially those who are not eligible for legal assistance?
The Communications Authority (CA) is an independent statutory body, established on April 1, 2012 under the Communications Authority Ordinance (Cap. 616) as the unified regulator of the telecommunications and broadcasting sectors in Hong Kong in accordance with, inter alia, the Telecommunications Ordinance (Cap. 106) (TO) and Broadcasting Ordinance (Cap. 562) (BO) respectively.
My response to the three questions raised by Hon Paul Tse is as follows:
(a) CA or the Office of the Communications Authority (OFCA) is not conferred with any statutory power under the existing TO to intervene or investigate contractual disputes over telecommunications services between telecommunications service providers (operators) and their customers. Nonetheless, OFCA has been closely monitoring the operation of the telecommunications market and, with respect to the complaints lodged by consumers against telecommunications service contracts, carrying out consumer education programmes and encouraging the telecommunications industry to implement self-regulatory measures. Since July 2013, CA has been empowered by the amended Trade Descriptions Ordinance (Cap. 362) (TDO) to regulate unfair trade practices in providing services by licensees under TO or BO.
As regards self-regulatory measures, after active discussions between OFCA and the industry organisation, the Communications Association of Hong Kong (CAHK), CAHK drew up the Industry Code of Practice for Telecommunications Service Contracts (Industry Code) in December 2010. The Industry Code provides improvement measures addressing major concerns of the complaints lodged by consumers in relation to telecommunications service contracts, including that contracts must prescribe the rights of customers to terminate contracts, and that the arrangements for contract termination must not cause inconvenience to customers.
Since July 2011, all major fixed and mobile network operators and one major external operator have implemented the Industry Code.
The Industry Code has been implemented for more than three years. The numbers of complaints received by OFCA involving telecommunications service contractual disputes have declined continuously, from 1 277 in 2011 to 1 116 in 2012 and 894 in 2013, representing a decrease of 13 per cent and 20 per cent respectively from the previous years. The monthly average number of complaints received in 2014 so far also decreased by 26 per cent as compared to that in 2013. In the past three years, OFCA has not identified any case of contravention of the Industry Code by any operator. These figures, to some extent, reflect that the existing self-regulatory measures are effective in reducing contractual disputes between consumers and operators.
As regards TDO, section 13F prohibits traders from engaging in aggressive commercial practices. If a customer intends to terminate a telecommunications service contract or exercise his rights under the contract, and the operator imposes non-contractual barriers that are onerous or disproportionate, such behaviour may constitute aggressive commercial practices. OFCA so far has not received any case involving suspected contravention of TDO by operators arising from the arrangements for contract termination. If such complaints are received, OFCA will take enforcement action subject to the facts and evidence of individual cases. The maximum penalty is a fine of $500,000 and imprisonment for five years.
(b) OFCA has from time to time reviewed the existing regulatory measures, and has maintained close collaborations with CAHK. With a view to further improving the Industry Code, OFCA conducted a comprehensive review with respect to the complaints received since the implementation of the Industry Code, and has, by making reference to operators' experience in implementing the Industry Code and the opinions of consumers and other stakeholders, proposed to CAHK last year some improvements to the Industry Code.
In respect of improving the arrangements for contract termination, the proposed new provisions will encourage operators to make available service termination forms on website, accept any written requests for service termination; issue acknowledgement of receipt of and handle any verbal, written, or in person requests for service termination promptly without unreasonable delay.
The revised Industry Code will be implemented by operators in the first half of 2015 to further protect the rights and interests of consumers. OFCA will continue to monitor the implementation of the Industry Code.
(c) In general, service contracts entered into between consumers and service providers come under the regulation of the Control of Exemption Clauses Ordinance (Cap. 71), Supply of Services (Implied Terms) Ordinance (Cap. 457), Unconscionable Contracts Ordinance (Cap. 458), etc. Amongst these ordinances, according to the Unconscionable Contracts Ordinance, if a consumer thinks that there are unreasonable terms in a contract, he can seek a Court ruling to declare the relevant contract terms null and void.
A consumer who encounters contractual disputes may, if justified, bring civil claims against the relevant service provider through the Court or the Small Claims Tribunal. Apart from pursuing legal actions, he may seek assistance from the Consumer Council for conciliation. The Consumer Legal Action Fund may also assist consumers to pursue joint civil claims out of the same or same series of transaction with a common question of law or fact.
As regards telecommunications services, while CA does not have the statutory power to handle contractual disputes, consumers who encounter telecommunications service contractual disputes may lodge complaints to OFCA. Depending on the content of the complaints, OFCA may refer them to CAHK for follow-up. Consumers may also report to OFCA any case of suspected contravention of TDO, and OFCA will conduct investigation based on the facts of the cases.
Wednesday, October 15, 2014