Speeches and Presentations



LCQ10: Protection of consumer rights in telecommunications service

Following is a question by the Dr Hon Samson Tam and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (July 13):

Question:

I have recently received complaints from quite a number of members of the public that when they requested to terminate the contracts for residential broadband network services after moving house as they could not continue to use the services due to a lack of network coverage or insufficient cable capacity in their new residence, they were levied a service charge or fine by the Internet service providers. The Office of the Telecommunications Authority (OFTA) introduced the new Code of Practice (CoP) in February 2010, requiring telecommunications service operators (operators) to waive any fee for the aforesaid circumstances, but the CoP is implemented on a voluntary basis only. In this connection, will the Government inform this Council:

(a) of the number of complaint cases received by the authorities from members of the public in the past two years in relation to the levy of service charge or fine on them upon termination of network service contracts because there was no broadband network coverage in their new residence, as well as the follow-up actions;

(b) whether it knows the number of operators which have indicated their willingness to comply with the CoP since its issuance by OFTA; whether it has assessed if the voluntary CoP can effectively regulate the operators; if the result of the assessment is in the negative, when it will introduce more stringent measures to safeguard consumers' rights, and of the details of such measures; whether it will consider incorporating into the licences upon renewal mandatory provisions to require full compliance by the operators; and

(c) given that the authorities issued the consultation paper on the Customer Complaint Settlement Scheme in June 2010, of the progress of the consultation at present and when they will make public the latest consultation outcome?

Reply:

President,

The telecommunications market in Hong Kong is developing rapidly with a variety of fixed, mobile and broadband services widely available to consumers in a highly competitive environment. While maintaining a fully liberalised market and a level playing field for the telecommunications industry, the Administration attaches great importance as well to safeguarding the interests of consumers as they use telecommunications services. The Office of the Telecommunications Authority (OFTA) regulates the telecommunications sector under the powers conferred by the Telecommunications Ordinance, and has all along strived to strengthen consumer protection in this regard.

With regard to safeguarding consumer interests, pursuant to the market-led approach and our policy to ensure fair competition, OFTA would encourage the telecommunications industry to adopt self-regulatory measures through the promulgation of industry standards. Nevertheless, OFTA will consider adopting mandatory regulatory measures that are more stringent if the problems persist.

In respect of telecommunications service contracts, OFTA issued in February last year the Code of Practice for Communications Service Contracts. It sets out the best practices on drawing up service contracts for the reference and voluntary adoption by the industry. Since then, OFTA had been in active discussion with the telecommunications industry on how the relevant measures could be implemented to enhance consumer protection. In December last year, the Communications Association of Hong Kong (CAHK), an industry organisation, issued in collaboration with all the major telecommunications service operators the Industry Code of Practice for Telecommunications Service Contracts (Industry Code), after taking into account the key measures recommended in OFTA's code of practice and the operating environment specific to the telecommunications industry. The Industry Code provides guidelines on drawing up telecommunications service contracts for personal or residential users and includes measures to improve the existing contract forms, sales practices and arrangements ranging from renewals to terminations. The Industry Code is being implemented on a self-regulatory basis by the operators.

My reply to the question raised by Dr Hon Tam is as follows:

(a) From 2009 to May this year, the number of complaints received by OFTA in respect of persistent service charges in the case of service being unable to cover the relocated address, with a breakdown of fixed telephone and broadband Internet access services, is set out below:

Year
----
No. of complaints on
fixed telephone services
-------------------------------
No. of complaints on broadband
Internet access services
----------------------------------------
2009 2 9
2010 30 153
2011
(January to May)
7 80

The number of complaints rose significantly in 2010 as compared to that in 2009 since a number of fixed network operators altered their service relocation arrangements in 2010 and required their customers to pay the service charges for the remaining contract period even if the service failed to cover the relocated address. Upon receipt of relevant complaints from consumers, OFTA had all the way worked to mediate disputes between the consumers and operators. Such efforts include referring the complaint cases to the operators and requesting them to handle the cases properly. All the aforesaid complaint cases had been referred to the concerned operators for follow-up. To our understanding, the complainants of all these cases have accepted the solutions offered by the operators. Moreover, in accordance with the Industry Code, participating operators have agreed to include terms in newly signed contracts which would ensure that customers would not need to pay the service charges for the remaining contract period should they terminate the service due to unsuccessful relocation.

(b) At present, a total of 11 telecommunications service operators (including all the major fixed and mobile network operators and one major external telecommunications services operator) have agreed to adopt the Industry Code (See Note). These operators together have a market share of over 98% each for the fixed telephone services, broadband Internet access services and mobile communications services. Since the issue of the Industry Code in December last year, all of the participating operators have one after another completed the preparatory work in line with the requirements in the Industry Code, including the revision of their contract forms, service platforms as well as sales and internal supporting procedures. Starting July this year, the participating operators would have implemented the necessary measures to ensure that all new contracts signed with their personal or residential customers comply with the provisions of the Industry Code. As mentioned above, one of the provisions in the Industry Code seeks to ensure fairer arrangements for service relocation requests made by customers.

The implementation of the Industry Code represents the proactive efforts of the telecommunications industry in meeting the expectations of the public to enhance consumer protection. We are confident that the Industry Code will promote good sales practices and customer services to better safeguard the interests of consumers. It will also address contractual-related complaints and disputes more effectively.

OFTA will monitor closely the progress and effectiveness of the Industry Code. It will continue to work closely with the industry and evaluate the need for further enhancing the Industry Code in future, taking into account the experience of operators in implementing the Industry Code and the feedback from consumers. In addition, OFTA will consider as appropriate other measures for resolving consumer complaints on telecommunications services. It will not rule out the possibility of adopting more stringent regulatory measures, including the imposition of additional licence obligations on consumer protection for the mandatory compliance by operators.

(c) In June 2009, we briefed the Legislative Council Panel on Information Technology and Broadcasting (the Panel) on the progress of a pilot programme for the Customer Complaint Settlement Scheme (CCSS) administered by OFTA. The pilot programme ended in February last year.

In June last year we submitted another discussion paper to the Panel on the proposed way forward for the CCSS. OFTA also conducted a consultation exercise in the same month to seek the views of the public and the industry on issues relating to the implementation of the CCSS on a long-term basis. The consultation period ended in December last year with 13 submissions received from the industry (including 10 telecommunications operators and an industry association) and other parties (including the Consumer Council and a solicitor firm).

Having regard to the outcome of the consultation, OFTA is evaluating different options including exploring actively with the industry on the feasibility of setting up a voluntary industry scheme. Once the way forward is firmed up, we will report the details to the Panel.

Note:
The following telecommunications service operators (including fixed, mobile and external telecommunications operators) have agreed to adopt the Industry Code (in alphabetical order):

* China Mobile (Hong Kong) Co. Ltd
* City Telecom (Hong Kong) Limited
* CSL Limited
* Hong Kong Broadband Network Limited
* Hutchison Telecommunications Hong Kong Holdings Limited
* i-CABLE
* New World Mobility Limited
* New World Telecommunications Limited
* PCCW
* SmarTone-Vodafone
* Wharf T&T

Wednesday, July 13, 2011