Speeches and Presentations

LCQ22: Termination of telecommunications service contracts

Following is a question by the Hon Chan Hak-kan and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Legislative Council meeting today (December 4):


Since July 2011, major fixed and mobile telecommunications service providers (providers) have implemented the Industry Code of Practice for Telecommunications Service Contracts (Code of Practice). The Code of Practice aims at providing guidelines on the drawing up of fair, balanced and reasonable service contracts between the telecommunications industry and consumers. However, the Consumer Council (CC) pointed out in December 2012 that upon termination of telecommunications service contracts by clients, some providers did not charge service fees for the month concerned on a pro rata basis according to the number of days between the contract end date and the last cut-off date for payment; instead, they charged service fees for the entire month. CC considered this mode of charging unfair to consumers. In addition, some members of the public have relayed to me from time to time that they had had disputes with providers over termination of telecommunications service contracts, and they had sought help from organisations such as CC and the Communications Authority (CA), etc., but the disputes remained unresolved in the end. In this connection, will the Government inform this Council:

(a) whether CA has any plan to discuss with the telecommunications industry to incorporate guidelines into the Code of Practice to stipulate how service fees for the period concerned upon termination of service contracts are to be calculated, so as to reduce disputes between providers and consumers;

(b) whether the authorities concerned have reviewed, in collaboration with the telecommunications industry, the situation of "being easy to enter into contracts, but difficult to terminate them" since the implementation of the Code of Practice; if they have, of the details; if not, the reasons for that; and

(c) given that quite a number of clients using telecommunications service have indicated to me that as ordinary people have difficulties in understanding the contents of telecommunications service bills, they can hardly confront providers with the aid of such bills in the event of disputes over termination of service contracts, whether the authorities will incorporate guidelines into the Code of Practice to stipulate that providers must present the contents of such bills in simple and comprehensible ways?



The telecommunications industry has implemented since July 2011 the Industry Code of Practice for Telecommunications Service Contracts (Industry Code) formulated by the Communications Association of Hong Kong (CAHK), an industry organisation, in collaboration with the major telecommunications service operators (operators) after active discussions between the Office of the Communications Authority (OFCA) and the industry. The Industry Code provides guidelines for the industry and consumers on drawing up fair, balanced and reasonable telecommunications service contracts in order to bring about improvements in aspects such as contract contents and arrangements for contract termination and renewal. The Industry Code has been implemented for more than two years, during which OFCA has been monitoring closely its implementation and effectiveness. So far, no breach of the Industry Code is found.

The Administration's reply to the Member's question is as follows:

(a) and (b) In formulating the Industry Code, OFCA and CAHK have made reference to the crux of the complaints on telecommunications service contracts lodged by consumers as well as the main causes for such disputes at that time. The disputes between telecommunications users and operators in respect of renewal and termination of service contracts are sometimes due to the cumbersome procedures which cause inconvenience to users.

In view of the above, regarding the arrangement of service provision and charges upon expiry of a term telecommunications service contract, the Industry Code requires that the contract must specify whether service will continue to be provided to the customer by the operator after the contract expires. If the operator will continue to provide service after expiry of the contract term, the charges which will be payable by the customer must be specified on the contract or the customer must be notified of the relevant charges not less than 30 days prior to the contract renewal date.

In addition, the Industry Code also provides specific protection to the consumers in the following aspects to ensure the simpler and more transparent procedures for contract renewal and termination:

* the contract must specify that the operator will notify customers of the impending expiry of the contract term, no more than 60 days and no less than 30 days before the contract expires;

* customers must not be obliged to give the operator more than one month of prior notice for contract termination;

* the arrangements for contract termination must not put customers to unreasonable inconvenience; and

* the operator shall make available reasonable means for customers to obtain (on any day) information in relation to, and to exercise the right of, termination.

To further enhance the protection of consumer interests, OFCA has conducted a comprehensive analysis of the complaints received in the first 18 months of implementation of the Industry Code and reviewed the existing provisions of the Industry Code with the advice of the Consumer Council. In this connection, OFCA has put forward to the CAHK in May this year some suggestions for improving the Industry Code. Regarding the "arrangements for contract termination", OFCA suggests that operators should allow customers to download service termination forms from their websites. As to the "method to calculate the charge of the last bill", OFCA's suggestions include requesting the operators to synchronise the payment cut-off date for the last bill with the contract termination date, to collect the payment for the last bill on a pro rata basis, and to explain to the customers or list on the contracts the method to calculate the charge for the month in which the service is terminated, etc. As we understand, the suggestions are being discussed by CAHK and the operators.

(c) Pursuant to the Telecommunications Ordinance and the licence conditions, operators must ensure the fees charged on customers are accurate and have the responsibility to inform customers of the details of service charges. To help reduce billing disputes of telecommunications services as well as to improve the transparency of the chargeable items in the bills, the Communications Authority (CA) issued in October 2011 the Code of Practice in Relation to Billing Information and Payment Collection for Telecommunications Services which provides guidelines on the information to be included in bills and on the arrangements for payment collection, for compliance by operators on a voluntary basis. Seven local fixed network operators and five mobile network operators have pledged compliance with the Code of Practice, effective from July 1, 2012. The code of practice sets out the types of billing information which should be provided in the bills issued by operators to their customers, including billing account number, address, phone number(s) (if applicable), billing period, payment due date and method, charges for each type of service, etc., so that customers can understand clearly about the correct charges incurred by using telecommunications services. Under the code of practice, customers may also request itemised billing information from the operators for verification of charges, while the operators may charge the customers reasonable administrative fees for the requested information.

Wednesday, December 4, 2013