Speeches and Presentations



LCQ18: Industry Code of Practice for Telecommunications Service Contracts

Following is a question by Hon Christopher Chung and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Legislative Council meeting today (February 20):

Question:

Since July 2011, all major fixed and mobile network operators and one major external telecommunications service operator in Hong Kong have adopted the Industry Code of Practice for Telecommunications Service Contracts (the Code). The Code aims to protect the consumer rights of personal or residential users who enter into or renew telecommunications service contracts. However, there are comments that disputes and complaints relating to telecommunications service contracts are still not uncommon. In this connection, will the Government inform this Council:

(a) of the number of complaints received by the authorities concerned from members of the public relating to telecommunications service contracts in each of the past five years, and the top five types of telecommunications services with the highest numbers of complaints received as well as the number of complaints for each of the services;

(b) of the procedures of the authorities concerned for handling complaints relating to telecommunications service contracts; whether the telecommunications service operators who have been found after investigation to be in breach of the Code will be punished; if so, of the punishment imposed on them since the implementation of the Code;

(c) whether the authorities have assessed the effectiveness of the Code; if they have, of the details; if not, the reasons for that; whether they will conduct a comprehensive review of the Code, including extending the coverage of the cooling-off period (no less than seven days) provision required to be specified in unsolicited contracts, so as to further protect consumers of their rights; if they will, of the details; if not, the reasons for that; and

(d) as there are comments that, at present, the procedures drawn up by telecommunications service operators for entering into service contracts are very simple and convenient (e.g. the procedures can be completed by telephone), but the procedures for termination of contracts are very cumbersome (e.g. termination of contracts must be in writing), whether the authorities will consider formulating policies concerning such situation of "being easy to enter into contracts, but difficult to terminate them", so as to protect consumers of their rights; if they will, of the details; if not, the reasons for that?

Reply:

President,

The telecommunications market in Hong Kong has been developing rapidly, with a variety of fixed, mobile and broadband services widely available in a highly competitive market. In the environment of a fully liberalised market with fair competition, the Office of the Communications Authority (OFCA) has been closely monitoring the market operation, formulating timely measures for protecting consumer rights, and regulating telecommunications service providers under the powers conferred by the Telecommunications Ordinance (TO) (Cap. 106).

In recent years, OFCA and the industry have collaboratively implemented a series of measures for the protection of consumer rights. As regards the telecommunications service contracts of the consumers, as a result of the active discussion between OFCA and the telecommunications industry, the industry has formally 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. Guidelines on drawing up telecommunications service contracts that are fair, balanced and reasonable for the industry and consumers are provided in the Industry Code so as to bring about improvements in such aspects as contract contents and arrangements for contract termination or renewal.

The Government's reply to the member's question is as follows:

(a) OFCA started to develop detailed categorisation of complaints in relation to disputes on telecommunications service contracts in 2009. Therefore, detailed categorised information of such complaints in or before 2008 is not available.

The respective numbers of complaints on telecommunications service contracts received by OFCA from 2009 to 2012, broken down by the types of disputes, are set out in Annex.

(b) OFCA receives complaints in respect of telecommunications service contracts from consumers from time to time. Normally, such complaints will be directly referred to the service operators concerned for follow-up. The Communications Authority (CA) regulates the telecommunications sector in accordance with the powers conferred under the TO. Since the Industry Code is a voluntary scheme of the industry, the CA will not impose punishment on operators in breach of the Industry Code. However, when there is evidence indicating that an operator may have breached the TO or the licence conditions, the CA will conduct an investigation. A sanction or a fine will be imposed on the operator if there is sufficient evidence to substantiate the case. Under section 36C of the TO, in any case where a licensee fails to comply with any licence conditions or any provisions of the TO, the CA may impose a financial penalty not exceeding $200,000 on the first contravention, while the amount of financial penalty imposed for the second and subsequent occasions can be up to $500,000 and $1,000,000 respectively.

(c) Starting from July 2011, all major fixed and mobile network operators and one major external telecommunications service operator in Hong Kong have implemented the Industry Code. As indicated by the figures in part (a) of the reply, the number of complaints in relation to disputes on telecommunications service contracts has significantly reduced after the implementation of the Industry Code. Regarding the number of such complaints received by OFCA in 2012 and 2011, there was a decrease of nearly 13% as compared with the previous year. Hence, we consider that the Industry Code has effectively improved the transparency in the contracting process and customer satisfaction, as well as reduced the number of disputes on contracts.

The Industry Code has been implemented for more than 18 months. OFCA has been monitoring its implementation and effectiveness throughout the course and considers it opportune to conduct a comprehensive review on the effectiveness and the scope of the Industry Code now. In this connection, OFCA has made the review proposal to CAHK in January this year. OFCA is currently conducting a comprehensive analysis of the complaints received so as to study whether there is a need to make appropriate modifications to the Industry Code.

(d) Concerning the "arrangements for contract termination", provisions have been made in the Industry Code to safeguard consumers interest in relation to contract termination, providing specific protection in the following aspects:

* the contract must oblige the service provider to notify the customer of the impending expiry of the term of the contract, no more than 60 days and no less than 30 days before the date the contract expires;

* the customer must not be obliged to give the service provider more than one month's prior notice of termination;

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

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

As mentioned in part (c) of the reply, OFCA is currently conducting a comprehensive analysis of the complaints received in the past 18 months to review the existing provisions of the Industry Code, including the provisions concerning the "arrangements for contract termination".

Wednesday, February 20, 2013

Annex PDF