Speeches and Presentations



LCQ17: Billing disputes in relation to telecommunications services

Following is a question by the Hon Albert Chan and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Legislative Council meeting today (November 27):

Question:

In reply to my question on November 28, 2012 on the issue of telecommunications service operators (TSOs) overcharging service fees, the Government said that where there was evidence indicating that a TSO might have breached the Telecommunications Ordinance (Cap. 106) or the licensing conditions, the Office of the Communications Authority (OFCA) would conduct an investigation and penalise the TSO if the case was substantiated. Yet, I have still received complaints recently from a number of members of the public that TSOs had charged them for services that they had not applied for, or overcharged telecommunications service fees, thus causing them to suffer huge losses. In this connection, will the Government inform this Council:

(a) whether it knows the numbers of complaints, received in the past 12 months by OFCA and the Consumer Council respectively, which involved overcharging by TSOs and the names of TSOs in substantiated cases, broken down by type of telecommunications services (e.g. fixed-line phones, mobile phones, external telecommunications and broadband Internet access, etc.) and content of the complaints;

(b) whether it knows, among the cases in (a), the number of those in which the complainants succeeded in getting compensation, as well as the names of TSOs which were prosecuted and the number of times they had been prosecuted; and

(c) apart from continuing to implement the existing measures to regulate TSOs, whether the authorities will adopt new regulatory measures to better protect consumers' rights and interests; if they will, of the details; if not, the reasons for that?

Reply:

President,

The telecommunications market in Hong Kong has been developing rapidly and is highly competitive. The Office of the Communications Authority (OFCA) and the Consumer Council (CC) receive complaints from consumers in respect of the billing of telecommunications services from time to time and have always endeavoured to help resolve such disputes between consumers and operators. Normally, such complaints will, with the consent of the complainants, be referred to the service operators concerned direct for follow-up. The Communications Authority (CA) is empowered under the Telecommunications Ordinance (TO) (Cap. 106) to regulate the telecommunications sector. Where there is evidence indicating that an operator may have breached the TO or the licence conditions, the CA will conduct an investigation and penalise the operator if there is sufficient evidence to substantiate the case. In addition, the amended Trade Descriptions Ordinance (Cap. 362) (TDO) has come into effect on July 19, 2013. Traders are prohibited from deploying the unfair trade practices prescribed under the Ordinance against consumers. The Customs and Excise Department (C&ED) is the principal agency responsible for enforcing the TDO. Concurrent jurisdiction is conferred on the CA to enforce the provisions of the TDO in relation to the commercial practices of licensees under the TO and the Broadcasting Ordinance (Cap. 562) that are directly connected with the provision of a telecommunications or broadcasting service under the relevant Ordinances.

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

(a) The number of complaints on billing disputes (Note) in relation to telecommunications services received by the OFCA from November 2012 to October 2013, broken down by the type of services, is set out below:

November 2012 to
October 2013
Fixed services98
Mobile services761
Internet access services100
Others (e.g. external communications services)     20
-----
Total979

The number of complaints on billing disputes (Note) in relation to telecommunications services received by the CC over the same period, broken down by the type of services, is set out below:

November 2012 to
October 2013
Fixed services330
Mobile telephone services1 170
Mobile data services650
Internet access services855
Others (e.g. external communications services)     553
-----
Total3 558

The above figures include complaints cases that are ultimately unsubstantiated or categorised as enquiries. Moreover, the numbers of complaints against individual operators may be affected by the size of their customer bases. Therefore, in line with the established practice of handling consumer complaints, the OFCA and the CC will not disclose the names of individual operators involved in the complaints.

(b) Among the complaint cases set out in part (a) from November 2012 to October 2013, the OFCA referred to the operators and mediated in 818 cases with the consent of the complainants, and 513 (63%) of these cases have been settled. The CC referred to the operators and mediated in 3 416 cases with the consent of the complainants, and 2 420 (71%) of them have been settled. The OFCA and the CC have also requested the operators to handle the remaining cases properly.

Over the past year, the CA has issued advice to the concerned operator in respect of two billing error incidents. Given that the problem is not serious and the concerned operators have taken immediate action to rectify the errors, the CA decided to remind the concerned operators, by way of advice, to comply strictly with the licence conditions and requirements under the Code of Practice in Relation to Billing Information and Payment Collection for Telecommunications Services. The CA has also requested the operators to take appropriate remedial measures to prevent similar incidents from happening again.

(c) The Administration attaches great importance to enhancing consumer protection. The amended TDO has come into effect on July 19, 2013, with its scope expanded to cover services. It prohibits the traders from deploying the following unfair trade practices against consumers, including false trade descriptions of services, misleading omissions, aggressive commercial practices, bait advertising, bait-and-switch and wrongly accepting payment. Any person convicted of committing an offence against the unfair trade practices specified above is liable to a maximum fine of $500,000 and imprisonment for 5 years. The amended TDO also introduces a compliance-based mechanism under which civil enforcement options can be drawn on to deal with infringements. The Enforcement Agencies may, with the consent of the Secretary of Justice, seek an undertaking from a trader suspected of deploying an unfair trade practice to stop and not to repeat that practice instead of lodging criminal prosecutions and, where necessary, seek an injunction from the court for the purpose. The CA will, as it has been the case all along, closely monitor the developments in the telecommunications market, investigate cases involving any unfair trade practices, and where circumstances warrant, exercise the powers conferred on the CA under the TDO. Since the unfair trade practices specified under the Ordinance are criminal offences, of which the penalties include fines and imprisonment, this has a significant deterrent effect on all telecommunications service licensees.

Moreover, licences issued by the CA to the telecommunications service operators also include provisions for protecting consumers. For instance, the licensee is required to ensure the accuracy and reliability of its metering equipment and billing system related to service usage.

Besides, with a view to enhancing the transparency of pricing in respect of chargeable items in the provision of telecommunications services, the 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.

For the period of the past 12 months ending October this year, the number of complaints on billing disputes received by the OFCA has dropped by nearly 10% as compared to the corresponding period of last year while the number of such complaints received by the CC has increased by about 11% as compared to the same period of last year. Despite the respective changes in the two sets of complaint figures, the overall situation has improved significantly since the implementation of the Code of Practice. The OFCA will continue to maintain close communication with the operators and urge them to observe closely the requirement of the Code of Practice in order to enhance the transparency of pricing of chargeable items in telecommunications services, as well as to take reasonable steps to ensure accuracy of billing and collection of payment.

On the other hand, the CA, through its close collaboration with the telecommunications industry, has also introduced a variety of schemes for the voluntary participation of the industry to strengthen the protection of consumer interests. The Industry Code of Practice for Telecommunications Service Contracts (Industry Code) is formulated to improve the transparency of the process of drawing up contracts. The Industry Code was issued by the Communications Association of Hong Kong (CAHK), an industry organisation, in collaboration with the major telecommunications service operators after active discussions between the OFCA and the industry. It has been implemented since July 2011. The Industry Code provides guidelines on drawing up fair and reasonable telecommunications service contracts in order to modify the content of the contract and improve the arrangements for contract termination and renewal. During the two years since the implementation of the Industry Code, the OFCA has always been closely monitoring its implementation and effectiveness. So far, no breach of the Industry Code is found.

We believe that the Industry Code can effectively improve the transparency of the process of drawing up contracts and increase customer satisfaction, as well as reducing the number of contractual disputes. To further protect consumer interests, the OFCA has put forward some suggestions to the CAHK in May this year for improving the Industry Code. The CAHK is now working with the operators to discuss the proposal.

Moreover, the OFCA supports the two-year pilot run of the Customer Complaint Settlement Scheme (CCSS) launched by the telecommunications industry in November 2012 to resolve billing disputes in deadlock between the telecommunications service providers and their customers through mediation. During the pilot run, the OFCA sponsors the operation of the CCSS by contributing the necessary funding, it also plays an active role in monitoring the governance and effectiveness of the scheme, as well as providing other administrative support.

The OFCA will continue to closely monitor the implementation and effectiveness of the above measures, and consider enhancing existing measures or introducing new measures to protect the right and interest of consumers, in the light of operators' experience and consumers' views.

Note: While some complaints on billing disputes involve overcharging, some may involve other billing disputes such as consumers not being clear about the details of their tariff plans. As such, the figures in part (a) are not limited to complaints about overcharging. Neither the OFCA nor the CC further categorises complaints on billing disputes received.

Wednesday, November 27, 2013