Promoting the Development of Mobile Data Services to Meet Consumer Demand

Consultation on Re-assignment of the 3G Spectrum

There are currently over 11 million 3G/4G mobile data service customers. Despite the launch of 4G services by all mobile network operators in August 2012, the 3G spectrum retains its importance as the backbone in supporting the provision of mobile data services. The 2 x 60 MHz 3G spectrum in the 1.9 to 2.2 GHz band was assigned through auction to four mobile network operators, each with 2 x 15 MHz, in October 2001. The assignment was for a tenure of 15 years which will expire on 21 October 2016.

According to the Radio Spectrum Policy Framework promulgated by the Government in April 2007, there is no legitimate expectation on the part of the operators that any right of renewal or right of first refusal of any licence or frequency assignment will be offered upon its expiry. Furthermore, according to the statement issued by the then TA in January 2008, insofar as it is practicable under the circumstances, a notice period of not less than three years would be given for variation or withdrawal of spectrum assignment to carrier licences, that is, in this case by October 2013 at the latest.

In order to solicit views from the industry and other interested parties on the arrangements for the frequency spectrum in the 1.9 to 2.2 GHz band upon the expiry of the existing frequency assignments for 3G mobile services and related issues, two rounds of public consultation were conducted. In the first consultation paper issued in March 2012, three options for spectrum re-assignment were proposed. Having taken into account the views and comments collected from that consultation, a hybrid option, which includes the offer of right of first refusal for two-thirds of the 3G spectrum to the incumbent 3G operators and re-auctioning of the remaining one-third of the 3G spectrum, was put forward for further consultation in the second consultation paper issued in December 2012. In deciding on the way forward, the CA aims to achieve multiple spectrum management objectives, including ensuring service continuity of existing customers, enhancing the efficiency of spectrum utilisation, encouraging investment and the introduction of innovative services, and ultimately stimulating further competition in the mobile market to the benefit of consumers.

The views and comments received in response to the second consultation paper will be carefully considered. Insofar as it is practicable, the decision on the re-assignment arrangements will be announced by October 2013, thereby giving three years' advance notice to the incumbent 3G operators on any possible variation to their frequency assignments.

2.5/2.6 GHz Band Spectrum Auction for the Development of 4G Service

In March 2013, OFCA auctioned off 50 MHz of radio spectrum in the 2.5/2.6 GHz band⁵. Four existing mobile network operators successfully bid for the radio spectrum for a total SUF of HK$1.54 billion. The assignment of the 50 MHz of radio spectrum will enable the successful bidders to deploy state-of-the-art mobile broadband technologies and provide the necessary network capacities to further develop 4G services in Hong Kong. The assignment is for a validity period of 15 years, to expire in May 2028.

Strengthening Consumer Protection in the Use of Telecommunications Services

Ongoing Implementation of "Mobile Bill Shock" Preventive Measures

With the increasing popularity of smart phones and advanced mobile devices in recent years, the demand for mobile data services has increased considerably. At the same time, the number of consumer complaints relating to mobile broadband billing disputes has also been on the rise since the end of 2009, and continued through to 2010. These complaints are commonly referred to as "mobile bill shock", which refers to the shock consumers experience upon receiving unexpectedly high mobile bill charges. "Mobile bill shock" was mainly caused by unintentional or inadvertent usage of mobile data services, locally or while using roaming services overseas.

To address the rising number of complaints related to "mobile bill shock", OFCA promulgated in May 2010 a series of preventive measures for the industry to adopt. These measures include allowing customers to opt out of individual services; setting a charge ceiling; setting a usage cap for all kinds of usage-based mobile services; and alerting customers through short messages when their predetermined usage threshold is reached, or whenever their roaming data usage is triggered.

With a view to increasing the transparency of the relevant service information, we have published the measures implemented by individual operators on our website and have been providing updates on a regular basis. In parallel with these measures, we have organised a series of publicity programmes to enhance consumer awareness and knowledge of mobile data services. A data usage calculator has also been posted on our website, which serves as a tool for consumers to estimate their data usage.

Following the implementation of these measures by mobile network operators and our consumer education efforts, the number of related complaints decreased from 526 cases in 2011 to 475 cases in 2012.

The Fair Usage Policy Guidelines

Mobile and fixed broadband service providers offer a variety of service plans for consumers, including "unlimited" usage plans. However, these "unlimited" usage plans are often subject to limitations, in the name of FUP, imposed by service providers. For example, service providers may impose restrictions by lowering the network service priority or reducing access speed for customers whose data usage has exceeded a specified threshold. Service providers apply the FUP mainly to ensure their customers as a whole have a reasonable opportunity to enjoy and access their services and to prevent possible abuses by a small number of customers. Nevertheless, consumers may not be aware of the existence of the FUP or understand the respective terms and conditions. Customers of unlimited service plans in particular feel aggrieved when their data usage was subject to restriction because of FUP.

To better protect consumer interests and enhance the transparency of service information, the CA issued a set of mandatory guidelines entitled "Guidelines for the Implementation of Fair Usage Policy for the Provision of Mobile and Fixed Broadband Services" governing how service providers should implement their FUP. The mandatory guidelines have been in effect since February 2012.

Since the implementation of the guidelines, the number of related complaints decreased from 78 cases in 2011 to 46 cases in 2012, indicating that the guidelines have been effective in addressing consumer concerns.

Enhancement of the Broadband Performance Test System

Since December 2010 OFCA has posted on its website a broadband performance test system to enable broadband service users to measure the performance of their broadband connections, including download and upload speeds, network latency, packet loss and jitter. Apart from users of desktop and notebook computers, users of smart phones and tablets working on Apple's iOS and Google's Android operating systems may also make use of the test system.

In December 2012, we completed the upgrade of the broadband performance test which now offers desktop users an optional speed test of up to 300 Mbps. In January 2013, we also updated the mobile apps to offer more accurate measurement for Android- and iOS-based mobile devices.

The broadband performance test system was accredited with a Certificate of Merit under the category of "Best Public Service Application (Web/Mobile Application) Award" in the "Hong Kong ICT Awards 2013". From service launch to September 2013, more than 38 million tests were performed over this system.

Continuing to Facilitate the Implementation of Self-regulatory Measures

Industry Code of Practice for Telecommunications Service Contracts

In December 2010, in order to provide guidelines for the industry on drawing up communications service contracts so as to improve transparency in the contracting process and increase customer satisfaction, CAHK promulgated the self-regulatory Industry Code of Practice for Telecommunications Service Contracts. Since July 2011, all major fixed and mobile network operators and one major external telecommunications services operator have implemented the necessary measures for complying with the Industry Code to provide personal and residential users of telecommunications services with better protection upon signing or renewal of service contracts. The implementation of the Industry Code is a major initiative in protecting consumer rights and interests. The Industry Code also represents the proactive efforts of the telecommunications industry to address consumer complaints and disputes in relation to contractual matters.

The number of complaints related to service contract disputes decreased from 1 277 cases in 2011 to 1 116 cases in 2012. With a view to enhancing the Industry Code for better consumer protection, we have taken the initiative to analyse the consumer complaints that we received since the implementation of the Industry Code in the past two years and identified several improvement areas. We sent our findings to CAHK in May 2013 which will discuss with their members our suggested improvement areas.

Code for the Provision of Chargeable Mobile Content Services

To safeguard consumer interests and increase the transparency of the pricing information related to MCS, OFCA has been working closely with the industry to draw up the voluntary "Code for the Provision of Chargeable Mobile Content Services". The code governs the practices of third-party Content Service Providers (CSPs) in providing MCS and the establishment of an industry self-regulatory scheme. This was promulgated and put into effect by the CAHK in January 2010. The code requires all third-party CSPs, before initiating delivery of MCS to customers, to indicate to them clearly the chargeable nature of the services, provide them with clear information on all charges, obtain clear consent from them for the provision of MCS, and also set out clearly the unsubscribing mechanisms which should be simple and convenient.

The code also provides for the establishment of an Administrative Agency (AA), which is responsible for assessing the capability of CSPs and securing their pledges in complying with the requirements of the code, and monitoring their compliance through random checks and complaint handling on a regular basis. A mobile network operator may only enter into a commercial contract with a CSP which has obtained a Letter of Positive Assessment (LPA) from the AA, on the delivery and billing services in respect of MCS. As at end March 2013, 11 CSPs had successfully obtained LPAs from the AA.

OFCA has been closely monitoring the effectiveness of the code. Since the adoption of the code in January 2010, the number of related complaints received by OFCA has decreased and remained low at a monthly average of less than five cases during the year under review, reflecting that the voluntary code has been working positively to address consumer concerns.

Code of Practice in Relation to Billing Information and Payment Collection for Telecommunications Services

In October 2011, OFCA issued a code of practice entitled "Code of Practice in Relation to Billing and Payment Collection for Telecommunications Services" to provide guidance to telecommunications operators on the chargeable items to be included in their bills and the arrangements for payment collection, for compliance by operators on a voluntary basis.

Effective from 1 July 2012, seven local fixed and five mobile network operators have pledged compliance with the code of practice. For the information of consumers, we have published on our website a consumer alert as well as a summary of the compliance status of the operators. We will continue to closely monitor the implementation and effectiveness of this code of practice.

Industry Code of Practice for Provision of Mobile TV Services

According to the relevant regulatory framework for the development of broadcast-type mobile television (mobile TV) services, the content of mobile TV, either local broadcast-type or streaming-type, should be subject to regulation by general laws but not by the BO. To enable self-regulation, the industry issued a code of practice for provision of mobile TV services in August 2012. The code of practice includes the requirements of access control with a view to protecting public morals and children.

Launch of the Customer Complaint Settlement Scheme

To help resolve, by means of mediation, billing disputes in deadlock between telecommunications service providers and their residential/personal customers, OFCA has facilitated the setting up of the voluntary CCSS for a trial period of two years as from 1 November 2012 by the telecommunications industry. The mediation service is provided by an independent mediation service centre set up under CAHK with the participation of all major telecommunications service providers in Hong Kong. OFCA sponsors the CCSS operation. We also play an active role in monitoring the performance and the governance of the scheme.

During the period of 1 November 2012 to 31 March 2013, OFCA received 236 application enquiries. Among them, 36 applications were within the scope of the CCSS, of which 27 were satisfactorily settled before referral to the CCSS mediation service centre, and the remaining nine cases were satisfactorily settled after following up by the CCSS mediation service centre.

Following the trial period, OFCA and the industry will assess the effectiveness of the CCSS and its usage by the public in considering the way forward.

Self-Regulatory Scheme for Person-to-Person Marketing Calls for the Telecommunications Sector

In June 2011, with the assistance of CAHK, all major fixed and mobile network operators joined the self-regulatory scheme and published their codes of practice on person-to-person marketing calls. CAHK has also assisted in collecting the complaints statistics from the participating operators in order for the Government to monitor the progress of the self-regulatory scheme.

We have issued consumer tips to inform and educate the members of the public about the self-regulatory scheme set up by the telecommunications sector so that they may have access to information on how to make unsubscribe requests regarding person-to-person marketing calls from operators as well as on how to lodge complaints. We will closely monitor the implementation of the scheme in the telecommunications sector.

Landing of New Submarine Cable Systems in Hong Kong

As a telecommunications and Internet hub for the Asia-Pacific region, Hong Kong has continued to attract the landing of new submarine cables. In 2012, two new submarine cable systems, namely ASE and SJC, landed in Hong Kong. ASE, together with its new submarine cable landing station in Tseung Kwan O, came into operation in February 2013 and SJC will be ready for service later in 2013.

In addition, another new submarine cable system, the Asia-Pacific Gateway (APG) is scheduled to land in Hong Kong in 2014. We are providing a single-point-of-contact service to assist the operator in applying for the necessary statutory approvals to land the APG. A new submarine cable landing station, the eighth such landing station in Hong Kong, is being built in Tseung Kwan O to accommodate its landing. With the installation of these new submarine cable systems and landing stations, Hong Kong's position as a regional telecommunications and Internet hub will be further strengthened.

Steady Growth of Fixed Broadband Services

Broadband access to various applications and content services has become an integral part of people's lives in Hong Kong. With the ubiquitous availability of broadband services, whether delivered through cable or wireless technologies, consumers are able to enjoy broadband access almost everywhere, at home, in the office or outdoors. As of July 2013, there were around 2.24 million residential and commercial fixed broadband subscribers, with a household penetration rate of 84%. Broadband services are now available at speeds up to 1 Gbps. According to the worldwide rankings published by the Fiber-to-the-Home Council in May 2013, Hong Kong, with 44% of households connected to Fiber-to-the-Home (FTTH) or Fiber-to-the-Building (FTTB) networks, ranks number five worldwide among the 35 economies with at least 1% of households served by FTTH or FTTB service providers.

Review of Regulatory Guidance on the Charging Principles for Narrowband Interconnection between Fixed Carriers

Charges for narrowband interconnection between fixed carriers are the only type of carrier-to-carrier local interconnection charge still subject to regulatory guidance. Fixed–fixed broadband interconnection charges, mobile–mobile interconnection charges and fixed–mobile interconnection charges are not subject to any regulatory guidance at present and are solely determined through commercial negotiations between the telecommunications operators.

Regulatory guidance on the charging principles for narrowband interconnection between fixed carriers was first promulgated in 1995, when the local fixed telecommunications market was liberalised. Taking into account the significant changes and developments in the market and technologies over the past two decades, regulatory guidance which applies to narrowband interconnection between fixed carriers is increasingly out of place when broadband interconnection is not subject to similar regulatory guidance. The CA decided in April 2013, after a public consultation, to withdraw the regulatory guidance subject to an 18-month transitional period.

The regulatory guidance will cease to be effective starting from 16 October 2014. Fixed carriers are encouraged to make their best endeavours to conclude commercial agreements on interconnection. In the meantime, the CA will ensure that fixed carriers fully observe the any-to-any connectivity requirement, i.e. any customer in any network can have access to any other customer in any interconnecting network, such that services would not be interrupted in case of failure of commercial negotiations between fixed carriers.