Chapter 1 Message from the Director-General
Hong Kong’s communications market remained vibrant and dynamic in 2016/17. The mobile telecommunications market remained very competitive with high quality services available to consumers at affordable prices. All four mobile network operators are now offering 4G services utilising Long Term Evolution (“LTE”) technology. The penetration rate of mobile services exceeded 238% as at March 2017. The World Economic Forum’s Global Information Technology Report 2016 ranked Hong Kong the first among 139 economies in both mobile subscriber penetration rate and mobile network coverage. Our fixed telecommunications infrastructure is also among the most advanced in all economies, with fibre to the home/building household penetration scored the fifth globally by the Fibre to the Home (“FTTH”) Council Europe. Hong Kong’s Internet service users benefit substantially from the submarine cable systems that landed here. The World Economic Forum’s Global Information Technology Report 2016 ranked Hong Kong as the second among 139 economies in international Internet bandwidth per user. Furthermore, according to the Internet content-delivery provider Akamai, Hong Kong has the fourth highest average peak connection speeds globally.1
There were also exciting developments in the broadcasting sector in the past year. Fantastic Television Limited (“Fantastic TV”) formally launched its licensed domestic free television programme (“free TV”) service on 14 May 2017 by using a fixed network. Together with HK Television Entertainment Company Limited (“HKTVE”) and Television Broadcasts Limited (“TVB”), the three licensees, by using frequency spectrum and / or fixed network as transmission mode for the delivery of their free TV services, are providing a total of 11 channels with a wide variety of programmes.
In respect of free TV licences, apart from the launch of the new free TV services by Fantastic TV on 14 May 2017, the Communications Authority (“CA”) submitted its assessment of and recommendations on the application of Hong Kong Television Network Limited (“HKTV”) to the Chief Executive in Council (“CE in C”) in January 2016. In September 2016, the CE in C decided to give HKTV more time to submit the information required under the Broadcasting Ordinance (Cap. 562) (“BO”), and invited the CA, on receipt of the required information from HKTV, to submit further recommendations to the CE in C on HKTV’s application. After a few rounds of correspondence with HKTV, the CA was awaiting the remaining required information from HKTV as at the end of March 2017. Since April 2017, the application of Forever Top (Asia) Limited (“Forever Top”) for free TV service licence has been put on hold at the applicant’s request. Forever Top became the major shareholder of i-CABLE Communications Limited upon approval of the CA in September 2017 and withdrew its free TV licence application thereafter. As for the free TV licence application of Phoenix Hong Kong Television Limited (“Phoenix HK”), the applicant informed the CA in August 2017 that it had decided to withdraw the application due to commercial considerations.
As for the domestic pay television programme services (“pay TV”), the CE in C decided to renew the pay TV licence of Hong Kong Cable Television Limited (“HKCTV”) for a term of 12 years on 13 December 2016.
Office of the Communications Authority (“OFCA”) continued to handle complaints about broadcast materials. In 2016/17, OFCA handled more than 17 000 complaints relating to over 1 800 cases. Using the powers delegated by the CA, OFCA dealt with most of those cases, which involved breaches of a minor nature, or allegations which did not constitute any breach, or fell outside the remit of the relevant ordinances. The CA dealt with 30 cases in accordance with the complaint handling procedures.
We assisted the CA in implementing the re-assignment of the 118.4 MHz of spectrum in the 1.9 – 2.2 GHz band upon expiry of the previous assignments in October 2016. With the collaboration of all mobile network operators, the spectrum handover took place successfully at 00 hours on 22 October 2016 without interruption to mobile services provided to the public. Another major task is to assist the CA in the re-assignment of 200 MHz of spectrum in the 900 MHz and 1800 MHz bands, with current terms of assignments expiring between November 2020 and September 2021. We have assisted the CA and the Secretary for Commerce and Economic Development (“SCED”) to conduct two rounds of public consultation in early 2016 and early 2017 respectively. The CA will endeavour to announce its decision on the arrangements for spectrum re-assignment by around the end of 2017, giving the industry about three years to prepare for any changes in spectrum assignments.
To better prepare Hong Kong for the fifth generation (“5G”) era, OFCA assisted the CA in preparing a work plan which was promulgated in March 2017 on making available additional spectrum for public mobile services towards 2020 and beyond. Among others, the work plan covered the 3.4 – 3.6 GHz band, the 26 GHz band (24.25 – 27.5 GHz), and the 28 GHz band (27.5 – 28.35 GHz). OFCA was working with the assignees in the 26 GHz band for relocation of existing frequency assignments to other frequency bands. We also assisted the CA in exploring the change in use of the 3.4 – 3.6 GHz band from fixed satellite services to public mobile services, which involved conducting a public consultation exercise from July to September 2017, and commissioning a technical consultancy study to advise on the feasible mitigating measures for co-existence of the two services in the 3.4 – 4.2 GHz band.
OFCA provides a single-point-of-contact service to actively facilitate interested parties to obtain the necessary statutory approvals for landing new submarine cable systems in Hong Kong, so as to increase our capacity and resilience of both internal and external telecommunications facilities. A new regional system has kicked off its service in Hong Kong since October 2016. Three new regional and transcontinental systems as well as two new domestic systems are expected to commence their services between mid-2017 and 2020.
OFCA assisted the CA in conducting a consultation in 2015 to solicit public views on five proposed measures with a view to making available additional number resources for mobile services through more efficient use of the existing 8-digit telecommunications numbering plan. Having carefully considered the views and comments received from the industry and interested parties during the public consultation, the CA announced on 24 June 2016 its decision to adopt all the five proposed measures for implementation in three phases. Phase 1 and Phase 2 of the measures were successfully implemented on 1 January 2017 and 1 July 2017 respectively. OFCA will continue to closely work with the industry and the parties concerned and monitor the implementation process of Phase 3 for the remaining measures.
Under the universal service obligation (“USO”) imposed in accordance with the Telecommunications Ordinance (Cap. 106) (“TO”), there were around 3 100 public payphones provided for public use as of 31 December 2016. Given the popularity of mobile phones, the demand for public payphones have waned over recent years. Almost all of the public payphones are operating at deficit, requiring subsidisation through universal service contribution (“USC”) by the telecommunications industry. In light of this, OFCA had been in consultation with the telecommunications industry since the second half of 2016 on conducting a review, with a view to reducing to a reasonable level the number of public payphones eligible for USC, thereby reducing the financial burden on telecommunications service providers and the pressure on them to pass on the burden to their customers. On 29 June 2017, after finalising the guiding principles and other details, the CA announced its decision to embark on the payphone review. OFCA will approach relevant stakeholders by groups to solicit their views on the exclusion of public payphones with extremely low usage rate from the USO.
Competition and Consumer Protection
In 2016/17, a total of 74 complaints/enquiries were received under the Competition Ordinance (Cap. 619) with 72 cases closed without the need for further actions and two cases under processing. During the year, OFCA also assisted the CA in reviewing one transaction under the merger rule of the Competition Ordinance. No further action was considered necessary in respect of the transaction.
As to the enforcement of the Trade Descriptions Ordinance (Cap. 362) (“TDO”), in 2016/17, OFCA handled 457 complaint cases under the TDO, of which 373 were closed due to insufficient evidence to suspect/establish a contravention, or were outside the scope of the TDO. A further 16 cases were closed with the issue of advisory letters to the licensees concerned to draw their attention to the need to observe more closely the requirements in the TDO. The remaining cases were at different stages of processing.
To enhance service information transparency and to better inform consumers, since November 2016, OFCA has published details of service termination arrangements of major residential broadband service providers. The published information enables consumers to better understand different service providers’ existing service termination practices, which help reduce disputes over such matters.
Enforcement of the Unsolicited Electronic Messages Ordinance (Cap. 593) (“UEMO”)
OFCA continued to assist the CA in the enforcement of UEMO. In 2016/17, there were 803 reports, representing a significant decline of about 53% as compared to 1 725 reports received in the previous year. Regarding the enforcement actions taken in 2016/17, OFCA issued a total of 244 advisory letters and 37 warning letters to the senders of commercial electronic messages after investigations. In January 2017, OFCA instituted the first successful prosecution against a commercial facsimile sender in relation to suspected contravention of an enforcement notice, demanding him to stop sending further facsimile messages in contravention of the UEMO. The sender was convicted of three offences of contravention of the enforcement notice in the Magistrates Court.
OFCA continued to organise the annual consumer education campaign under the theme “Smart Use of Communications Services” to relay various consumer messages to the public through a variety of programmes and activities. In order to keep a constant touch with the public and strengthen our educational efforts in promoting the smart use of communications services, a new Facebook Fan Page named “Communications Master • OFCA” was launched in November 2016. Updated consumer messages and information have been regularly disseminated through this social media channel to maintain our close communications with the public.
OFCA participated actively in conferences organised by international and regional organisations, including the International Telecommunication Union (“ITU”) and the Asia-Pacific Telecommunity (“APT”), to keep track of the latest global regulatory developments and to share our regulatory experience. During the year, OFCA also met with its counterparts from the Mainland, South Korea, Singapore and Macao to exchange views and share its experience.
Major Challenges Ahead
The communications sector is characterised by rapidly evolving technologies, market developments and service innovation. Looking ahead, we will continue to assist the CA in handling free TV licence applications, monitoring the roll-out of new free TV services, and performing regulatory functions on the broadcasting front. On the telecommunications front, we will stay alert of international developments and engage in active discussion with the industry to identify new spectrum allocations, and consider re-allocation of frequency bands in use to pave way for the introduction of 5G mobile services and meet the ever-increasing demand for mobile bandwidth. As always, OFCA will continue to keep track of technology and market developments, including new Internet of Things platforms and services, and provide support to the CA in updating and streamlining the existing regulatory and licensing regimes to ensure that they are conducive to business innovation and investment.
This is the last report I present as the Director-General of Communications. Starting from 18 August 2017, I have assumed the post of Permanent Secretary for Economic and Commerce Development (Communications and Creative Industries).
I would like to take this opportunity to extend my heartfelt thanks to the staff at OFCA for their unwavering support throughout my tenure. Their professionalism and dedication have enabled OFCA to overcome challenges in the past years and maintain a high-level performance. I wish my successor, Miss Agnes Wong, and all staff members of OFCA every success in meeting the challenges ahead and continuing to excel.