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Chapter 1 Message from the Director-General

It gives me great pleasure to present the 2017/18 annual report of the Office of the Communications Authority (“OFCA”).

Market Overview

Before reviewing our work in the past year, I would like to take a moment to present the overall picture of the communications market. In the telecommunications sector, the mobile service market remains highly competitive. The total number of mobile service subscribers has exceeded 18 million, representing a penetration rate over 240% and is one of the highest in the world. The mobile data market continues to flourish at a robust pace, with the total volume of mobile data usage amounting to 32 444 Terabytes per month, representing an average monthly consumption of about 4.4 Gigabytes per capita.

Our fixed-line market is also providing comprehensive and affordable broadband services to the public. There are about 2.66 million registered customers using fixed broadband services and the household penetration rate is over 92%. Due to the sustained efforts of the industry, Hong Kong broadband service users are able to enjoy one of the most advanced fibre-based networks in the world. The local fibre penetration rate has reached 75.6%, which ranks fifth in the Global Fibre to the Home Ranking out of 65 economies according to the report issued by the Fibre to the Home Council Europe in February 2018.

There has also been exciting development in the broadcasting sector. The domestic free television programme (“free TV”) service landscape is further enriched by the launch of the third free TV licensee in Hong Kong. The Chinese and English channels of Fantastic Television Limited were launched on 14 May 2017 and 30 July 2018 respectively, providing Hong Kong viewers with more programme choices.

Highlights of our work in 2017/18

2017/18 has been a challenging and rewarding year for OFCA. I would like to highlight some of our major tasks in the year.

Broadcasting Services

One of the major tasks of the OFCA in 2017/18 was to assist the Communications Authority (“CA”) in conducting the review of the relevant provisions in the Codes of Practice governing indirect advertising and advertisements for undertakers and associated services. The review aimed at facilitating broadcasting licensees to diversify their source of advertising in light of the keen competition in the broadcasting industry while safeguarding the interests of viewers. After taking into account the views collected from the industry and the public, the CA decided to relax the regulations governing indirect advertising in television programmes, and to lift the prohibition on broadcast of advertisements for undertakers and associated services with effect from 27 July 2018.

During the year, we continued to handle complaints about broadcast materials. In 2017/18, OFCA handled more than 4 340 complaints (relating to over 1 860 cases). A vast majority of these cases involved breaches of a minor nature, allegations which did not constitute any breach, or cases which fell outside the remit of the relevant ordinances. OFCA dealt with most of these cases under the powers delegated by the CA. 10 cases were submitted to the CA for consideration and determination.

Telecommunications Services

Preparation for the rollout of the fifth generation (“5G”) mobile telecommunications services was undoubtedly the primary focus of our work on the telecommunications front in 2017/18. Following the issue of a work plan by the CA in March 2017 on making available additional spectrum for public mobile service, we have been diligently following up on its implementation, which includes relocating existing spectrum assignments, clearing suitable frequency bands, assisting the CA in conducting public consultation on the proposed arrangements for the multiple frequency bands identified for the provision of 5G services, etc. Up till now, a total of 4 500 MHz of spectrum in multiple frequency bands have been so identified. Our target is to announce the decisions on the detailed assignment arrangements for these frequency bands by the end of 2018.

Internet of Things (“IoT”) is an emerging technology which enables the provision of communications platforms and services for interconnected devices to generate, exchange and consume data with minimal human intervention. In 2017/18, OFCA supported the CA in creating a new licensing regime for the provision of Wireless IoT platforms and services with a view to facilitating the development of IoT services and enabling various Smart City initiatives. The new licensing regime is well-received by the industry. Two licences have been issued since its implementation on 1 December 2017.

Another major task of OFCA during the year was to assist the CA in making arrangements for the re-assignment of the 200 MHz of spectrum in the 900 MHz and 1 800 MHz bands upon expiry of the existing assignments between November 2020 and September 2021. To this end, we have assisted the CA in conducting public consultation, and issuing a joint statement with the Secretary for Commerce and Economic Development on the respective decisions on the assignment arrangements and the related spectrum utilisation fees. We will continue our work on this reassignment exercise in 2018/19.

Public payphone is a basic telephone service which the universal service provider is required to provide under the Universal Service Obligation (“USO”) in accordance with the Telecommunications Ordinance. In view of the diminishing demand for public payphone services, we assisted the CA to embark on a review of the services in June 2017. We target to complete the review in 2019 to determine the reasonable number of public payphones that should be retained subject to the USO.

Safeguarding Consumer Interests

While consumers in Hong Kong enjoy a wide range of competitive telecommunications services, we believe it is equally important to encourage service providers and operators to enhance their service quality. To this end, we have been actively championing measures to accord better protection to consumers through collaborations with the industry.

The establishment of the Customer Complaint Settlement Scheme is one of the significant consumer-protection projects implemented through the cooperation between OFCA and the Communications Association of Hong Kong (“CAHK”), the leading association of the communications industry. The Scheme is operated by CAHK with funding from OFCA. It provides an efficient and economic way to help consumers resolve bill disputes in deadlock with their telecommunications service operators through mediation.

We will continue to work closely with the industry to explore other measures which will further enhance consumer interests and improve the overall quality of service of the telecommunications industry.

At the same time, to enhance public awareness of the smart use of communications services and to assist the public to make informed service choices, we have launched a large-scale consumer education campaign in 2017/18 to relay to the public various consumer messages through different activities and programmes, such as public seminars, community talks, school performances and roving exhibitions. In addition, we host a Facebook Fan Page named “Communications Master • 通訊達人” to further enhance our publicity efforts in promoting the consumer messages through the social media platform.

Major Challenges Ahead

Looking ahead, we will continue to assist the CA in performing its regulatory functions on the broadcasting front, striking a balance between providing a more conducive business environment to broadcasting licensees and protection of the interests of viewers. On the telecommunications front, we will assist the CA to finalise the arrangements for assigning the planned supply of spectrum and to continue to identify additional spectrum to enable Hong Kong to gear up to the 5G era. As always, we will continue to keep track of technology and market developments and provide support to the CA in updating and streamlining the regulatory and licensing regimes to ensure that they are conducive to business innovation and investment.

Finally, I would like to express my gratitude to members of the CA for their guidance; members of the advisory committees of OFCA for their invaluable advice; and all stakeholders including those in the telecommunications and broadcasting sectors for their support throughout the year. My special thanks also go to all of my colleagues for their commitment and professionalism in accomplishing our goals in the past year and in developing new initiatives for the coming years.