Overview of Developments in the Telecommunications Market in 2011

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1 Overview of Developments in the Telecommunications Market in 2011 Office of the Telecommunications Authority 9 February

2 Overview of Developments in the Telecommunications Market in 2011 Mobile Market Continues to Flourish No. of mobile users exceeds 14.4 million (penetration rate: over 200%) No. of mobile broadband (2.5G + 3G) users 2010 (October) : 6.04 million 2011 (October) : 7.70 million ( million) Mobile data usage more than doubled 2010 (October) : Terabytes 2011 (October) : Terabytes (+ 1.2 times) 2

3 TBytes MBytes Spectacular Growth in Mobile Data Traffic Mobile Data Usage per Month(TBytes) 463 Mbytes per user (October 2011) Usage per Customer per Month(Mbytes) Mbytes per user (October 2006) 10/ / / / / / / / /2011 Month/Year

4 Continuous Growth in Fixed Broadband Service Market No. of users exceeds 2.2 million (household penetration rate: 86%) No. of fixed broadband users 2010 (October) : 2.11 million 2011 (October) : 2.23 million ( million) 86% of domestic households: have a choice of at least two customer access networks 75% of domestic households: have a choice of at least three customer access networks 4

5 Consumer Affairs Total No. of Consumer Complaints : reduced by 13% (Categorized by Service Types) Total No. of Consumer Complaints (-13%) Mobile services (-24%) Fixed services (-1%) Internet services ( +3%) 5

6 Consumer Affairs Total No. of Consumer Complaints : reduced by 13% (Categorized by Nature of Complaints) Total No. of Consumer Complaints (-13%) Billing Disputes (-33%) Contractual Disputes (-13%) Service Quality (-7%) 6

7 Measures Adopted in Response to the Causes of Consumer Complaints Expeditiously formulate measures to address systemic complaints Encourage the industry to implement selfregulatory measures Continuous implementation of consumer education programmes 7

8 Expeditiously Formulate Measures to Address Systemic Complaints Complaints on Mobile Data Services: 934 cases (2010: cases) From August 2010 onwards: Mobile service operators implement a series of mobile bill shock preventive measures From February 2011 onwards: Publication of actual quarterly performance statistics against mobile broadband service performance pledges Complaints on bill shock reduced by 33% on average Complaints on Billing Disputes: cases (2010: cases) October 2011: Issued the Code of Practice in Relation to Billing Information and Payment Collection for 8 Telecommunications Services

9 Expeditiously Formulate Measures to Address Systemic Complaints Complaints on Fair Usage Policy: 78 cases (2010: 160 cases) November 2011: Promulgated mandatory Fair Usage Policy Guidelines for compliance by service providers To take effect on 13 February 2012 Prohibit the provision of unlimited service plans which are subject to restrictions. To enhance the transparency of service information to facilitate informed consumer choices If service providers breach the Guidelines, they may contravene the licence conditions If misleading or deceptive conduct is involved, service providers may contravene Section 7M of the Telecommunications Ordinance 9

10 Are Service Providers Prohibited from Offering Unlimited Service Plans under the Guidelines? No prohibition in the Guidelines on service providers offering unlimited service plans The main objective of the Guidelines is to enhance service transparency to avoid misleading consumers and to facilitate informed consumer choices Whether service providers will continue to offer unlimited service plans is a commercial decision of their own Service providers offering unlimited service plans should ensure that they offer genuine unlimited service plans that are free from restrictions, including any FUP If any service provider considers that FUP must be implemented to ensure normal network operation, their service plans must not include the word unlimited. It may consider offering plans with high usage cap (e.g. 5 GB or above per month) or flat-rate plans to replace the unlimited service plans they currently provide 10

11 Encourage the Industry to Implement Self-regulatory Measures Complaints on Contractual Disputes: cases (2010: cases) July 2011: Implement the Industry Code of Practice for Telecommunications Service Contracts Breach of the code: 0 case Complaints on Chargeable Mobile Content Services: 52 cases (2010: 146 cases) The Industry Code and the Administrative Agency came into operation in January 2010 and March 2010 respectively 15 content service providers have obtained Letters of Positive Assessment Breach of the code: 0 case 11

12 Continuous Implementation of Consumer Education Programmes Educate consumers about smart use of telecommunications services, including the points to note in using data services and entering into telecommunications service contracts

13 Continuous Implementation of Consumer Education Programmes Activities include: TV and radio announcements, short videos Public and school talks Newspaper columns Issue of consumer alerts 1-minute TV programme series Roving exhibitions 13

14 Continuous Implementation of Consumer Education Programmes Assisting Consumers in Estimating Data Usage As at October 2011: Average data usage is 463MB per mobile broadband user December 2011: Data usage calculator launched A consumer alert issued to alert users about their data usage [Data Usage Calculator] 14

15 Measures to Facilitate Telecommunications Market s Development Release of New Radio Spectrum Purpose to meet the market demands for mobile data services to sustain the momentum of market growth Spectrum auctioned March 2011: a total of 20 MHz of radio spectrum in 850 MHz 900 MHz bands Auction sum: HK$ billion Spectrum recently auctioned February 2012: a total of 90 MHz of radio spectrum in 2.3 GHz band Auction sum: HK$470 million 15

16 Measures to Facilitate Telecommunications Market s Development Landing of New Submarine Cables in Hong Kong April 2010: Provision of single-point-of-contact service to streamline the application procedures for landing submarine cables Effectiveness: Two new submarine cable systems: Asia Submarine-Cable Express (ASE system) - Connect Hong Kong with Japan, Malaysia, the Philippines and Singapore - Date of landing: End of 2012 Southeast Asia Japan Cable (SJC system) - Connect Hong Kong with Brunei, the Mainland, Japan, the Philippines and Singapore - Date of landing: Second half of Allow co-location of data centre within submarine cable landing station

17 Measures to Facilitate Telecommunications Market s Development Review of Regulatory Regime for Local Access Charge (LAC) Completed 23 December 2011: A Statement of the Telecommunications Authority issued Fixed and mobile network operators are allowed to collect LAC The level of LAC will be set by commercial agreements New regime will be put into effect following an 18-month transitional period 17

18 Strive to Perform Regulatory Role Regulatory Actions against Misleading Sales Practices Contravention of Section 7M of the Telecommunications Ordinance (misleading and deceptive conduct) 2011: 3 cases substantiated Involving 3 telecommunications licensees Financial penalty imposed: ranging from $90,000 to $120,000 Regulatory Actions against Breach of Telecommunications Licence Conditions 2011: 4 cases substantiated Related to illegal LAC bypass Financial penalty imposed: ranging from $130,000 to $250,000 18

19 Work in Active Progress Preparation for the establishment of the Office of the Communications Authority 1 April 2012: The Communications Authority Ordinance will come into effect Establishment of the Communications Authority Establishment of the Office of the Communications Authority by Merging the Office of the Telecommunications Authority and the Broadcasting Division of the Television and Entertainment Licensing Authority 19

20 Work in Active Progress Creation of a New Civil Service Grade of Regulatory Affairs Managers Purpose: To embrace talents with expertise in different disciplines to perform the multifarious regulatory functions intertwined with economic and technical issues The Regulatory Affairs Manager grade comprises: A directorate post: Chief Regulatory Affairs Manager Non-directorate posts: Principal Regulatory Affairs Manager Senior Regulatory Affairs Manager Regulatory Affairs Manager Recruitment exercise will commence in the first quarter of

21 Focus of Future Work To fully support the regulatory work of the Communications Authority To study the arrangements for re-assignment of radio spectrum for 3G mobile services and the spectrum utilisation fee involved To study the implications of the development of the next generation networks on the telecommunications regulatory regime Target to auction the radio spectrum in the 2.5/2.6 GHz band available for the provision of 4G mobile telecommunications services in the first quarter of

22 Major Developments in the Hong Kong Telecommunications Industry Since the Establishment of OFTA (in 1993) 22

23 1993: The first Internet Service Provider licensed to provide commercial Internet services Launch of GSM digital mobile phone services in Hong Kong 1995: Progressive liberalisation of the local fixed-line market Change of telephone numbers from 7 to 8 digits Launch of the world s first CDMA public mobile service 1997: Full portability of fixed telephone numbers implemented Services launched by all six Personal Communications Services (PCS) licensees 23

24 1998: Launch of broadband Internet services in Hong Kong Full digitalisation of mobile services with the emergence of a highly competitive mobile service market Agreement reached between the Government and Hong Kong Telecom International on early termination of its exclusive licence for external telecommunications services 1999: Liberalisation of the external telecommunications service market Implementation of mobile number portability 2000: Award of licences to new wireless local Fixed Telecommunications Network Services (FTNS) operators and external facilities-based FTNS operators by the Government 24

25 2001: Launch of inter-operator mobile short messaging service The Telecommunications Authority conducted the first auction for 3G spectrum, four operators were granted the relevant licences 2003: Full liberalisation of the telecommunications market with more telecommunications operators licensed to provide local fixed-line services 2004: Launch of 100 Mbps and 1000 Mbps residential broadband services in Hong Kong 25

26 2005: Lifting of the prior-approval requirement on PCCW-HKT Telephone Limited s prices via the issue of a new Fixed Carrier Licence to shift from the ex ante to the ex post regulatory approach 2006: Launch of the first High-Speed Downlink Packet Access (HSDPA) mobile broadband network in Hong Kong 2007: Full implementation of the Unsolicited Electronic Messages Ordinance Official launch of digital terrestrial television services 2008: Completed withdrawal of mandatory Type II interconnection at the telephone exchange level 26

27 2009: Official de-regulation of the Fixed Mobile Interconnection Charge Successful auction of radio spectrum in the GHz bands for 4G mobile services 2010: Successful auction of radio spectrum in the MHz band for the provision of broadcast-type mobile TV services De-regulation of the mandatory provision of White Pages by fixed operators as well as maintaining the requirement for fixed operators to provide telephonic directory enquiry service to their subscribers 27

28 Thank You! 28

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