Introduction
- The Consumer Council (CC) welcomes the Office of the Telecommunications Authority (OFTA) taking the initiative in addressing quality of performance issues in the telecommunication market, by proposing to implement a quality of services (QoS) regulatory framework whereby the QoS of service providers in the market will be measured, reported and published based on definitions and measurement methodology uniformly applied across the industry.
- In the telecommunications market in Hong Kong, service providers are expected to compete on prices and quality and those service providers failing to meet consumers' demand or expectation in price or service quality would be forced out of market. CC received large number of complaints on telecommunications services and around a quarter of them concerns consumer dissatisfaction with quality of services. Those complaints are an indication of market failure and the consumers' grievance reflects that they do not find that the quality of services meet their expectation or constitute good value for money paid.
- CC agrees with OFTA that information asymmetry between service providers and consumers is a cause of market imperfection. The market can achieve better levels of efficiency if sufficient information is available to consumers. For the telecommunications market to get the full benefit of competition, CC strongly believes that consumers need to be well informed, particularly of the quality of service of different service providers in the market.
- CC would like to give views on the following areas regarding OFTA's proposed measures:
- General principles
- Scope and targets of the regulatory framework
- Implementation
General Principles
- CC agrees to the general principle that the market should be the main determinant of quality of services. CC supports OFTA's view that broadband service providers should make their pledges of the QoS standard of their services and make these pledges known to the regulator, potential customers and the customers that they are serving. Consumers will benefit from the publication of service pledges and the exact figures of the achieved level of performance of individual service providers on a periodic basis. For the information to be useful and to facilitate consumer choice, performance statistics should be comparable across different service providers and monitored.
- CC understands that different service providers may target different segments of customers and would like to highlight their competitive advantages to establish their market positions. However, consumers may have difficulty comparing attributes and qualities across different services providers without a common base. CC agrees to OFTA's proposed approach that some performance indicators significantly affecting consumer choices should be classified as key performance indicators (KPIs) on which service providers are required to publish their performance pledges and statistics. Consumers can then compare statistics on the KPIs across service providers and make an informed choice.
- CC suggests that OFTA should conduct a customer satisfaction survey to identify what crucial elements beside price are most relevant to the purchase decision concerning telecommunications services. The result of the survey will help to define the KPIs. The definition of KPIs coming out of the survey will also help service providers focus on improving these key areas of concern to consumers in order to capture more market shares.
Scope and Targets of the Regulatory Framework
- Regarding the scope of the QoS framework, given the broad classification for the Internet services market into the residential market segment and business market segment, CC agrees with OFTA's proposal to give priority to residential consumers who have little bargaining power. However, CC understands that a lot of small business users in Hong Kong do not have much stronger power to bargain with the service providers than residential consumers. The quality of services they receive from the telecommunications operators can affect their communication with their business partners and indirectly affect their competitive positions in the market and ultimately the competitive environment. CC therefore invites OFTA to consider extending the scope of the framework to benefit small business users too.
- The Government has proposed two approaches concerning the targets of the regulatory framework:
- Approach one: to set criteria (such as on basis of market share) for defining the targets of monitoring
- Approach two: to implement on a voluntary basis.
- CC considers it more appropriate to have a mixed approach, to mandate service providers of sizeable operations to take part (approach one) and to encourage others to voluntarily participate. Whilst those service providers not included can avoid the costs of becoming involved in the scheme, non- participation actually costs them in the form of loss of customers who might otherwise be attracted to a service provider covered by the scheme.
- Consumers tend to have a higher degree of confidence in dealing with a service provider whose performance standards are known. However, operators with a large market share could place a lot of reliance on their brand names and prefer to spend resources on marketing their services rather than on improving their QoS of services. CC considers that requiring service providers with market share above a certain level to participate in the QoS scheme would promote competition in terms of quality of service and benefit consumers. CC therefore supports including the top service providers in the QoS monitoring scheme. Smaller service providers who see advantage in joining the scheme should be allowed to participate on a voluntary basis.
Implementation
- OFTA has suggested that service performance and technical indicators should be treated separately. CC supports the Government commissioning an independent institution to measure the technical indicators for residential broadband service providers. CC urges the Government to publish the technical performance statistics as soon as possible and make effort to ensure that the indicators and statistics are easily comprehensible to consumers.
- For both service performance and technical performance, a question that ensues is whether statistics to be published have to be audited to ensure their truthfulness and reliability or simply accepted as claimed by the operators.
- CC appreciates the view of some operators that section 7M of the Telecommunications Ordinance could safeguard against misleading and deceptive conducts in telecommunications markets. However, independent monitoring is important as inaccuracy in operators' performance affects consumer interest. CC urges that OFTA should take an active monitoring role, by investigating claims or imposing auditing requirement when it is in doubt as to the correctness of information provided about QoS.
- Ensuring service quality through making and accomplishing of service pledge will enhance consumer confidence in the operators and in turn bring financial gains and this could pose an incentive for the operators to participate in the monitoring scheme.
- The scheme should be the first step in the right direction to reverse the trend of increasing number of complaints being lodged with OFTA and CC. Transparency of service quality will put consumers in perspective and may facilitate efficient handling and early resolution of complaints. CC would like to see implementation of the monitoring scheme to provide quality of service information to consumers as soon as possible.
