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Regulation

HKT, Hong Kong regulator at loggerheads over network service suspension

Dispute comes amid efforts to establish a Code of Practice on terminating services for so-called mobile virtual network operators

PUBLISHED : Sunday, 10 September, 2017, 4:59pm
UPDATED : Sunday, 10 September, 2017, 9:08pm

Tensions between HKT and Hong Kong’s telecommunications industry regulator heated up last week over the termination of services by two so-called mobile virtual network operators (MVNOs) in the city in the past 18 months.

The Office of the Communications Authority (Ofca), the industry regulator’s executive arm, released a statement on Thursday that blamed HKT, the city’s largest mobile and fixed-line network operator, for the service interruption that affected more than 110,000 mobile subscribers of MVNO license-holders Easycall and CMMobile.

An MVNO license-holder provides services by leasing mobile network capacity from an existing telecommunications operator, typically at wholesale prices, and resells it to consumers at reduced prices under its own brand. HKT was the contracted host network of those two companies.

Citing the most recent case involving CMMobile, Ofca criticised HKT for only giving less than 10 hours’ notice before terminating its wholesale service.

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HKT has maintained that it gave ample opportunity for both Easycall and CMMObile to advise their customers of impending service termination in light of each firm’s missed payments, which resulted in the accumulation of a combined HK$90 million debt to the operator.

“I think the Ofca is being very selective, totally ignoring the weeks of consultation and engagement previous to the suspension of service,” a spokesman for HKT told the South China Morning Post.

“Also, the Ofca should have advised the two MNVOs many weeks earlier to issue a warning to their respective customers about having commercial difficulties and falling behind in their payments to HKT. Was HKT expected to suffer continuous financial losses, while the Ofca took no action to request the two MVNOs to advise their customers?”

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The dispute between HKT, the telecommunications arm of tycoon Richard Li Tzar-kai’s PCCW, and Ofca has come amid efforts by Hong Kong regulator the Communications Authority to draw up a Code of Practice on the cessation arrangements for MVNO services.

Under its proposed code, Ofca requires concerned parties to provide advance notice of at least five business days to the affected MVNOs and subscribers, as well as provide a copy of such notice to the regulator before the notice period.

HKT last week refuted what it called “false and misleading allegations” made by Ofca at an industry meeting last month about the Easycall and CMMobile services suspension.

MVNOs have helped increase competition in Hong Kong’s telecommunications market, while providing another source of revenue for the incumbent network operators.

There were 29 MVNOs as of August this year, according to Ofca. These operators included Hong Kong Broadband Network, China Unicom, Citic Telecom International, NTT Com Asia and Tink Labs.

The worldwide MVNO market is forecast to be worth US$85 billion by 2022, according to a report by Global Market Insights.