Hongkong Telecom has been rapped on the knuckles by the Office of the Telecommunications Authority (Ofta) for a promotional package which critics say violates rules on cross-subsidy of services. The promotion was run in conjunction with computer company Acer and enabled buyers of personal computers to obtain a second residential line and subscription to Hongkong Telecom's Netvigator Internet service free for two months. In a letter this week, Ofta told Hongkong Telecom it disapproved of the package and advised the company to immediately end the services. The promotion finished late last month. Ofta's move came in response to a complaint from rival Internet providers which see bundling of such services as unfair competition. They said Hongkong Telecom was wrongly using the revenues from its monopoly international operation to subsidise the free offer. 'The main issue was if you are telling the world that you're losing money on local lines, why are you giving it away for free?' Charles Mok, of the Hong Kong Internet Providers' Association, said. Ofta's letter did not say whether a subsidy violation had occurred. 'We have agreed it happened, but they [Ofta officials] did not say why. It's a positive step that Ofta has taken regarding this issue,' Mr Mok said. A Hongkong Telecom spokesman confirmed it had received a letter from Ofta. He denied the company had violated its licensing conditions and reiterated that all Hongkong Telecom businesses were run at arms' length, with no cross-subsidy. Ofta's comments leave it unclear whether it wants Hongkong Telecom to stop the free lines immediately. However, the Hongkong Telecom spokesman said the company would stand by its promise to customers. He would not say how many new lines had been offered with the promotion. Ofta declined to comment publicly on the matter, saying it was a matter between it and the complainant. However, Hongkong Telecom will surely see it as a sign that Ofta may take a closer look at this sort of offers in the future.