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Communications Authority press release
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The following is issued on behalf of the Communications Authority:

     This press release summarises the Communications Authority (CA)'s decisions at its 32nd meeting in June 2014:

Competition complaint lodged by Hong Kong Telecommunications (HKT) Limited (HKT) against Apple Asia Limited (Apple Asia), SmarTone Mobile Communications Limited (SmarTone), Hutchison Telephone Company Limited (HTCL) and CSL Limited (CSL)
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     The CA has completed an initial enquiry into a complaint lodged by HKT in September 2012, alleging that Apple Asia has unilaterally, or jointly with SmarTone, HTCL and CSL (the three mobile network operators, or the "three MNOs"), contravened the competition provisions of the Telecommunications Ordinance (TO) (Cap 106) and the statement Way Forward of SIM Lock (the SIM Lock Statement) issued by the former Telecommunications Authority in February 1997.

     Specifically, HKT alleged that Apple Asia, either unilaterally or jointly with the three MNOs, "SIM locked" iPhone 5 handsets and certain other Apple devices (the Apple Devices) to prevent these devices from connecting to the fourth generation (4G)/Long Term Evolution networks of HKT (the Restriction). HKT requested the CA to issue an immediate direction under section 36B of the TO that Apple Asia and the three MNOs should not make the Apple Devices available in Hong Kong until they fully comply with the SIM Lock Statement.

The CA's considerations and decision

     The evidence collected during the initial enquiry reveals that the Restriction was solely imposed by Apple Inc., the parent company of Apple Asia, at Apple Inc.'s discretion. Apple Inc. is incorporated in the United States of America and is not a licensee under the TO. There is no evidence suggesting that the Restriction was imposed by Apple Asia, either unilaterally or jointly with the three MNOs or any party as alleged by HKT.

     On the basis of the above, the CA has concluded from the initial enquiry that there is no reasonable ground for suspecting that Apple Asia or the three MNOs have infringed the competition provisions of the TO in respect of the conduct alleged by HKT as anti-competitive. The CA considers therefore there is no justification to accede to HKT's request to issue the section 36B direction. Accordingly, the case is closed without proceeding to investigation.

     The CA would wish to emphasise that in closing the case, the CA is not condoning the act of Apple Inc. in imposing the Restriction on the Apple Devices. The complaint is dismissed on the ground that the facts as found do not establish that any of the licensees (viz. Apple Asia and the three MNOs) as subject of complaint, over which the CA has jurisdiction, is found to have engaged in conduct which HKT alleges to be anti-competitive in its complaint.  

The CA's advice to consumers

     The CA would wish to take this opportunity to remind consumers that, though currently a wide range of choices of 4G mobile devices are available in the market and all the four local MNOs are providing 4G services, they should take note that while the 4G devices generally support the third generation (3G) services provided by all the local 3G networks, some of them do not in fact support all the local 4G networks. The Apple Devices is a case in point. Though the CA notes also that the availability of such devices in the Hong Kong market do provide consumers with more choices.

     In order to fully enjoy the user experience of 4G services, the CA would advise consumers to pay particular attention to a number of matters when choosing 4G devices, or MNOs for subscription to 4G services. These include:

* Make detailed enquiry with the device vendor as to which 4G networks in Hong Kong are supported by their 4G device before making any purchase decision;

* Ascertain with MNOs whether their 4G network is supported by the particular 4G device they intend to purchase before entering into any service contract;

* Take note that, in considering offers from MNOs which bundle the 4G mobile device with mobile service contract, such devices may not support the 4G services offered by other MNOs. This may become an issue when consumers wish to switch to another service operator upon the expiry of their current service contracts, only to find out then the device does not support the 4G service of that particular operator.

     For more consumer tips on this matter, please refer to the Office of the Communications Authority (OFCA)'s "Consumer Alert on the Purchase of 4G Mobile Devices", which is published on the OFCA's website.

Details of the complaint

     Apple Asia is a licensee under the TO by virtue of its holding a Radio Dealers Licence (Unrestricted), whereas SmarTone and HTCL are both holders of a Unified Carrier Licence (UCL) for the provision of public mobile radiocommunications services. CSL was a holder of a UCL prior to the transfer of its licence to HKT on May 15, 2014, after HKT's parent company completed the acquisition of CSL's parent company on May 14, 2014.

     The OFCA has been handling the competition complaint lodged by HKT in accordance with the established procedure laid down in the procedural guidelines issued by the CA under the competition provisions of the TO.

     Having examined the facts of the case, the information and representations provided by HKT, Apple Asia and the three MNOs, the CA affirms OFCA's assessment that there are no reasonable grounds for suspecting that Apple Asia or any of the three MNOs has infringed any of the competition provisions of the TO, primarily on the basis that there is no evidence suggesting that the Restriction on the Apple Devices was imposed by Apple Asia, either unilaterally or jointly with the three MNOs or any other party, as alleged by HKT. The evidence rather reveals that the Restriction was solely imposed by Apple Inc. at Apple Inc.'s discretion. Apple Inc. is incorporated in the United States of America and is not a licensee under the TO.

     As there is no reasonable ground for suspecting that Apple Asia or any of the three MNOs has infringed any of the competition provisions of the TO in respect of the conduct alleged by HKT as anti-competitive, the CA affirms OFCA's assessment that there is no justification for the CA to accede to HKT's request for a direction under section 36B of the TO. Accordingly, the case is closed without proceeding to investigation.

     It should be noted that since the lodging of the complaint by HKT at end September 2012, it has sparked off a series of legal proceedings including hearings before the Telecommunications (Competition Provisions) Appeal Board (the Appeal Board), and case stated applications before the Court. The OFCA's processing of HKT's complaint has been interrupted and suspended for six months between end of January 2013 and end of July 2013, when the request made by the OFCA at end of January 2013 to HKT for additional information to enable it to process HKT's complaint was not answered by HKT until end of July 2013. The OFCA's processing of the complaint was further suspended for another two months between February 2014 and April 2014, as a result of the legal proceedings brought by HKT in relation to which a substantive hearing of the appeal took place in March 2014, and the Appeal Board issued its decision on April 16, 2014.

     For details of the case, please refer to the CA's Decision at: www.coms-auth.hk/filemanager/listref/en/upload/38/iPhone_Decision_20140630_e.pdf.@

Disruption of mobile data services of HTCL
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     On January 22, 2014, there was an outage of the mobile data service of HTCL, which affected about 200,000 of its customers for 157 minutes. The OFCA completed an investigation into the incident. After considering the assessment of the OFCA, the CA concluded that there had been no breach by HTCL of General Condition 5.1 of its licence, which required it to operate, maintain and provide a good, efficient and continuous service in a manner satisfactory to the CA. For details, please refer to the CA's Decision at: www.coms-auth.hk/filemanager/statement/en/upload/277/HTCL_FinalDecision_20140630_e.pdf.@

Breach of regulatory requirement on duration of news programme by Television Broadcasts Limited (TVB)
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     The CA decided that TVB was in breach of Condition 4 of the First Schedule to its domestic free television programme service licence in relation to the duration of the news bulletin broadcast on Pearl Channel on February 2, 2014 at 11.40pm, which fell short of the requirement of 15 minutes as stipulated in its licence by 30 seconds.

     The CA noted that the lapse was due to staff oversight and that the presentation and comprehensiveness of the news programme concerned was not affected by the under-run of 30 seconds. Taking into account that TVB's representations that the lapse was an unintentional oversight, and that TVB had taken the initiative to report the lapse and pledged to exercise greater care to prevent similar lapses from occurrence in future, the CA decided that TVB should be advised to observe the relevant requirement more closely. As this is the second breach by TVB of the same provision within a space of three months, TVB was reminded of the need for more effective measures to prevent the recurrence of similar lapses in future, and that it was incumbent upon TVB, the licensee, to comply with the licence condition.

Broadcast complaints
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     The CA also considered two public complaints against the television advertisement for "ParknShop" broadcast on the Jade and HD Jade Channels of TVB on January 23, February 1 and February 4, 2014. The CA decided that TVB should be advised to observe more closely the relevant provisions of the Generic Code of Practice on Television Advertising Standards. Details of the case are at www.coms-auth.hk/filemanager/en/content_713/appx_20140630_en.pdf.

Ends/Monday, June 30, 2014
Issued at HKT 18:23

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