FINAL DECISION OF THE

COMMUNICATIONS AUTHORITY

ALLEGED MISLEADING OR DECEPTIVE REPRESENTATIONS

BY SMARTONE MOBILE COMMUNICATIONS LIMITED
IN RELATION TO GPRS CHARGES SET OUT IN ITS WEBSITE

Licensee concerned: SmarTone Mobile Communications Limited

(“SmarTone”)

Issue: The representations about GPRS charges made in

SmarTone’s website were alleged to be misleading
or deceptive

Relevant Instruments: Section 7M of the Telecommunications Ordinance

(“TO”) (Cap. 106)

Decision: Breach of section 7M of the TO

Sanction: Financial penalty

Case Reference: 7M/2/3-12

THE COMPLAINT

In March 2010, the former Office of the Telecommunications

Authority (“OFTA”) received a complaint from a mobile customer of
SmarTone, alleging that the representations made in SmarTone’s website that
the GPRS1 charges for browsing SmarTone iN!2 WAP pages were “average 10
cents per page” were misleading or deceptive. The complainant claimed that

1
GPRS stands for “general packet radio service”, which is a mobile data service provided on 2G mobile
communication systems based on the global system for mobile communications (GSM) standard.
2
SmarTone iN! provides entertainment and information services to SmarTone’s mobile customers through
their handsets.
the GPRS charges for using his handset to browse SmarTone iN! WAP pages
were in fact substantially higher than the “average 10 cents per page”.

2. The complainant was a customer of SmarTone’s PayGo Plan, a 2G

mobile service plan in March 2010, which entitled him to access SmarTone’s
GPRS service and use GPRS to browse SmarTone iN! on a pay-as-you-go basis.
The charges for browsing SmarTone iN! would be directly deducted from the
value stored in his SIM card. The complainant provided to the former OFTA a
copy of a Chinese version of the webpage of SmarTone displaying the
SmarTone iN! GPRS charges as of 28 March 2010 (Annex 1). The GPRS
charges for browsing SmarTone iN! were set out in the webpage as follows -

Chinese version
㾷奥 SmarTone iN! GPRS 㓞屣
㚰屣 烉 $12 䃉旸㾷奥
㊱㫉㓞屣 烉 㭷 KB $0.04炻⸛⛯㭷枩㓞屣 1 㮓
(Picturemail ⍲ Vodafone Business Email 昌⢾)

English version
Browsing SmarTone iN! GPRS Charges
Monthly Fee烉$12 Unlimited browsing
Pay As You Go : 4 cents/KB, average 10 cents per page
(excluding picturemail, & Vodafone Business Email)

The above is hereinafter referred to as “the Statement”

3. The complainant alleged that in March 2010, he used his handset

to browse SmarTone iN! WAP pages. He found that even though he had
deactivated the graphic function of his handset before browsing (see
sub-paragraphs (a) and (b) below), he was charged substantially higher than the
“average 10 cents per page” as claimed in SmarTone’s webpage. The
browsing information provided by the complainant is summarized as follows -

(a) At 2:00 pm to 3:00 pm on 27 March 2010 (with no graphic

activation on his handset), he was charged $0.94 after browsing the
WAP page at http://wap.smartone-vodafone.com/.

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 (b) At 0:15 am on 28 March 2010 (with no graphic activation on his
handset), he was charged $0.63 after browsing the WAP page at
http://wap.smartone-vodafone.com/wmc/jsp/nightlife/
foodeasy/dine_main.jsp?lang=1.

(c) At 0:16 am on 28 March 2010 (with graphic activation on his

handset), he was charged $0.95 after browsing the WAP page at
http://wap.smartone-vodafone.com/wmc/jsp/
nightlife/foodeasy/dine_main.jsp?lang=1.

4. Subsequently, between 4 April 2010 and 7 May 2010, the

complainant conducted three tests using different handset models. The process
of conducting the tests was photographed by the complainant and the details
were provided to the former OFTA for reference. The results of the tests
conducted by the complainant are summarized in Table 1 below. It was noted
that in each of the tests, the GPRS charges incurred for browsing a SmarTone iN!
WAP page was much higher than 10 cents per page.

Table 1: Results of the tests conducted by the complainant

Test A B C
Handset model Samsung LG KS660 Nokia 5610
S3650C (2G handset) (3G handset)
(2G handset)
Date and time 6/5/2010 7/5/2010 4/4/2010
23:40 00:55 18:05
WAP page browsed SmarTone iN! SmarTone iN! SmarTone
Latest News3 Latest News iN!
(“㕘倆⾓妲”) (“㕘倆⾓妲”) Home Page
(“椾枩”)
Graphic activation No No Yes

3
The address of the Latest News WAP page was:
http://news.smartone-vodafone.com/livenews/xhtml/standarddisplayEntry.do?lang=1&cp=TVB&edition=
standard&headlineId=5179285&viewId=6&fh=true

-3-
 Test A B C
Actual GPRS charge $0.66 $0.57 $3.59

Percentage of charges 560% 470% 3490%

exceeding “average 10
cents per page”

THE INITIAL ENQUIRY

5. SmarTone was invited to comment on the complainant’s

allegations and the tests he conducted.

6. SmarTone explained in its reply of 9 November 2010 that the first

part of the Statement clearly stated that the charge was “4 cents/KB”, so there
should be no room for misunderstanding. The phrase “average 10 cents per
page” in the second part of the Statement referred to the average amount
charged for browsing SmarTone iN! based on the assumption that a 2G
customer4 was using the service. SmarTone said the Statement specifically
targeted 2G customers, such as the customers of its PayGo services using an
average 2G handset. SmarTone further advised that the phrase “average 10
cents per page” had been posted on its webpage since 2004, and was
subsequently removed on 22 July 2010.

7. The former OFTA examined the webpage of SmarTone iN! on 23

August 2011 and noted that the phrase “average 10 cents per page (excluding
picturemail & Vodafone Business Email)” had been removed from the
Statement. A copy of the original webpage is reproduced at Annex 2.

8. SmarTone claimed that there were still a large number of mobile

service customers in Hong Kong using average 2G handsets with basic features,
like having a small screen, low resolution colour or monochrome screen, and
less powerful browser as compared to the latest 3G or 2G handsets.

4
SmarTone advised that "2G customers" is a general term which include PayGo 2G customers except
otherwise stated.

-4-
9. SmarTone explained that its network had the intelligence to
provide customers with the appropriate version of SmarTone iN!, depending on
the handset and the SIM card being used for the browsing. SmarTone had
conducted its own tests on 5 August 2010 using two handset models. SmarTone
summarised the results of the tests it conducted in Table 2 below -

Table 2: Results of the tests conducted by SmarTone

Data usage (KB) Average data usage

iNQ Nokia of iNQ and Nokia
SmarTone iN!
(bytes) 2760 2760 handsets
(bytes) (KB)
Main Page(“椾枩”) 1642 3473 2.5
Live! 5 (“⌛㗪屯妲”) 1072 3960 2.5
Music Now (“枛㦪䅙㓦”) 1678 3598 2.6
Game Shock(“㽨ㇳ暣䍑”) 1107 3810 2.4
Sports Unlimited(“橼⡯䃎溆”) 1399 3648 2.5
Bet to Win (“⌂⼑䌳”) 907 4769 2.8
Spend it! 926 4418 2.6
18 Plus (“⣏攳䛤䓴”) 1656 3402 2.5
PLUS 䎮屉忂 778 2200 1.5
2.4

10. Two handset models, namely iNQ and Nokia 2760, were used.
SmarTone explained that these two models were chosen because they
represented a mix of two groups of 2G handsets in that -

(a) iNQ was a model which SmarTone’s network could not recognise.

5
SmarTone advised that there were 7 different sub-WAP pages under SmarTone iN! Live! WAP page,
including Latest News (“㕘倆⾓妲”) that had been browsed by the complainant in conducting tests A and B
(see Table 1 in paragraph 4). It advised that the average data usage for viewing contents in “Latest News”
was 5.8 KB per page using handsets iNQ and Nokia 2760 while the data usage for browsing Live! WAP
page referred to the average data usage for browsing these 7 sub-WAP pages.

-5-
 In this situation, a text-based SmarTone iN! version 6 would be
provided by the network; and

(b) Nokia 2760 was a higher end 2G model with a colour screen and
more updated browser. In this situation, a colour SmarTone iN!
version7 would be provided by SmarTone’s network.

11. SmarTone further advised that when the tests were conducted, the
graphic function of the iNQ and Nokia 2760 handsets was not disabled.
SmarTone declined to comment on the tests conducted by the complainant as
they were based on browsing a specific page of SmarTone iN! and the handset
models used did not represent the average 2G handsets in the market.

12. On examining the results of the tests conducted by SmarTone, the

former OFTA noted that the average data usage of 2.4 KB (or 2.4 KB x 4 cents
= 9.6 cents in terms of usage charge) per page was arrived at by SmarTone by
averaging the data usage of the two handset models used for browsing various
SmarTone iN! pages. If the test results of the two handset models were
considered separately, iNQ which used the text-based version of SmarTone iN!
involved an average GPRS usage of 1.2 KB per page (=11,165 bytes/9
SmarTone iN! pages) and based on the rate of “4 cents/KB” represented on the
webpage of SmarTone iN!, the average usage charge for iNQ per page would be
4.8 cents. However, the Nokia 2760 handset which used the colour version of
SmarTone iN! involved an average GPRS usage of 3.7 KB per page (=33,278
bytes/9 SmarTone iN! pages) and based on the same rate of “4 cents/KB”, the
average usage charge for Nokia 2760 would be 14.8 cents per page.

13. On SmarTone’s webpage where the representations of “average

10 cents per page” appeared, no remark was provided to explain the basis of
SmarTone in arriving at the average charge of “10 cents per page”. According
to the results of the tests conducted by SmarTone and the complainant, when a

6
Please see paragraph 23(a)(i) for SmarTone’s clarification that iNQ received text-based monochrome
version of SmarTone iN!.
7
Please see paragraph 23(a)(ii) for SmarTone’s clarification that Nokia 2760 received text-based colour
version of SmarTone iN!

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higher end 2G handset model (such as Nokia 2760 used by SmarTone) or a 3G
handset model (such as Nokia 5610 used by the complainant) was used for
browsing SmarTone iN! on a pay-as-you-go basis, the charges incurred would
be higher than the “average 10 cents per page” as represented on SmarTone’s
webpage. Without any specific advice in this regard, customers would not be
aware that the “average 10 cents per page” representations were only
applicable to situations where certain handset models were used for browsing
SmarTone iN! on a pay-as-you-go basis.

14. On 26 November 2010, the complainant provided a statement on

his complaint to the former OFTA. In addition to repeating the results of the
tests he conducted between 4 April 2010 and 7 May 20108, the complainant also
set out in his statement the procedures he followed when browsing the
SmarTone iN! WAP pages in March 2010 and the follow-up actions he had
taken with SmarTone.

15. The complainant had followed the procedures below on 27 March

2010 in browsing the SmarTone iN! home WAP page -

(a) he first deactivated the graphic function of his handset;

(b) he then entered SmarTone iN! home WAP page address;

(c) after browsing SmarTone iN! home WAP page, he recorded the
SIM card value being deducted.

16. As the amount he was charged for browsing a SmarTone iN! WAP
page was much higher than the “average 10 cents per page” as stated in
SmarTone’s webpage, the complainant called SmarTone’s service hotline on 27
March 2010 and lodged a complaint on the excessive charges for browsing a
SmarTone iN! WAP page. He was informed by the hotline staff that the usage

8
The details of these tests had already been provided by the complainant to the former OFTA on 25 May 2010,
and passed by the former OFTA to SmarTone for making comments. See paragraph 4 above.

-7-
charge would be affected by the type of handset used, the location, and the
environment.

17. In light of the explanation given by the hotline staff, the

complainant browsed again SmarTone iN WAP page9 on 28 March 2010 at
00:15 am and 00:16 am, and found that he was charged six times (with the
graphic function deactivated) and nine times (with the graphic function
activated) more than what SmarTone had promulgated on its website. The
complainant lodged another complaint to SmarTone’s service hotline. Again he
was told by the hotline staff that the amount of data usage and the charges
incurred depended on various factors as previously explained to him.

THE INVESTIGATION

18. The representations of “average 10 cents per page” on

SmarTone’s webpage were a piece of pricing information promulgated by
SmarTone for providing telecommunications services to its customers. There
was no remark accompanying the representations in SmarTone’s webpage to
explain the basis of SmarTone in arriving at the average charge of “10 cents per
page” or to alert customers that the usage charges would depend on the types of
handset used or other factors. By reading the pricing information in the
Statement, ordinary customers might be led into believing that they would be
charged based on “average 10 cents per page” for browsing the contents of
SmarTone iN!. Ordinary customers have no way of knowing that SmarTone’s
network would provide different versions of SmarTone iN! for their browsing
based on the handsets they use and as a result they might be subject to higher
charges than the “average 10 cents per page” if a higher end version of
SmarTone iN! was accessed.

19. Having considered the complainant’s statement and SmarTone’s

initial comments, the former Telecommunications Authority (“TA”) considered

9
The address of the WAP page that was entered for conducting the tests was:
http://wap.smartone-vodafone.com/wmc/jsp/nightlife/foodeasy/dine_main.jsp?lang=1.

-8-
that the matter being complained of was within the scope of section 7M of the
TO and there were reasonable grounds for him to suspect that there might be a
breach of section 7M by SmarTone. Section 7M provides that -

“A licensee shall not engage in conduct which, in the opinion of the

Authority, is misleading or deceptive in providing or acquiring
telecommunications networks, systems, installations, customer
equipment or services including (but not limited to) promoting,
marketing or advertising the network, system, installation, customer
equipment or service.”

20. On 3 December 2010, the former OFTA commenced an

investigation into the complaint. SmarTone was provided with a copy of the
complainant’s statement and was invited to make representations that it wished
the former TA to take into account in deciding on the matter.

SmarTone’s Representations

21. In its representations of 4 January 2011, SmarTone submitted that

the Statement had been published on its website since December 2004, and the
phrase “average 10 cents per page” was to provide an illustration of what “4
cents/KB” would mean to an average 2G customer when browsing SmarTone
iN! on a pay-as-you-go basis. SmarTone considered that this was just
supplementary information for customers’ reference only, and was by no means
meant to be used to replace its tariff, which was “4 cents/KB”.

22. SmarTone submitted that the phrase “average 10 cents per page”
reflected the typical situation in most of the times since 2004 for a 2G customer
when browsing SmarTone iN! on a pay-as-you-go basis. Nevertheless, with the
increasing popularity of smart phones which were equipped with more
powerful features and larger screens since early 2010, SmarTone had reviewed
the situation and removed the phrase “average 10 cents per page” from its
website on 22 July 2010 (see Annex 2).

-9-
23. SmarTone explained that SmarTone iN! basically had two
versions –

(a) Text based version, with two sub-versions for monochrome and
colour handsets –

(i) text based monochrome version (e.g. for handset iNQ); and

(ii) text based colour version (e.g. for handset Nokia 2760).

(b) Non-text based version, with six sub-versions. SmarTone advised

that an appropriate non-text based sub-version would be delivered
to the customers depending on the resolution of the handsets used
for browsing the SmarTone iN! website. SmarTone did not
provide the average data consumption for all six non-text based
sub-versions but it advised that the three handsets used by the
complainant (i.e. Samsung S3650C, LG KS660 and Nokia 5610)
would receive non-text based SmarTone iN! version.

24. SmarTone submitted in Table 3 the information regarding the

percentages of its “PayGo/2G customers”10 whose handsets were capable of
receiving text based version of SmarTone iN! from 2005 to 2010.

Table 3: Percentage of PayGo/2G customers whose handsets were capable of

receiving text based version of SmarTone iN!

Percentage of PayGo/2G customers whose handsets

Year were capable of receiving the text based version of
SmarTone iN!
2005 []
2006 []
2007 []

10
The term “PayGo/2G customers” was used by SmarTone to refer to 2G customers (see footnote 5) as well as
PayGo 3G customers during the period between November 2007 to September 2009.

- 10 -
 Percentage of PayGo/2G customers whose handsets
Year were capable of receiving the text based version of
SmarTone iN!
2008 []
2009 []
2010 []

25. SmarTone advised that the percentage of its PayGo/2G customers

for the year 2004 was not available. In addition, SmarTone advised that the
percentages for the period between November 2007 and September 2009 also
included PayGo 3G customers who could browse the SmarTone iN! WAP
pages for free. According to SmarTone, the number of PayGo 3G customers
was about [] of the total number of PayGo customers during the period.

26. Referring to the three handset models used by the complainant to

conduct the tests as referred to in paragraph 4 above, SmarTone pointed out that
all the three handset models were more advanced “high-end” models which
could display more contents and graphics in a single page. Thus, the average
data consumption per page for these handsets did not represent the data usage of
an average 2G customer. SmarTone advised that the average data consumption
per page for browsing SmarTone iN! by using these three handset models with
default setting at a graphic enabled status would be as follows –

(a) Samsung S3650C (2G model) – 33.3 KB per page;

(b) LG KS660 (2G model) – 33.4 KB per page; and

(c) Nokia 5610 (3G model) – 31.9 KB per page.

27. According to SmarTone’s webpage (Annex 1), a 2G customer

could either browse SmarTone iN! on an unlimited basis by paying a monthly
fee of $12, or on a pay-as-you-go basis at “4 cents/KB”. SmarTone advised that
the $12 unlimited browsing plan of SmarTone iN! was not applicable to PayGo
2G customers. In 2010, about [] of its 2G customers (excluding PayGo 2G
customers) were monthly subscribers for the $12 unlimited browsing plan of

- 11 -
SmarTone iN!. The remaining [] of its 2G customers (excluding PayGo 2G
customers) might or might not be subject to the Pay As You Go GPRS tariff,
depending on whether these 2G customers (excluding PayGo 2G customers)
would have any data usage.

28. SmarTone submitted that it did not have the information in respect
of the number of PayGo/2G customers who had paid an average of “10 cents per
page” and those who had paid an average of more than 10 cents per page for
browsing SmarTone iN! on a pay-as-you-go basis because its billing system had
not recorded the number of pages viewed by each customer. Alternatively,
SmarTone submitted that, as at December 2010, the total number of its 2G
customers was about [] including 2G customers (excluding PayGo 2G
customers) of [] and PayGo 2G customers of [].

29. SmarTone further advised that a remark was added on the relevant
webpage in December 2010. The former OFTA browsed the relevant webpage
on 5 January 2011 and noted that the following remark was added. A copy of
the relevant webpage showing the remark is reproduced at Annex 3.

Chinese version
SmarTone iN! ℏ⭡㚫㟡㒂敋ᶳㇳ㨇✳嘇⍲℞≇傥ἄ↢婧䭨炻
ẍ㍸ὃ㚨Ἓ䘬ἧ䓐橼槿烊侴㇨䓋䓇䘬㔠㒂䓐慷Ṏ㚫⚈㬌侴㚱
㇨ᶵ⎴ˤ

English version
To provide the best user experience, the content of SmarTone iN!
is adjusted according to the handset model and features you use.
Thus, the data usage may vary.

OFCA’S ASSESSMENT

30. Based on the information available and the explanation provided

by SmarTone, OFCA understands that the SmarTone iN! was operated in the
following manner (to the extent that is relevant to this case) -

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(a) the Statement was applicable to SmarTone’s 2G customers
(including PayGo 2G customers) (see footnote 5) who selected to
browse SmarTone iN! under the Pay As You Go GPRS tariff;

(b) the Statement promulgated that the Pay As You Go GPRS tariff for
browsing SmarTone iN! was 4 cents/KB, average 10 cents per
page;

(c) the representations of “average 10 cents per page” were alleged to

specifically targeted 2G customers using average 2G handsets, but
this was not mentioned on SmarTone’s website;

(d) different versions of SmarTone iN! were created to cater for

customers using different handset models and SmarTone’s
network would determine and despatch the most appropriate
SmarTone iN! version to customers for browsing SmarTone iN!;

(e) non-text based versions (comprising six sub-versions) of

SmarTone iN! would be sent to customers using high-end handset
models, and text based versions (comprising monochrome and
colour) of SmarTone iN! would be sent to customers using low-end
handset models. Only the charge on browsing of text based
monochrome version of SmarTone iN! was in line with the pricing
information contained in the phrase “average 10 cents per page”;
and

(f) the percentages of PayGo/2G customers whose handsets were

capable of receiving text based versions of SmarTone iN!
decreased from [] in 2005 and 2006 to [] in 2007 and 2008,
[] in 2009 and [] in 2010 as shown in Table 3, though the
percentages in 2007 to 2009 also included PayGo 3G customers
(constituting [] of the total number of PayGo customers) who
could browse the SmarTone iN! WAP pages for free. SmarTone
was unable to provide separately the percentage or number of

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 customers who were capable of receiving the text based
monochrome and text based colour version of SmarTone iN!.

31. SmarTone argued that the phrase “average 10 cents per page”
was to provide an illustration of what “4 cents/KB” would mean to an average
2G customer when browsing SmarTone iN! on a pay-as-you-go basis and that
there were no misleading representations that the GPRS charges for browsing
SmarTone iN! were “4 cents per KB”. SmarTone considered that the phrase
“average 10 cents per page” was just supplementary information for customers’
reference only, and was by no means used to replace the tariff of “4 cents per
KB”.

32. OFCA disagrees with SmarTone’s argument that the phrase

“average 10 cents per page” was supplementary information for reference by
customers’ reference only. OFCA considers that it is difficult for the ordinary
customers to understand the actual GPRS charges they would incur based on the
formula of “4 cents per KB”. This is so as the ordinary customers would not
have any concrete idea as to the data volume involved in browsing different
SmarTone iN! WAP pages, not to mention the complications caused by
SmarTone providing different versions of SmarTone iN! to customers based on
the types of handset they used. Rather, ordinary customers would find the
phrase “average 10 cents per page” more comprehensible since they would be
well aware of the number of WAP pages they have browsed. As such, OFCA
considers that the phrase “average 10 cents per page” was material pricing
information that ordinary customers would choose to rely on when estimating
the required charges for browsing SmarTone iN! WAP pages.

33. SmarTone argued that the phrase “average 10 cents per page”
specifically targeted its 2G customers. To justify the phrase “average 10 cents
per page” was not misleading or deceptive, SmarTone identified two handset
models, i.e. iNQ and Nokia 2760 that represented the mix of two groups of 2G
handsets used by its 2G customers to conduct the tests with tests results
presented in Table 2.

- 14 -
34. OFCA does not consider that the test results presented in Table 2
could justify that the phrase “average 10 cents per page” was not misleading or
deceptive. Firstly, the tests results only represented two low-end handset
models (iNQ and Nokia 2760) that received text based monochrome or colour
version of SmarTone iN!. There were however six non-text based SmarTone iN!
versions which would be delivered to its customers using other higher end
handsets, such as the three handsets used by the complainant (i.e. Nokia 5610,
Samsung S3650C and LG KS660). According to the average data consumption
mentioned in paragraph 26, those three handsets used by the complainant
consumed more than 30 KB per page, translating into a service charge of more
than 120 cents per page (or twelve times the rate of “average 10 cents per
page”) based on the tariff of “4 cents/KB”. Secondly, SmarTone had not
qualified in its SmarTone iN! webpage that the phrase “average 10 cents per
page” applied only to data consumption of text based monochrome SmarTone
iN! version accessible by low-end handset models. Thirdly, even for the two
low-end handset models used by SmarTone for its testing, the charge incurred
was within the reference rate of “average 10 cents per page” for browsing
SmarTone iN! on a pay-as-you-go basis only for the handset model iNQ while
the charge for the other model (Nokia 2760) had exceeded the reference rate of
“average 10 cents per page”.

35. OFCA notes that there was no explanation given on SmarTone’s

website accompanying the Statement on the basis of SmarTone in arriving at
the average charge of “10 cents per page” in the period between 2004 and 2010.
By reading the phrase “average 10 cents per page” in the Statement, ordinary
customers would have been misled into believing that the GPRS charges for
browsing SmarTone iN! were 10 cents per page on average. Notwithstanding
that ordinary customers might have a general understanding that the actual
GPRS charges for browsing different WAP pages would be different and that
the browsing of certain WAP pages would incur higher GPRS charges than the
average rate of “10 cents per page”, they would not expect that the actual GPRS
charges per page could be so much higher than what was promulgated on
SmarTone’s website.

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36. OFCA considers that Table 3 has shown an obvious trend that the
2G customers whose handsets were capable of receiving text based version of
SmarTone iN! was dropping from [] in 2005 and 2006 to [] in 2010. This
suggests that the percentage of 2G customers who were not using handset
models capable of receiving the text based version of SmarTone iN! was on the
rise. In other words, at the time of the complaint in 2010, the rate of “average
10 cents per page” was applicable to less than [] of the 2G mobile customers
of SmarTone or, to put it in another way, the rate was not applicable to the
majority of those customers.

37. According to SmarTone, as of December 2010 the number of its

2G customers was about [], of which [] of its [] 2G customers
(excluding PayGo 2G customers) subscribed to $12 unlimited browsing plan of
SmarTone iN! in 2010 and therefore would not be subject to the GPRS charges
for browsing SmarTone iN!. While the actual number of customers being
affected by the phrase “average 10 cents per page” in 2010 could not be
ascertained as SmarTone could not provide the relevant figures or any statistical
information on the number of customers who might only use the handset for
basic voice services and would not browse the contents in SmarTone iN!, the
estimated number of customers being potentially affected by the phrase
“average 10 cents per page” could be up to [] (i.e. [] PayGo 2G
customers + [] 2G customers (excluding PayGo 2G customers) x (1 –[]))
after excluding [] of its subscribers to the unlimited browsing plan.

38. OFCA notes that SmarTone had removed the phrase “average 10
cents per page” in the Statement from its website on 22 July 2010 after
receiving the former OFTA’s enquiry on this complaint on 20 July 2010.
OFCA also notes that SmarTone had further added a remark in its website in
early December 2010, advising customers that the data usage might vary
according to the handset models used by the customers and their features.
OFCA considers that the removal of the phrase “average 10 cents per page” in
the Statement has rectified the misleading effect of the Statement, and the
remark added in December 2010 gives a general alert to the customer that the
data usage for browsing the contents of SmarTone iN! website will vary
according to the handset model and features the customer use.

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39. Based on the considerations in paragraphs 30 to 38, OFCA’s
assessment is that the representations of “average 10 cents per page” made on
SmarTone’ iN! website before their removal in July 2010 were misleading or
deceptive in regard to the provision of telecommunications service to its
customers thus constituting a breach of section 7M of the TO.

THE CA’S ASSESSMENT AND DECISION

40. After examining the facts of the case, the

information/representations provided by the complainant and SmarTone,
including the further representations submitted by SmarTone of 1 August 2012,
the CA affirms OFCA’s assessment that SmarTone had engaged in misleading
or deceptive conduct in breach of section 7M of the TO. A financial penalty
should be imposed.

41. This is the fourth occasion on which a financial penalty is imposed

on SmarTone under section 7M of the TO, and the maximum penalty stipulated
by the TO is $1 million. In considering the appropriate level of financial
penalty in this case, the CA has had regard to the Guidelines on the Imposition
of Financial Penalty issued under Section 36C of the TO (the “Guidelines”).
Under the Guidelines, the CA is to consider the gravity of the breach (such as
the nature and seriousness of the infringement, damage caused to third parties
by the infringement, and duration of the infringement), whether the licensee
under concern has previous records of similar infringements, and whether there
are any aggravating and mitigating factors.

42. In considering the gravity of the breach and therefore the starting
point for the level of penalty, the CA notes that (a) the phrase “average 10 cents
per page” in the Statement featured only in SmarTone website, but not other
publicity materials of SmarTone or displayed in its sales outlets, (b) as
discussed in paragraph 37, the estimated number of SmarTone’s customers who
might be potentially affected by the phrase “average 10 cents per page” in
2010 could be up to [] customers and (c) the phrase “average 10 cents per

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page” was promulgated on the website for some 5.5 years from December 2004
to July 2010 and SmarTone has started to send different versions of SmarTone
iN! since December 2004. Overall speaking, the CA considers this a
substantive breach.

43. While considering that this was a substantive breach of section 7M,
the CA also notes that the former OFTA had received only one consumer
complaint concerning the Statement. Also, the CA has not found any previous
record of similar infringement committed by SmarTone in relation to the GPRS
charges on browsing of SmarTone iN!.

44. In consideration of the above, the CA is of the view that the

appropriate starting point for determining the level of financial penalty is
$130,000.

45. On mitigation factor, the CA notes that SmarTone has been fairly
cooperative with the former OFTA and OFCA throughout the investigation. It
has also taken prompt remedial action by removing the phrase “average 10
cents per page” from the Statement in July 2010, before the former OFTA
commenced investigation in December 2010 and inserted a remark in the
relevant WAP page in December 2010 to alert customers that the data usage for
browsing the content of SmarTone iN! varies according to the handset model
the customer used and its features.

46. Having carefully considered the circumstances of the case and

taking all factors into account, the CA concludes that in this case of the fourth
occasion on which a financial penalty is imposed under section 7M of the TO on
SmarTone, the penalty which is proportionate and reasonable in relation to the
breach concerned is $100,000.

The Communications Authority

August 2012

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 Annex 1

SmarTone’s English Version

Browsing SmarTone iN! GPRS Charges
Monthly Fee : $12 Unlimited browsing*
Pay As You Go: 4 cents/KB*, average 10 cents per page
(excluding picturemail, & Vodafone Business Email)
 Annex 2

SmarTone’s English Version

Browsing SmarTone iN! GPRS Charges
Monthly Fee : $12 Unlimited browsing*
Pay As You Go: 4 cents/KB*
 Annex 3

SmarTone’s English Version

To provide the best user experience, the content of SmarTone iN! is
adjusted according to the handset model and features you use. Thus,
the data usage may vary.