Card issuers for prepaid telecommunications services should be regulated by a class licence, according to a consultation paper issued today by the Office of the Telecommunications Authority.

The services include prepaid calling cards for International Direct Dialling (IDD) and prepaid SIM cards for mobile phones.

Under the proposal, card issuers who offer prepaid telecommunications services without maintaining or establishing any means of telecommunications are required to register with the authority under the class licence regime.

Class licence reduces administrative burden to licensees by not requiring individual licence applications. They are only required to register with the authority before offering the regulated telecommunications services.

Protecting consumers

The authority said in view of the proliferation of prepaid telecommunications services the mode of business operation of which involves collection of service charges before delivery of the services, card issuers should be regulated to protect consumer interests.

Card issuers for prepaid telecommunications services typically conduct their business by issuing prepaid calling cards (fixed line services) or SIM cards (mobile services) to end customers. 

They purchase bulks of call minutes from the network or service operators on a wholesale basis, and resell the call minutes in retail by issuing their own prepaid calling cards or SIM cards.

A shop that merely sells telephone cards or SIM cards as general commodities, but is not involved in similar conduct will not be regarded as card issuers of prepaid telecommunications services and regulated according to the proposal.

Consultation ends December 14 

A company incorporated or registered under the Companies Ordinance (Cap 32) and registered with the authority under the proposed class licence will become a class licensee.

The class licensee will be required to provide information such as its name, its registration number and tariffs to the consumers, which will facilitate the consumers to make informed purchasing decisions

By requiring the card issuers to register, the authority will be able to trace them and monitor their business operations.