A complaint alleging Chunghwa Telecom's free in-home telecommunications wiring installation and maintenance in the interior of architectural structures violated the Fair Trade Law
Case:
A complaint alleging Chunghwa Telecom's free in-home telecommunications wiring installation and maintenance in the interior of architectural structures violated the Fair Trade Law
Key Words:
bottleneck facilities, telecommunications market, fixed network communications
Reference:
Fair Trade Commission Decision of May 31, 2000 (the 447th Commissioners' Meeting); Letter (89) Kong T'ai Tzu No. 88008692-006, 8808692-007, 8808692-008
Industry:
Telecommunications Industry (6320)
Relevant Laws:
Summary:
1. In a letter to engineering and construction industry trade associations, Chunghwa Telecom Co., Ltd. announced that it would provide free in-home telecommunications wiring installation and maintenance work in the interior of architectural structures provided that the subscriber enter into an installation and maintenance consent agreement stipulating that Chunghwa Telecom would retain ownership of the wiring. Chunghwa Telecom exploited its position as engineering drawing certifier to demand that subscribers submitting drawings for review also enter into the consent agreement so that it could obtain ownership of the wiring. In so doing, Chunghwa Telecom acted both as player and referee. Its act had denied private enterprises the opportunity to compete, which had seriously affected the trading order in the telecommunications engineering installation work market. Chunghwa Telecom also attempted to monopolize the future fixed network communications market. 2. With respect to the legal basis of Chunghwa Telecom's certifying power over engineering drawing, and the question of whether its had acted as both player and referee, note that the part of telecommunications engineering in the interior and exterior of architectural structures that requires professional skill- design, supervision of construction, and certification - must be carried out pursuant to the Technician Law, Architecture Law, Regulations Governing the Certification of Professional Engineers Pertaining to Architectural Structures and Equipment, Regulations Governing the Management and Certification of Professional Technicians Pertaining to the Professional Portion of the Installation of Electronic Equipment in Architectural Structures, Regulations Governing the Installation of Telecommunications Equipment in the interior and Exterior of Subscriber's Architectural Structures, and Standards Governing the Design of Telecommunications Wiring in Subscriber's Architectural Structures. Given that Chunghwa Telecom was not a design, construction supervision, or certification agency, and that it was not composed of the professional technicians specified in the Architecture Law, it was not authorized to carry out the review and certification of engineering drawings. Although according to the Regulations Governing the Installation of Telecommunications Equipment in the interior and Exterior of Subscriber's Architectural Structures promulgated by the Ministry of Transportation and Communications (MOTC), and to the Standards Governing the Design of Telecommunications Wiring in the Interior and Exterior of Subscriber's Architectural Structures prescribed by the MOTC's Directorate General of Telecommunications (DGT), Chunghwa Telecom was authorized to carry out work pertaining to the reception and processing of wiring drawings, connection of networks, and the supply of cable, it was not authorized by the Ministry of the Interior's (MOI) Construction and Planning Administration to carry out work pertaining to the professional part of the design, oversight of construction, and certification of Telecommunications Equipment in the Interior and Exterior of Architectural Structures. The Commission could not find that Chunghwa Telecom acted as player and referee in its reviewing work for telecommunications engineering drawing. As to the question of whether Chunghwa Telecom's free installation and maintenance had constituted an abuse of its advantageous market position, note that in July 1990, Chunghwa Telecom decided to leave its subscribers the freedom to opt for the ways their telecommunications wiring in the interior of architectural structures could be installed. To let subscribers choose whether to install and maintain the wiring themselves, Chunghwa Telecom provided three installation and maintenance packages and payment programs, and the "architectural structure's MDF telecommunications room or central wiring box" was designated as the point demarcating the extent of responsibility for the installed wiring. If a subscriber chose to use Chunghwa Telecom to install and maintain the wiring, Chunghwa Telecom would own the wiring and be responsible for maintenance. If a subscriber chose to install the wiring itself but not maintain it itself, the subscriber would own the wiring and Chunghwa Telecom would be responsible fo r maintenance. But the subscriber should incur the costs of labor and upgrading materials. If a subscriber chose to install the wiring itself and maintain it, it would own the wiring and be responsible for maintenance. The Fair Trade Commission (the Commission) found that Chunghwa Telecom had allowed subscribers to commission another enterprises to install on its behalf telecommunications wiring in the interior of an architectural structure. Chunghwa Telecom did not automatically carry out installations itself. Moreover, Chunghwa Telecom had acknowledged that to avoid adversely affecting the interests of other telecommunications installers and related enterprises, it would evaluate and adjust its aforementioned business practices in accordance with the changes of market condition. The Commission could not find that Chunghwa Telecom intended to restrain competition or engage in unfair competition. Due to the consideration of property ownership and maintenance obligation, Chunghwa Telecom offered different options for installing telecommunications wiring; but subscribers were able to choose self-installation-and- maintenance service. The Commission could not find that Chunghwa Telecom's free work constituted an abuse of advantageous market position. As to the question of whether Chunghwa Telecom's free service, and its obtaining of ownership of the telecommunications wiring had the potential of affecting fair competition in the fixed network communications market in the future, the DGT had interpreted the content of the Consent Agreement For Installation and Maintenance by Chunghwa Telecom of Telecommunications Wiring in the Interior of New Architectural Structures as to mean that once a subscriber agreed to have telecommunication wiring in the interior of an architectural structure installed and maintained by Chunghwa Telecom's installation, and pay for the services pursuant to Chunghwa Telecom's Local Telephone Operation Code of Practices, legally the relationship of a mandate was formed. As a result, Chunghwa Telecom should not be seen as having obtained the permanent ownership over the telecommunications wiring. Moreover, "telecommunications conduit" is telecommunications transmission ducting in architectural structures, and that "telecommun ications wiring" is telecommunications circuits in telecommunications conduit. What the subscriber had consented to in the Agreement was to have "telecommunication wiring" installed and maintained by Chunghwa Telecom. Despite that Chunghwa Telecom owned the property right of telecommunications wiring, it could not be said that this permanent ownership should be extended to cover "telecommunication conduit." Therefore, it ruled out the possibility that Chunghwa Telecom could exclude its competitors from entering the fixed network communications market. It was also the opinion of the DGT that in order to get an early start in the fixed network communications market, the operators would need to accelerate their installation of telecommunications equipment. It is expected that they will follow Chunghwa Telecom's mode to install telecommunications wiring in the interior of subscribers' architectural structures themselves. In addition, no significant restrictions preventing cable television enterprises from en gaging in telecommunication operations are currently in force. If a cable television enterprise could obtain a fixed network license and then install the required equipment by using the subscriber's existing network, it could compete with Chunghwa Telecom in the fixed network communications market. After considering the DGT's opinions, the Commission found that Chunghwa Telecom's practices were not likely to create entry barriers for potential entrants or affect fair competition in the fixed network communications market. 3. In a resolution of the Commissioners' Meeting, the Commission found that there was no concrete evidence to prove that Chunghwa Telecom had abused its advantageous market position in violation of the Fair Trade Law. Although when issuing home construction license, local construction authorities usually commissioned Chunghwa Telecom to provide assistance on matters relating to the connection of public telecommunication network, yet to avoid conflict of interest and to maintain the trust on government from the public, the drawings should more appropriately be reviewed by the competent authority of the industry to which the enterprise belongs - either the MOI's Construction and Planning Committee or another impartial agency. The Commission recommended that the Construction and Planning Committee inform county and city governments to reevaluate the matter. With respect to the contents of the consent agreement regarding ownership of the wiring, it could raise the concern that fixed network operators wo uld thereby be blocked from entering architectural structures bound by the consent agreement in the future, and whether consumers would continue to have the right to choose between different service providers. In light of the recent liberalization of the fixed network communications market, the Commission recommended that the DGT reevaluate its approval on March 12, 1999 regarding Chunghwa Telecom's Local Telephone Operation Code of Practices and consent agreement, to avoid future dispute on the possibility that private enterprises are squeezed out of the telecommunications market by leading enterprises monopolizing bottleneck facilities and communications networks, and to maintain fair market competition and public interest. Summarized by Lu Li-Na; Supervised by Hu Kuang-Yu