Far Eastone Telecommunications Co. Ltd.

Case:

Key Words:

false advertisement, all free, largest network in the country

Reference:

Fair Trade Commission Decision of October 18, 2007 (the 832nd Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 096163

Industry:

Telecommunications (6100)

Relevant Laws:

Article 21(3) of the Fair Trade Law applied mutatis mutandis to Article 21(1) of the same Law

Summary:

1. Summary of the report from the complainant: Far Eastone Telecommunications Co. Ltd. (hereinafter referred to as "Far Easton") advertised "Far Eastone Big Twin Networks Chats 990" charge plan commercial on broadcasts, televisions, newspapers and other media, contending "free calls among intra-network", "intra-network visual calls are also free". However, it intentionally hid or only noted with a raw of letters of important restriction conditions on newspaper commercials, which limiting the benefits to the first 5 or 2 minutes of a single call are free, and the words are unreadable by the public with general attention. In addition, the advertisement charge plan of "inter-network and district calls are half price", in fact, is NT$0.15/second for inter-network phone-calls, NT$0.17/second for inter-network visual calls, and no offer with half price rate for inter-network or district calls. Although the plan offered 220 minutes free inter-network and district calls, free minutes and half price are two different issues. Besides, when the consumer's calls exceeded 220 minutes, then the charge rate would be NT$9.00/minute. Further, the commercial contended that " Far Eastone and KG Telecom are the biggest network in this country" etc., but in accordance with "Telephone Business in Chinese Taipei - Fuchien Area for 2G mobile phone communication", the alleged and KG Telecom (hereinafter referred to as "KG"), irrespective of their total customer quantity or their added operation revenue items are all less than Chunghwa Telecom (hereinafter referred to as "Changhwa"). Thus, such behavior might violate Article 21 and 24 of the Fair Trade Law.
2. Investigation showed that Far Eastone advertised "Far Eastone Big Twin Networks Chats 990" charge plan commercial on broadcasts, televisions, newspapers and other media, contended "free calls among intra-network", "intra-network visual calls are also free", and etc. However, Far Eastone's actual calculation of the charge plan is free for the first five minutes for "intra-network calls" and "intra-network visual calls", but the charge rate since the sixth minute is NT$1.00/minute or NT$9.60/minute respectively. Hence the contention on "free calls among intra-network", "intra-network visual calls are also free" are incorrect in practice. Although the fore-said television commercial noted at the bottom of its commercial with "restrict to first five minutes of intra-network free only; 3G visual calls must go with 3G mobile phone", or "first five minutes of each call are free" and etc. Yet, the said commercial adopted conversation method to contend beneficial claims but failed to at the same time disclose restrictive conditions and the mere silent and unobvious font of presenting the restrictive conditions obviously contrasted greatly against the afore-mentioned beneficial claims. Besides, the unobvious restrictive condition notes would in actual fact insufficient to reverse consumers' misconnection from the fore-section of the commercial about free intra-network calls and visual calls. As for the aforementioned newspaper commercial, tiny and ‘reversed-direction' words noting that "'intra-network voices and 3G visual calls free' meant calls of Far Eastone and KG network, free for first five minutes…." etc, would be hard to expect consumers to simultaneously understand the restrictive conditions attached to the beneficial claims under normal reading behavior. Hence, the statements constituted to false and misleading representation.
3. Further, with regards to Far Eastone's contentions of "inter-network calls and landlines are half price" in the aforementioned broadcasts and television media, the actual beneficial amounts is "free inter-network and district calls 220 minutes (equivalent to NT$1,980)" and "inter-network call charges" is NT$0.15/second which is a non-discounted charge rate. Far Eastone contended "inter-network and district calls are half price" meant granting the above-mentioned calls with the base rate of NT$0.15/second (equivalent to $9.00/minute) for 220minutes. As for inter-network calls, a saving of $1,980 comparing with "Big Twin Networks Chats 990" monthly fee of $990 as the proportional comparison for the half price contention. However, consumers would not be able to realize the aforementioned half price calculation method from the commercial and thus would result in the misconception of half price for inter-network and district calls for the charge plan. Resultingly, if calculate in accordance with the chargeable rate of NT$0.15/second for calls exceeding 220 minutes of inter-network and district calls, then there would be a great discrepancy to the commercial contention of "inter-network and district calls are half price", resulted in the contention to be false and misleading. Although Far Eastoneat end of the television commercial on the "inter-network and landline calls half price" contentions noted with relatively small font "each month grant a total of 220 minutes free inter-network and district calls, and if calculated on NT$0.15/second, value worth is NT$1,980, but monthly fee is $990 and thus customers would enjoy an equivalent of half price discount. For details please visit Far Eastone website" and "for Chats 990 monthly fee of 990 divide each month's free grant of 220 minutes, average rate per minute is NT$4.50 and comparing with the original inter-network call of NT$9.00/minute, the customers are deemed to enjoy an equivalent of half price discount. For details please visit the Far Eastone website", and etc. Except for the complexity of the restrictive conditions concepts and the way of expressing them in the commercial, it is insufficient for consumers to simultaneously understand both beneficial claims and restrictive conditions and result in the consumers unable to realize from the overall commercial that "inter-network and district calls are half price" in fact is restricted to 220 minutes. Hence, the above-mentioned behaviors violated Article 21(3) of the Fair Trade Law and the applicable Article 21(1) of the same Law.
4. With regards to Far Eastone's contention of "Far Eastone and KG are the biggest network in this country" in the aforementioned broadcast and television media, indicating that its contention is based upon the statistics from "Telephone Business in Chinese Taipei - Fuchien Area for 2G mobile phone communication", from January to end of December of 2006, Far Eastone and KG aggregated dialed minutes are more than other telecommunication enterprises. Except the contentions in the said commercial are "biggest network in the country", and "intra-network calls free", "intra-network visual calls are also free", etc, would lead a consumer to assume the contention of being the biggest network should include intra-network calls and intra-network visual calls services and thus the calculation base should include both second generation and third generation mobile phone communication operation information. According to the communication operation information from January to December of 2006, the aggregated dialed minutes for Far Eastoneand and KG of 2G and 3G mobile phone services are lower than Chunghwa. Hence the statement is a false and misleading contention. Although the aforementioned television commercial has noted "the biggest network in the country contention is based on the dialed minutes, information from National Communications Commission's January 2005 ~ September 2006 announcement titled "Telephone Business in Chinese Taipei - Fuchien Area for 2G mobile phone communication"" and similar wordings etc. Except those notes are presented in unobvious font at the bottom of the commercial and the wording and length of presentation is not easy for understanding and whether consumers can fully understand from the duration of the commercial is doubtful. Also, the aggregated information is limited to 2G mobile operation status and is inconsistent to the perceptions from the commercial of being the biggest network for 2G and 3G mobile communication business. Hence, such statement violated Article 21(3) of the Fair Trade Law and the applicable Article 21(1) of the same Law.
5. In lights of Far Eastones motivation, purpose, and expected improper benefits of the unlawful acts; the degree of the unlawful act's harm to market order; the duration of the unlawful act's harm to market order; benefits derived on account of the unlawful act; scale, operating condition, and market position of the enterprise; whether or not the type of unlawful act involved in the violation has been the subject of correction or warning by the central competent authority; types of, number of, and intervening time between past violations, and the punishment for such violations; remorse shown for the unlawful act and attitude of cooperation in the investigation, and other factors, Far Eastone is therefore being ordered to immediately cease the unlawful acts and is also fined NT$ 6 million, in accordance with the fore-section of Article 41 of the Fair Trade Law.

Appendix:
Far Eastone Telecommunications Co. Ltd.'s Uniform Invoice Number: 97179430

Summarized by Ma, Hai-Chieh; Supervised by Yeh, Tien-Fu