Asia Pacific Telecom Ltd.

Case:

Key Words:

False Advertisement, free charge for intra-network, lowest price for inter-networks.

Reference:

Fair Trade Commission Decision of September 20, 2007 (the 828th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 096153

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. An enterprise reported that Asia Pacific Telecom Ltd. (hereinafter referred to as "Asia Pacific") published Wonder4+Honey99 charge package commercials, stating that "No charge for intra-net of Asia Pacific ", "Cheapest outside Asia Pacific network", and "Free charge for intra-network and the lowest price for inter-networks is NT$3.6/min" etc., violated the Fair Trade Law.
2. Investigation revealed that Asia Pacific's commercial statements on "No charge for intra-network", and "free charge for intra-network" etc., meant that the recipients of the calls should also be customers of Asia Pacific, then may enjoy the benefits of free call charge. Furthermore, the "free charges for intra-network" meant when customers choose Wonder4 charge plan plus Honey99 value-added service, then may enjoy the benefits of totally free charge to calls to designated 1 to 2 sets phone numbers, irrespective of the length and the time of the calls. Hence the actual charge plan for Wonder4+Honey99 package is not "intra-network" free, but "designated 1 to 2 sets intra-network phone numbers" free. If the customer calls to other intra Asia Pacific network phone numbers, rather than the designated phone numbers then would not be able to enjoy the benefits of free call charges. Further investigation showed that charge plans also segregated northern, middle, southern, and eastern regions as the four big beneficial regions for the purposes of a customer choosing a particular region as her (his) beneficial charge plan region. The basis of calculation of different charge plan is distinguished by intra-region and inter-region, rather than intra-network or inter-network. Taking the Wonder4 558 promotion plan of the Wonder4 commercial for example, its intra-region call charge is NT$0.06/second (equivalent to $NT3.6/minute), inter-network charge is NT$0.125/second (equivalent to NT$7.50/minute). Therefore, if the customer calls other phone numbers of the Asia Pacific network, but not designated phone numbers, then the cost would be NT$0.06/second and NT$0.125/second for intra-region and inter-region respectively. Thus, the actual phone charge is far more expensive than the "intra-network free" statement made in the commercial and the rate of the charge is the foremost consideration by a consumer when applying for telecom service. The said broadcast and television commercial statements on "intra Asia Pacific network is free" and "intra-network is free" and etc., would mislead consumers to believe that applying Wonder4+Honey99 charge plan would made them enjoy the benefits of free rate for intra-network calls and thus violates Article 21(3) of the Fair Trade Law and the applicable provisions in Article 21(1) of the same Law.
3. Furthermore, investigations on the statements of "cheapest inter-network charges", "lowest inter-network prices of NT$3.60/minute". and "inter-network" , meant the act of a customer of Asia Pacific calls recipients who are not Asia Pacific's customers, further the beneficial rate of NT$3.60/minute is restricted to "designated regions" and are not applicable to all "inter-network" calls, hence if the customer calls recipients who are not Asia Pacific's customers and outside the designated region, then NT$3.60/minute will be inapplicable and NT$7.50/minute calculation base must be adopted. Although the inter-network calls within the designed regions are cheaper than other telecom service providers, inter-network calls outside the designated regions of NT$7.50/minute is more expensive than inter-network charges of Taiwan Cellular Corp.'s 600 charge plan (NT$7.20/minute), and the inter-network beneficial price of the 586 charge plan offered by Vibo Telecom Inc. (NT$4.20/minute). Hence, the above statements on being the ‘cheapest inter-network calls" and "lowest inter-network charges" would mislead consumers to believe the inter-network call charges in Wonder4 charge plan offer the cheapest price in the marketplace. Therefore, the abovementioned behavior violates Article 21(3) of the Fair Trade Law and the applicable Article 21(1) of the same Law.
4. Although Asia Pacific noted conditions at the end of the commercial, the overall observation from the commercial, "Asia Pacific intra-network calls are free" and "Asia Pacific's inter-network calls are the cheapest" slogans, the conversation between the people and supplement images in the television commercial, "free intra-network calls and lowest inter-network call charges of NT$3.60/minute" at the end of the commercial using a more obvious font or tone, all drill into consumers, via the commercial, the concepts of "free intra-network calls" and "intra-network call charges are free". The fore-mentioned contrasts greatly against the restrictive conditions stated at the end of the commercial. Unless the method of expressing the restrictive conditions allows consumers to simultaneously understand the claims and restrictive conditions of the commercial, it would not be sufficient to reverse consumers' miss-concepts of "free intra-network call services" and "cheapest inter-network call charges in the market" after they read and listened to the commercial. In addition, Asia Pacific broadcasting commercial contains the same statements. Since broadcasting commercials are not able to simultaneously present images and sound, and only broadcast commercial content via sound, then by only stating "free intra-network calls, cheapest inter-network calls" in the commercial, consumers would not be able to realize the restrictive conditions of "designated number(s)" and "within region" and therefore constitutes false and misleading statements.
5. After considering Asia Pacific's motivation of the unlawful acts, the degree of harm of the unlawful act to the trading order, the lasting period of such unlawful act, the benefits originated from such unlawful act, the scale of operation and remorse shown for the unlawful act, the attitudes towards cooperating the investigations, and other factors, it is decided that Asia Pacific shall be fined in accordance with the fore-section of Article 41 of the Fair Trade Law for an amount of NT$500,000.

Appendix:
Asia Pacific Telecom Ltd.'s Uniform Invoice Number: 70771579

Summarized by Chen, Jen-Ying; Supervised by Yeh, Tien-Fu