Far EasTone Telecommunications Co., Ltd.

Case:

Key Words:

telecommunications, rate plans, rates, comparison advertisement

Reference:

Fair Trade Commission Decision of January 4, 2007 (the 791st Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 096004

Industry:

Telecommunications (6100)

Relevant Laws:

Article 21(1) and 24 of the Fair Trade Law

Summary:

1. This case originated from a complaint letter filed by Taiwan Mobile Co., Ltd. (hereinafter called "Taiwan Mobile") stating that:
1. Far EasTone Telecommunications Co., Ltd. (hereinafter called "FET") issued a news release and comparison advertisement of telecommunications rate plans (rates comparison chart) on December 29, 2005. Said comparison advertisement compared three plans of three telecommunications enterprises, which were "FET 365," "Taiwan Mobile 268," and "VIBO 386." The items compared were the "Average rates per minute" and the billing amounts when calling "50 minutes per month" and "100 minutes per month" with the aforementioned plans. FET was aware that if calculating with the same standard its average rates would be higher than "Taiwan Mobile 268" and "VIBO 386" but omitted 15% landline calls. Instead, FET stated that its plan "FET 365" had the lowest "average rate" of NT $5.1 and the billing amount when calling "100 minutes per month" was NT $510. FET further wrongly represented the billing amount of "Taiwan Mobile 268" as NT $500 when calling "50 minutes per month" and NT $731 when calling "100 minutes per month."
2. In its news release, FET stated that its "FET Double Network 165" had the lowest threshold of all monthly plans of all domestic enterprises. However, the complainant also had a monthly plan "Type 66" while Chunghwa Telecommunications and APBW had "Type 88" monthly plan. Therefore, "FET Double Network 165" was definitely not the monthly plan with the lowest threshold in the domestic market.
2. Findings of FTC after investigation:
1. FET sated in its rate plans comparison chart that "FET 365" had an average rate of NT $5.1 per minute (calculated with 50% for FET to FET calls, 35% for calling to other networks, and 15% for calling landlines), and that the billing amount was NT $510 when calling "100 minutes per month." According to FET, the average rate of NT $5.1 per minute of the plan "FET 365" was calculated based upon the preferential rate of "call one minute get one free." In other words, the rate for making FET to FET calls was NT $0.04 per second (NT $2.4 per minute). However, it was found that the calculation of said "call one minute get one free" was only for "the same phone call," "odd minutes are charged," and "even minutes are free." Therefore, if the average rate is NT $5.1 per minute, the user would have to make phone calls all lasting for even minutes. As a result, upon the user's actual usage of the plan "FET 365," the average rate per minute is from NT $5.1 to NT $6.3. FET's act of employing only the lowest rate, NT $0.04 per second, to calculate FET to FET calls and stating the result in a comparison advertisement without disclosing the calculation rules would easily cause the general public to wrongly believe that "FET 365" had the lowest rate of the three telecommunications enterprises. In addition, FET stated that the billing amount of "Taiwan Mobile 268" was NT$500 when calling "50 minute per month" and NT$731 when calling "100 minutes per month" without including Taiwan Mobile's preference of "first 30 minutes free for Taiwan Mobile to Taiwan Mobile calls." If said preference was included, the billing amount shall be NT$355 when calling "50 minutes per month" and NT$587 when calling "100 minutes per month."
2. FET stated that its "FET Double Network 165" had the lowest threshold in its news release. According to FET, said plan had the lowest threshold of NT$165 among the monthly plans in the market when applying for a new number. The Monthly fee was able to be offset by calling fees. However, it was found that the complainant provided a monthly plan to new customers as low as NT$66 a month, which was also able to be offset by calling fees. The plan with lowest monthly fee of Chunghwa Telecommunications was its "Super Value 128" with a monthly fee of NT$88 which could offset 128 dollars of calling fees. Therefore, FET's "FET Double Network 165" did not have the lowest threshold.
3. Grounds for disposition:
1. FET's wrongly claimed that its "FET Double Network 165" had the lowest threshold and wrongly represented the average rates and billing amounts of "FET 365" and "Taiwan Mobile 268." FET therefore violated Articles 21 and 24 of the Fair Trade Law by making false, untrue and misleading representations regarding its services and services provided by other enterprises.
2. After considering the motive, purpose and anticipated improper profits of the unlawful acts of FET; the degree and duration of the unlawful acts' harm to market order; the benefits derived on account of the unlawful acts; the scale, operating condition and market position of the enterprise; whether or not the type of unlawful acts involved in the violation have been corrected or appropriate warnings have been given by the Central Competent Authority; the types and numbers of and intervals between past violations, and the punishment for such violations; the remorse shown for the acts and attitude of cooperation in the investigation; and other factors, the FTC, in accordance with the fore part of Article 41 of the Fair Trade Law, imposed an administrative fine of NT$800,000.

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

Summarized by Fong, Jyun-Cyuan; Supervised by Shen, Li-Yu