Chunghwa Telecom

Case:

Key Words:

untrue, misleading, obviously unfair

Reference:

Fair Trade Commission decision of March 31, 2010 (the 960th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 099043

Industry:

Telecommunications Businesses (6100)

Relevant Laws:

Paragraph 3 of Article 21, mutatis mutandis application of and Paragraph 1 of the same Article, and Article 24 of the Fair Trade Law

Summary:

1. Cable Broadband Institute in Taiwan informed the FTC that the comparative advertising by Chunghwa Telecom Co., Ltd. (hereinafter referred to as Chunghwa Telecom) of the services of the "Optical Network" and "Cable Modem" on its "broadband access network comparison " web page to compare "connection quality," "upload and download speeds," "security," "network expandability," "network protection mechanism," "bandwidth distribution," and "extra equipment for users" was untrue.
2. Chunghwa Telecom claimed in its advertisement for the "Optical Network" that fiber optic networks could be divided into FTTH/Fiber to the home, FTTB/Fiber to the building, and FTTC/Fiber to the curb and the "connection quality" varied depending on the location of the fiber optic terminals. Full FTTH services were not yet available, while both FTTB and FTTC still used certain amounts of non-fiber optic connection. Therefore, the quality of services and functions were not 100% that of fiber optic cables. Chunghwa Telecom also asserted that the company provided a "router and equipment protection mechanism" to ensure network connection stability, such as use of alternative transmission lines when a network connection malfunction occurred. However, both FTTB and FTTC had to be hooked up to users through existing cables that could not be replaced. Therefore, the advertising by Chunaghwa Telecom was inconsistent with facts and in violation of the regulation of Paragraph 3, mutatis mutandis application of Paragraph 1, of Article 21 of the Fair Trade Law.
3. Chunghhwa Telecom advertised under the title of "connection quality" in regard to "cable modem" that the company used coaxial cables. However, in reality a cable modem network consisted of fiber optic and cable lines. Next, Chunghwa telecom claimed its upload speed reached "80K~1M" and the download speed was "230K~10M," yet the data provided by Chunghwa Telecom showed that "Cable Modem" was capable of providing service with the download speed already achieving 128K~2M/1M-30M. Meanwhile, according to National Commutations Commission, by applying the DOCSI3.0 technology, the upload and download speeds of "Cable Modem" could respectively reach 30Mbps and 160Mbps. At the same time, Chunghwa Telecom's allegation that "use of the same medium would result in lower security." However, according to the Telecom Technology Center, "Cable Modem" and "Optical Network" both had their own security protection mechanism. Without actual cases and evidential data, it would be impossible to assess which one had higher or lower security. In other words, it was impossible to judge transmission through cable modems was lower in security. Finally, Chunghwa Telecom declared under the title of "network expandability" that "expandability is low when the transmission speed is determined in line with the number of subscribers." In reality, however, the network expandability when using the services of "Cable Modem" depends on the technology applied at the headend of the system instead of on the number of subscribers. With the above combined, the allegations Chunghwa Telecom made against its competitor Cable Modem in regard to connection quality, upload and download speeds, security, and network expandability constituted unfair competitive conduct and were in violation of Article 24 of the Fair Trade Law. The FTC therefore fined Chunghwa Telecom 1 million NT dollars.

Summarized by: Lee,Wan-Chun
Supervised by:Chen,Chun-Ting

Appendix:
Chunghwa Telecom Co., Ltd.'s Uniform Invoice Number: 96979933