New Century InfoComm Tech Co.

Case:

Key Words:

telecommunications business, Internet phone, performance competition

Reference:

Fair Trade Commission Decision of June 6, 2012 (at the 1074th Commissioners' Meeting), Disposition Kung Chu-Tzu No. 101066

Industry:

Telecommunications (6100)

Relevant Laws:

Subparagraph 3 of Article 19 of the Fair Trade Law

Summary:

1. The FTC was informed by Chunghwa Telecom Co., Ltd. (hereinafter referred to as Chunghwa Telecom) that when Far Eastone Telecommunications Co., Ltd. (hereinafter referred to as Far Eastone Telecom) and New Century InfoComm Tech. Co. (hereinafter referred to as New Century InfoComm) installed the Wagaly Talk Lite device, packed by Far Eastone Telecom, in users' homes to receive their E.164 number mapping standard (also called 070 Internet phone) service, they altered the local phone connection setting of Chunghwa Telecom without authorization in order to make the profit that should belong to Chunghwa Telecom. The new setting enabled subscribers to the 070 Internet phone service to dial like using Chunghwa Telecom's original service when making local calls but they had to press the "*" button twice when they wanted to use Chunghwa Telecom's service to make local calls. As a consequence, people chose to use the 070 Internet phone service out of convenience and the local call service of Chunghwa Telecom became unpopular for the users with the Far Eastone Wagaly Talk Lite device. The conduct was in violation of the Fair Trade Law.
2. Findings of the FTC after investigation:
   With the provision of the E.164 number mapping standard Internet phone service, New Century InfoComm connect the Far Eastone Wagaly Talk Lite device between the landline terminal of a subscriber's home phone and the phone splitter. In other words, the cable from the splitter of the modem was first plugged into the Wagaly Talk Lite device before it was hooked up to the landline terminal. Through such a maneuver, the company was able to alter the routing of the subscriber's fixed network by setting the functions of the Wagaly Talk Lite device in a certain way. When the subscriber pressed the buttons as usual to make a local or long distance call or call a cell phone, the machine automatically dialed the number through the company's 070 Internet telephony router. If the user chose to make a call through Chunghwa Telecom's router, he or she would have to press the "*" button twice before dialing the number. Meanwhile, to make an international call, the user would have to dial 002 first and the call would be processed through the router of New Century InfoComm. If the user wanted to make an international call through another fixed line service provider, he or she would also have to press the "*" button twice before dialing the predetermined international access code for the provider, such as 005, 006, or 007.
   
3. Grounds for disposition:
   Due to users' habit when using telecommunications services, the length of telecommunications numbering is critically significant in the competition between providers of the same telecommunications service. By maneuvering the function settings of telecommunications equipment to change the length of numbers the user needed to dial to use the service of its competitor, New Century InfoComm. Increased the level of difficulty for its user to access the service of other telecommunications service providers and also pushed up the switching cost of the trading counterpart. The conduct could put its competitors in an unfair position in market competition. The FTC's investigation showed that the function setting maneuver made to the Wagaly Talk Lite Device by New Century InfoComm was not meant to offer better rates, quantity, quality, service, or other conditions to increase its own trading opportunities. On the contrary, it was incompliant with the spirit of performance competition and in violation of Subparagraph 3, Article 19 of the Fair Trade Law. The FTC therefore acted according to Paragraph 1, Article 14 of the same law and ordered New Century InfoComm to cease or correct the said unlawful act within six months. However, considering that the market share of the company in the overall fixed communications service market was still small and was left far behind Chunghwa Telecom by a large margin, as well as the company being a new business in the market, the FTC decided not to impose any administrative fine on the company.

Summarized by Chang, Hsin-Yi; Supervised by Liou, Chi-Jung

Appendix:
New Century InfoComm Tech. Co., Ltd.'s Uniform Invoice Number: 70774626