Taiwan Star Telecommunications Co., Ltd.

1373rd Commissioners' Meeting (2018)

Case:

Taiwan Star Telecom violated the Fair Trade Law by posting false advertisement of "New Year's Eve Internet connection speed test result No. 1 for the third consecutive year"

Keyword(s):

Comparative advertising, wireless connection, connection speed

Reference:

Fair Trade Commission Decision of March 1, 2018 (the 1373rd Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 107012

Industry:

Wireless Telecommunications Activities (6102)

Relevant Law(s):

Article 21 of the Fair Trade Law

Summary:

1. The FTC received complaints about Taiwan Star Telecommunications Co., Ltd. (hereinafter referred to as Taiwan Star Telecom) posting a New Year's Eve Internet connection speed test advertisement (hereinafter referred to as the advertisement in concern) carrying texts and pictures claiming that "Taiwan Star New Year's Eve Internet connection speed test result No. 1" and "Congratulations! Taiwan Star New Year's Eve Internet Connect speed tested No. 1 for the third consecutive year." The company also issued on January 1, 2017 a new release (hereinafter referred to as the news release in concern) containing the wording of "4G connection speeds at different New Year's Eve party locations tested No 1?吋aiwan Star average speed reached 67.6Mbps, beating competitors by ten folds and once again winning the first place" and "Taiwan Star performance even more eye-catching: average downloading speed maintained stably at 67.6Mbps." The overall content of the above advertising gave the general public the impression that the company's Internet connection speed was the fastest, outperforming competitors by ten folds. However, the claim made in the advertisement was based on the results of speed tests conducted by the company itself. Superlatives were used in combination with objective statements without objective data from any impartial and objective third party to serve as the additional evidence in this case. Meanwhile, the claim in the advertisement and new releases in concern that the company's New Year's Eve Internet connection speed was No. 1 for the third consecutive year gave people the impression that the New Year's Eve wireless connection speed of the company was better than that of its competitors from 2014 to 2016. However, the news release about the 2014 New Year's Eve Internet connect tests only indicated the transmission speed of Taiwan Star Telecom without showing the connection speed test results of its competitors. In other words, the claim was groundless and in violation of Article 21 of the Fair Trade Law.
2. Findings of the FTC after investigation:
   (1)According to Taiwan Star Telecom, the company had conducted wireless connection speed tests at major New Year's Eve celebration activity venues around the island on the evening of December 31 from 2014 to 2016 for three years in a row. Cell phones of the same specifications were applied in the same venue at the same time to run the tests, and Ookla International's speed test software was used for the test. At the same time, using speedtest database data for 2015 and 2016 provided by Ookla International, Taiwan Star Telecom screened and analyzed test data from the speedtest database that complied with the conditions of the tests conducted by Taiwan Star Telecom within a 500m radius of the center of each New Year's Eve celebration activity. The results showed the company's average wireless connection speed in 2015 and 2016 was faster than that of other telecom companies. Therefore, the contents of the advertisement and the news release in concern were based on the data obtained from Taiwan Star Telecom's actual tests and comparisons with the data from the speed test database. In addition, confirmation was made before the test results were posted on the company's website.
   (2) Inspections of pictures that were taken during the tests and provided by Taiwan Star Telecom showed that the cell phone models used in the tests conducted at the Taiwan City Hall Square and four other locations were not the same as the ones the company claimed to have used. The cell phone models used for the tests conducted during different periods at the Taoyuan Arts Center and Taichung Intercontinental Baseball Stadium were also inconsistent. Moreover, the company was unable to provide the photos taken during the tests conducted at different times and different locations in 2014 because the photos had been lost as a result of computer storage problems. The company admitted that the cell phone model inconsistency was disadvantageous to the company's test results, but the test results would not be affected. Nonetheless, it was doubtful whether the test results adopted by the company were representative enough. The FTC's investigation also revealed that Taiwan Star Telecom had not acquired any data from the speed test database in 2014 due to cost considerations and there was no evidence showing the company's wireless connection speed was faster than that of other telecom companies on the New Year's Eve in 2014. Furthermore, according to the Telecom Technology Center, there were many factors that would have impact upon fixed-point measurement of wireless connection speeds. Without understanding the circumstances and settings of the tests run by Taiwan Star Telecom, it was difficult to assess whether the test results of the company were representative enough.
3. Grounds for disposition:
   (1)Taiwan Star Telecom cited data from its own tests in the advertisement and news release in concern. Moreover, the 2014 test data lacked the data from an impartial and objective third party for validity support. Hence, it was difficult to believe that the claim of outperforming other telecom companies in connection speed was justifiable. Meanwhile, the difference between the average wireless connection speed of 67.6Mbps claimed by Taiwan Star Telecom based on the results of tests run by the company and the speed of 20.22Mbps shown in the speedtest data base was 47.38Mbps. The difference has way surpassed the general or related public could accept. If the data from the speed test database were adopted to be the basis of comparison, Taiwan Star Telecom's connection speed was only 2.4 to 3.1 times faster than the speeds of other telecom companies. Apparently, the claim of the average speed reaching 67.6Mbps and faster than that of competitors by ten folds was inconsistent with the reality. In other words, its was impossible to believe that Taiwan Star Telecom had actually compared with related data from the speedtest database of Ookla International before posting the advertisement and news release in concern and data from Ookla International, a third party, to support the company's claim. Therefore, the language applied in the advertisement and news release in concern was a false and misleading representation with regard to quality of service and also could affect transaction decision in violation or Paragraph 4 of Article 21 of the Fair Trade Law and Paragraph 1 of the same article was applicable mutatis mutandis.
   (2) After assessing the motive and purpose behind the unlawful conduct of Taiwan Star Telecom, the illegitimate profit expected, the level of harm of the unlawful conduct to trading order, the duration of the harm, the profit gained from the unlawful conduct, the business scale, management condition and market status of the company, the types, frequency and intervals of past violation and the penalties received, the level of remorse and cooperativeness during the investigation, the FTC cited the first section of Article 42 of the Fair Trade Law and imposed an administrative fine of NT$600.000 on the company.