Taiwan Mobile and Chunghwa Telecom Fined for Cancelling Incentives

Taiwan Mobile and Chunghwa Telecom have been fined a total of NT$76 million (US$2.38 million) for jointly cancelling incentives for specific services. The move led to a decrease in subscribers of services with higher tariffs, according to the Fair Trade Commission. In June and July 2018, the two telecom companies separately offered a 4G service that allowed subscribers to pay a monthly fee of NT$699. The commission stated that internet access speed would not be reduced, regardless of the bandwidth used by subscribers.

The telecoms also offered additional incentives to attract subscribers. Subscribers of the monthly plan were not charged voice communication fees for intra-network telephone calls. During the first six months of their contracts, they would only pay NT$666 per month for extra-network phone calls.

However, after the introduction of the new monthly plan, the telecoms noticed a decline in subscribers of services with higher tariffs. They failed to increase revenue and attract more subscribers to those higher tariff services. In an effort to decrease their financial loss in voice communication services, they decided to cancel some of the incentives and move more subscribers to services with higher tariffs.

The pricing scheme was one of the strategies used by the three dominant telecoms to gain a competitive edge in the broadband services market, according to the commission. In October of that year, Taiwan Mobile and Chunghwa Telecom reached an agreement to jointly stop offering incentives. This decision prompted Far EasTone Telecommunications to follow suit, resulting in no telecoms offering incentives to subscribers.

As a result of their actions, competition among telecoms was weakened and the market was adversely affected. Chunghwa Telecom and Taiwan Mobile have been fined NT$40 million and NT$36 million respectively for contravening the Fair Trade Act.

The NCC stated that the Telecommunications Management Act does not designate any dominant player in the 4G service market. Therefore, any promotional plan offered by telecoms does not need to be reviewed by the NCC. The NCC respects the Fair Trade Commission’s decision on the concerted actions of Taiwan Mobile and Chunghwa Telecom.

Both Taiwan Mobile and Chunghwa Telecom expressed regret over the Fair Trade Commission’s decision and stated that they would study legal action after receiving official documents of the ruling. They deny engaging in concerted actions and believe that the judgment is unfair and unfavorable due to a lack of clarification and confirmation of relevant facts.