Telecom Asia

Taiwan’s cellcos seek compensation from Chunghwa for unbilled resale calls

Taiwan’s cellcos seek compensation from Chunghwa for unbilled resale calls

Robert K. Carter

If you don’t like getting stiffed for the message, sue the messenger. That appears to be the strategy behind a $13 million lawsuit filed against Taiwan’s state-owned Chunghwa Telecom by its two largest mobile competitors.

Taiwan Cellular and Far EasTone are seeking restitution for unbilled calls originating from the island’s two surviving CT-2 players. While the complaint would suggest that the alleged real thieves are the CT-2 players, the plaintiffs claim that Chunghwa can be held liable, because it was Chunghwa that provided the interconnection service.

In the process of opening Taiwan’s telecoms market to private competitors, government regulators mandated that former monopolist Chunghwa was to provide interconnection services between all mobile players, including TCC, FET and also the dying breed of CT-2 players. “Since TCC and other mobile companies were established in the late 1990s, it was difficult for CT-2 players to survive,” explains Ching Yu-chen, senior director at Chunghwa Telecom. “There used to be eight of them, but now only two are left.”

To remain viable, those two old dogs learned a new trick: sell their access to international simple resale (ISR) companies. “Because the environment is tough for CT-2, they started to do business with ISR companies,” Ching said. “The CT-2 players would make money from ISR, and pay Chunghwa Telecom interconnection fees, but they didn’t pay the mobile players. Their phone numbers didn’t show up on billing records of Far EasTone and TCC.”

The CT-2 players were unresponsive to the mobile operators’ complaints, and Chunghwa claimed that its hands were tied by a legal obligation to provide the interconnection to all parties. “TCC and Far EasTone asked us to stop providing interconnection services to the CT-2 companies, causing ongoing disputes from 2002 until earlier this year,” Ching said. “We tried to negotiate with them. It just didn’t work.”

A remedy was eventually found through Taiwan’s Directorate General of Telecommunications. “Chunghwa Telecom and all the mobile players went to the DGT recently to resolve this issue,” according to Leo Fang, legal director of Far EasTone. “One of the conclusions reached was that Chunghwa Telecom would immediately stop interconnection services to CT-2 companies.” But while the free ride for CT-2 players may be over, TCC and FET still want compensation for what they’ve already lost.

Ching claims they should only seek such compensation from the CT-2 players, and that Chunghwa is being sued only because it is the larger and easier target. “They are suing the wrong party. In fact, Chunghwa Telecom is the victim here.”

But Fang argues that the suit is far from frivolous. “This lawsuit has significant meaning on our part. We’re in a special license business. We pay substantial sums of money for the license to operate, and for the base stations we purchase. CT-2 companies can’t just steal that away from US.”

And for allowing that to happen, Chunghwa should be held responsible, insists Fang. “We wouldn’t go so far as to say that Chunghwa Telecom was part of a conspiracy, but they are directly involved in the whole thing. Without the interconnection, the CT-2 players wouldn’t have been able to do what they did. Chunghwa Telecom isn’t innocent.”

COPYRIGHT 2004 Advanstar Communications, Inc.

COPYRIGHT 2004 Gale Group