The Fair Trade Commission yesterday conditionally approved a bid by five major telecommunications companies and EasyCard Corp (悠遊卡公司) to establish a joint venture to offer mobile payment services. However, opposition lawmakers accused the commission of treating the bid as a joint venture rather than a monopoly.
The five telecoms carriers — Chunghwa Telecom Co (中華電信), Taiwan Mobile Corp (台灣大哥大), Far EasTone Telecommunications Co (遠傳電信), Asia Pacific Telecom Co (亞太電信) and Vibo Telecom Inc (威寶電信) — will set up a trust service management (TSM) company with EasyCard.
The TSM company, with a planned capitalization of NT$300 million (US$10.31 million), will enable customers to deposit money in their mobile devices, such as cellphones, and use them to pay for shopping and transportation.
The commission said the venture would create a new payment method, which could boost domestic consumption and benefit the economy.
However, the commission acknowledged that the venture could have the negative effect of creating barriers for others who want to enter the mobile payment service market.
“The TSM company would offer services for all the customers of the five telecoms companies, as well as the 35,000 EasyCard holders, giving the venture a significant advantage. However, the commission did set certain conditions in its approval to prevent a monopoly,” commission spokesman Sun Lih-chyun (孫立群) said by telephone.
For example, the TSM company would be open to all telecoms companies and touch-and-go ticketing services similar to EasyCard’s, and if other TSM companies emerge in the future, their systems would be accepted by the five telecoms firms, Sun said.
Moreover, the TSM company would not be allowed to offer special treatment to its current shareholders, Sun said.
The five telecoms companies and EasyCard will each provide NT$30 million in the joint venture, with plans to raise the remaining NT$120 million in the future. This would allow the commission said any company interested in joining the venture to make an investment, Sun said.
Under the conditions set by the commission, four years after the establishment of the TSM company, the five telecoms companies would not be allowed to hold more than half of the TSM company, while EasyCard could not own more than one-tenth of its shares.
Opposition lawmakers earlier called on the government to set up its own impartial TSM company, but a commission official who declined to be named said there was no government agency willing to take responsibility for establishing such a company.
Democratic Progressive Party (DPP) Legislator Chiu Yi-ying (邱議瑩) said that the TSM company would dominate the market, leaving consumers with no alternatives in the mobile payment service industry.
Chiu said the five telecoms firms collectively cover almost the entire 28.65 million mobile phone users in the nation, while EasyCard dominated the integrated-circuit ticketing system with its 35 million customers, far ahead of its closest competitors I Pass (2.8 million) — issued by the Kaohsiung Rapid Transit Corp (KRTC, 高雄捷運) — and TSWC Cards (2.1 million).
“The DPP has always supported the development of electronic transaction systems, but we oppose any form of monopoly that would limit consumer freedom,” DPP lawmaker Lin Tai-hua (林岱樺) said at a press conference.
DPP lawmakers urged the Control Yuan to investigate potential malfeasance among commission members.
“The joint venture could create a monopoly in the provision of two of the most common services used in daily life: mobile phone service and mass transportation. This does not benefit consumers,” KRTC general manager Hau Chien-sheng (郝建生) told the press conference.
Kainan University’s Yang Wei-wen (楊偉文) said the venture would be a violation of the Fair Trade Act (公平交易法) “from whichever angle you want to look at it.”