For a Chunghwa Telecom subscriber surnamed Tsai (蔡), who is between jobs, the low-cost offers by the nation’s largest telecom in celebration of Mother’s Day came as a real surprise.
On May 11, Tsai was waiting to switch to a NT$299 (US$9.96) per month mobile plan at a Chunghwa Telecom branch on Taipei’s Renai Road.
In addition to the NT$299 plan, the company also offered NT$399, NT$499 and NT$599 monthly plans, as long as the subscribers agreed to 30-month contracts.
The NT$499 plan was the most popular, as it offered unlimited Internet access and 180 minutes of talk time.
“My roommate told me about it [the NT$299 plan], which allows you 12 gigabytes of mobile Internet and 70 minutes of talk time,” Tsai said. “The plan’s data cap is six times what I have now, for which I pay about NT$400 per month. The new plan would be such a bargain.”
Her roommate arrived when the branch opened at 8am, but there were already about 200 people waiting, Tsai said.
Knowing the process would take a while, she said they decided to take care of some other errands before returning to the branch.
“Most people inside the branch had to stand and wait, because there were not even enough chairs to sit. The machine that gives numbers was broken, so some people were afraid to leave in case the staff called their numbers,” Tsai said.
She said she and her roommate did not finish their paperwork until almost 2:30pm.
The special sale was also an ordeal for Chunghwa Telecom employees, who had to handle the processing.
“I did not get off work until 12am last night [May 10] and had to take a taxi home, because the bus had already stopped running,” a clerk at the branch said. “We could only leave after attending to all the customers who came in before 6pm [when the office closed].”
Tsai and her roommate were two of an estimated 1 million people who requested to change their mobile service subscription during the seven-day sale.
That notorious period is now known as the “499 chaos,” referring to the consumer frenzy triggered by Chunghwa Telecom offering the low-cost plans.
Taiwan Mobile and Far EasTone Telecommunications quickly followed suit and also provided NT$499 plans.
Although the Mother’s Day specials ended on Tuesday last week, Chunghwa Telecom is now facing several investigations from government agencies.
The National Communications Commission (NCC) is investigating whether the company contravened the Regulations for Administration of Mobile Broadband Businesses (行動寬頻業務管理規則) by poorly managing its operations and compromising service quality to the detriment of subscribers.
The company could also be fined more than NT$20 million by the Ministry of Labor for overworking its employees nationwide, including those at the company’s branches and authorized retailers.
This was not the first time that the nation’s three major telecoms offered a NT$499 plan that included unlimited Internet access.
Last month, such a plan was offered to civil servants, teachers and military personnel, as well as employees of state-run or government-affiliated corporations.
Why did Chunghwa Telecom expand the low-cost plans to the general public? Chunghwa Telecom chairman David Cheng’s (鄭優) statement at a news conference on May 11 might explain why.
“The last thing we want to see is for this competition on price to affect our technology upgrade in the next phase,” Cheng said. “We don’t want a war, but if someone challenges us, we will fight them.”
The telecom was forced into “war mode” after Taiwan Mobile tried to undercut it in the civil servant, teacher and military personnel market, the Chinese-language Business Weekly reported last week.
It later decided to fully engage in the price war after Far EasTone and social network Line signed a brand licensing agreement aimed at enticing users to migrate to Far EasTone with monthly fees as low as NT$299, the report said.
Chunghwa Telecom’s low-price strategy and the overwhelming response it triggered served as a warning to other telecoms to think twice before they start another price war.
Even though Chunghwa Telecom has been criticized for its execution of the sales plan, some have said that the firm saw it as a “necessary evil” to secure its No. 1 status.
“It is a matter of not losing face,” said a market analyst, who requested anonymity. “Chunghwa Telecom now has close to 10 million mobile subscribers. If each of the other two major telecoms managed to take just 1 million users away from Chunghwa Telecom, all three would then have about the same number of subscribers.”
“Chunghwa Telecom has always considered itself a big brother in the field and could not possibly stand losing a large number of subscribers to its competitors,” the analyst said.
Financial losses from offering the low-cost service plans were the last thing on Chunghwa Telecom’s mind, considering the huge amount of money it has been willing to spend on frequency auctions, the analyst added.
Former NCC commissioner Lee Ta-sung (李大嵩) said that 4G is expected to remain in service for some time before the arrival of 5G technology, adding: “4G is widely perceived as a successful system for data transmission.”
“It might take a while for 4G to be phased out, as there are still potential for upgrades, while 5G is going to be really expensive and telecoms might not be in a hurry to jump right into it,” Lee said.
Regarding the chaos from the sale, former NCC Vice Chairman Yu Hsiao-cheng (虞孝成) said that such offers should be made available for a longer period to avoid making customers wait in long lines and overworking sales clerks.
The NT$499 plan was apparently used to attract subscribers, despite concerns that some heavy Internet users might abuse it and slow down the network, Yu said.
NCC spokesman Wong Po-tsung (翁柏宗) said he does not think Chunghwa Telecom would lose money because of the low-cost plans.
“Personally, I do not think the company would be stupid enough to introduce plans that would cause it to suffer a financial loss,” Wong said.
“Telecoms used to be able to charge subscribers by the number of minutes they talked or by the amount of transmitted data, but they now provide unlimited Internet access at a fixed rate. People now use Line to make telephone calls,” Wong said. “Without more innovative service models, telecoms would simply compete for subscribers transferring from one carrier to another, which would not expand the market nor help them sustain themselves in the 5G era.”
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