Taiwan - Telecoms, Mobile and Broadband - 15th ed

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Taiwan - Telecoms, Mobile and Broadband - 15th ed
Published on April 2009

Report Summary

Taiwan is a country leading in technology use. The report covers trends and developments in telecommunications, mobile, Internet,
broadband, digital TV and converging media including VoIP and IPTV developments. Subjects include:

· Market and industry analyses, trends and developments;

· Facts, figures and statistics;

· Industry and regulatory issues;

· Infrastructure;

· Major players, revenues, subscribers, ARPU;

· Internet, VoIP, IPTV;

· Mobile voice and data markets;

· Broadband (FttH, DSL, cable TV, wireless);

· Convergence and digital media.

Taiwan - Telecoms, Mobile and Broadband - 15th ed Page 1/9


EXECUTIVE SUMMARY

Taiwan has developed one of the most advanced telecommunications networks in Asia. With excellent telecommunications
infrastructure in place and the innovative use of breakthrough information technologies, the country continues to be well placed to
drive both mobile and data communications services. Annual telecommunications service revenues are around NT$400 billion
(US$12 billion) and investment in telecoms infrastructure remains substantial. This translates to an increase of 100% over the 10-year
period from 1998 when revenue was near NT$200 billion (US$6 billion).

Headed by what had been a runaway mobile sector which passed 100% penetration in early 2002 (it has since been hovering at
around 110%) and a very strong fixed-line telephone sector with a penetration of over 55%, the market continues to find new ways to
grow. Taiwan has been very progressive in its efforts to liberalise the telecoms industry and to create a positive regulatory regime.
First there was the strong push for competition to Chunghwa Telecom. The focus then moved to privatising the incumbent. Taiwan's
telecoms infrastructure has been upgraded significantly, undergoing a series of network modernisation projects over the last decade.

The proportion of the population who are Internet users has exceeded 65%. Some 80% of all homes in Taiwan own PCs and around
70% of homes have Internet connections. The market has moved rapidly away from dial-up access to broadband, mainly on DSL
subscriptions, and over 68% of all Internet connections are broadband. Going into 2009 the broadband penetration had lifted to over
20% with a progressive shift away from xDSL towards FTTx connections. This has been driven by significant price cuts as operators
strive for market share by aggressively competing with the dominant incumbent.

Taiwan has multiple mobile operators. High broadband take-up with the new WiMAX rollout is expected in 2009, which will help
contribute to higher growth and revenue for operators in this open economy with relatively low levels of corruption. In addition there is
a growing proportion of data services as a percentage of revenues, as the take-up for 3G increases. 3G subscribers now account for
20% of the total mobile subscriber base.

However, many telecoms sub-sectors are at or near saturation which constrain the scope for growth. While the market has been
liberalised, there is still limited competition in the local access market which is dominated by Chunghwa Telecom. Overall, there are
still low levels of foreign direct investment.

Key highlights:
' Total mobile sector revenues reached US$7.2 billion in 2008 as the highly penetrated market saw operators introducing
value-added, higher-margin products. The ARPU for 3G services, while dropping, was still 35% higher than for 2G. Mobile data
services increased to over 20%, up from only 2% in 2000.
' Taiwan's mobile operators signed up more than 8 million 3G handset users by the end of 2008. Chunghwa Telecom had around 3
million 3G users, while Far EasTone (FET) had 2.2 million 3G subscribers and Taiwan Mobile 1.8 million. Smaller operators VIBO and
Asia Pacific Broadband Wireless accounted for another million or so 3G users between them. 3G handset users account for more
than a third of all mobile subscribers in Taiwan, though many customers with 3G-capable phones are still connected via 2G tariffs,
meaning the actual 3G user base is lower than the total given by the operators. For more information, see chapter 10.4, page 61.
' Chunghwa Telecom's Optical Era Project involves an investment of approximately US$1.8 billion to construct an island-wide fibre
optic network over five years. By 2010 it aims to provide fibre access to 2.4 million residential and business subscribers from 700,000
going into 2009. The company expects FTTx to overtake its ADSL platform in terms of service capacity and number of subscribers in
2011. For more information, see chapter 8.5, page 47.
' The government allocated NT$9.6 billion (US$300 million) for WiMAX-related investment under the M-Taiwan project, which ran
though 2008. Taiwan expects the total investment in WiMAX networks on the island to reach US$644 million by 2010 and for there to
be 8 million WiMAX subscribers by the end of 2010. The government aims to make Taiwan a 'role model' for wireless broadband
development in Asia. By 2009 the global economic downturn had forced a number of players to hold off launching WiMAX until the
second half of the year.
' Over the five years to 2011, the government is expected to appropriate NT$55.6 billion in funds, with NT$11.3 billion for the
promotion of new applications that will play a role in the everyday lives of people, such as food, residence, travelling, education and
entertainment. Another NT$26.5 billion will be used to promote new e-government related services. The remaining funds will be used



to create equal digital opportunities and technology service industries. The key objectives are included in the report. For more
information, see chapter 3.9, page 11.
' Chunghwa Telecom set up a US$30 million 'Internet data joint venture' with Vietnam's military-run celco Viettel, as part of its efforts
to expand overseas. The company goal is for 20% of the revenue to come from overseas by 2013 and is to invest a total of NT$120
billion (US$3.9 billion) in the next five years to enable this. Chunghwa is also preparing to enter the China market once Taiwan's
telecom companies are allowed to invest in the mainland. For more information, see chapter 5.1, page 15.

Internet, broadband and telecoms statistics for Taiwan ' 2004; 2008
Sector 2004 2008
Internet (million)
Internet users 12.2 15.8
Internet subscribers 8.0 6.0
Mobile Internet subscribers 5.3 13.0
as % of all mobile subscribers 23.5% 51.4%
Broadband (million)
Total subscribers 3.7 4.7
Penetration rate 16.3% 20.3%
Proportion of Internet subscribers 46.0% 68.0%
DSL subscribers 3.1 3.3
Subscribers to telecoms services (million)
Fixed-line telephone subscribers 13.5 13.1
Mobile phone subscribers 22.7 25.3
3G subscribers 0.5 5.0
3G market share of mobile base 2.1% 19.8%
(Source: BuddeComm based on industry data)

Lisa Hulme-Jones
April 2009

Data in this report is the latest available at the time of preparation and may not be for the current year.

For those needing high level objective analysis on Taiwan, this report is essential reading and gives further information on:
' Chunghwa Telecom's ambitious CAPEX program, which includes increasing the penetration rate of its fibre optic network to at least
25% of Taiwan's households over a five year period.
' The government amendments to Regulations on Telecommunications Universal Service in February 2008, and appointment of
Chunghwa, Taiwan Fixed Network and Chungtou Cable Television Co to complete the construction of broadband networks in 50
remote tribal areas and regions in order to reduce the gap for availability of broadband data access services between urban and rural
areas.
' Taiwan having the second-highest cable and satellite television penetration rate in Asia with nearly 90% at end-2008, behind South
Korea with 92% ' yet average revenue per user was the ninth highest at US$17.07 and most deployments are analogue. Cable
operators could drive digital TV penetration to 80% by 2013 and unlock an estimated NT$4 billion through employment, content
creation and infrastructure investment. However, there is little incentive for operators to push digital TV in what they feel is an
over-regulated sector, which includes price caps.
' Chunghwa Telecom and SingTel's joint venture to build a satellite scheduled to be launched in the fourth quarter of 2010. The
venture will build the ST-2 satellite to replace the ST-1 satellite. ST-2 has a planned life cycle of 15 years, longer than ST-1's 12 years
and has a higher transmitting power that allows both companies to expand service coverage in Asia, India and the Middle East.
' Far Eastern Group uniting its three local telecoms businesses ' mobile operator Far EasTone, wireline operator New Century



InfoComm (Sparq) and ISP SeedNet ' into a new holding company, Far Eastern Telecoms Group (FETG).

Taiwan is a country leading in technology use. The report covers trends and developments in telecommunications, mobile, Internet,
broadband, digital TV and converging media including VoIP and IPTV developments. Subjects include:
' Market and industry analyses, trends and developments;
' Facts, figures and statistics;
' Industry and regulatory issues;
' Infrastructure;
' Major players, revenues, subscribers, ARPU;
' Internet, VoIP, IPTV;
' Mobile voice and data markets;
' Broadband (FttH, DSL, cable TV, wireless);
' Convergence and digital media.

Table of Content

TABLE OF CONTENTS

1. KEY STATISTICS 1
2. TELECOMMUNICATIONS MARKET 3
2.1 Overview of Taiwan's telecom market 3
2.2 Business environment overview 6
3. REGULATORY ENVIRONMENT 7
3.1 Regulatory authorities 7
3.2 Legislation and market liberalisation 7
3.3 The 1996 Telecom Bill 7
3.4 Ministry of Transport and Communications (MOTC) 8
3.5 National Communications Commission (NCC) 9
3.6 Privatisation of Chunghwa Telecom 9
3.7 Foreign investment 10
3.8 Licensing 11
3.9 National Information and Communication Initiative (NICI) 11
4. FIXED NETWORK MARKET 13
4.1 Market overview 13
5. MAJOR OPERATORS 15
5.1 Chunghwa Telecom Co Ltd 15
5.1.1 Mobile network
5.1.2 HiNet
5.1.2.1 Movie-on-demand
5.2 Far Eastern Telecommunications Group 21
5.2.1 KG Telecom



5.2.2 New Century InfoComm Tech Co Ltd (Sparq)
5.3 Taiwan Mobile (formerly Taiwan Cellular) 25
5.3.1 Taiwan Fixed Network Telecom
5.4 Asia Pacific Broadband Wireless (APBW) 28
5.5 VIBO Telecom 29
5.6 Major cable TV players 30
5.6.1 kbro (formerly Eastern Multimedia Group (EMG)
5.6.2 Taiwan Broadband Communications (TBC)
5.6.3 China Network Systems (formerly United Communications Group)
6. TELECOMMUNICATIONS INFRASTRUCTURE 32
6.1 Submarine cable networks 32
6.2 Satellite networks 33
7. INTERNET MARKET 34
7.1 Overview 34
7.2 Internet hosts 35
7.3 ISP market 35
7.4 WiMAX 36
7.5 E-services 39
7.5.1 Overview
7.5.2 E-commerce
7.5.2.1 Online music
7.5.3 E-government
8. BROADBAND MARKET 43
8.1 Overview 43
8.2 Government initiatives for broadband 44
8.3 DSL 45
8.4 Cable modems 47
8.5 Fibre-to-the-Home (FttH) 47
8.6 Video-on-Demand (VoD) 48
9. CONVERGENCE 49
9.1 Digital TV 49
9.1.1 Broadband TV
9.1.2 Cable and pay TV
9.2 Overview of broadcasting market 51
9.2.1 Television
9.2.2 Digital terrestrial services
10. MOBILE COMMUNICATIONS 55
10.1 Overview of Taiwan's mobile market 55
10.1.1 Mobile statistics
10.2 Regulatory issues 58
10.2.1 Mobile Number Portability (MNP)
10.3 Third Generation (3G) mobile 58
10.3.1 Overview
10.3.2 3G roll-out
10.4 Major mobile operators 61
10.5 Mobile voice services 62
10.5.1 Prepaid cards
10.5.2 Personal Handyphone Service (PHS)/Personal Access System (PAS)
10.6 Mobile data 63
10.6.1 SMS message volume, WAP and GPRS subscribers ' 2001-2007



10.6.2 Mobile Internet
10.6.3 Mobile TV
11. GLOSSARY OF ABBREVIATIONS 66

LIST OF TABLES

Table 1 ' Country statistics Taiwan ' 2008 1
Table 2 ' Telecom revenue and investment statistics ' 2007 1
Table 3 ' Telephone network statistics ' November 2008 1
Table 4 ' Internet user statistics ' November 2008 1
Table 5 ' Broadband statistics ' September 2008 2
Table 6 ' Mobile statistics ' November 2008 2
Table 7 ' National telecommunications authorities 2
Table 8 ' Fixed phone lines vs mobile subscriptions & penetration rates ' 1995 - 2008 4
Table 9 ' Call volumes for mobile and fixed networks ' 1999 - 2007 4
Table 10 ' International outgoing calls overview ' 1980; 1985; 1990; 1995; 2000 - 2007 5
Table 11 ' Distribution of telecom revenue by services ' 2007 5
Table 12 ' Data communication revenue as proportion of total telecom revenue ' 2001 - 2007 5
Table 13 ' Fixed network operators, market share by revenue ' 2007 13
Table 14 ' Chunghwa Telecom fixed subscribers and market share ' 2004 - 2007 14
Table 15 ' Chunghwa Telecom's subscriber base by sector ' November 2008 15
Table 16 ' Chunghwa Telecom revenue breakdown by sector ' 2003; 2007 15
Table 17 ' Chunghwa Telecom revenue, CAPEX, net profit and employees ' 2000 - 2008 16
Table 18 ' Chunghwa Telecom fixed-line, mobile subscribers & market share ' 2000 - 2008 17
Table 19 ' Chunghwa Telecom market share by segment ' 2008 18
Table 20 ' Chunghwa Telecom mobile subscribers and ARPU ' 2006 - 2008 18
Table 21 ' Chunghwa Telecom mobile subscribers and annual change ' 1998 - 2008 19
Table 22 ' Chunghwa Telecom Internet subscribers by access type ' 2003 - 2008 20
Table 23 ' Chunghwa Telecom Internet ARPU by access type ' 2003 - 2007 20
Table 24 ' Chunghwa Telecom MOD subscribers ' 2005 - 2008 21
Table 25 ' Far EasTone revenue, EBITDA, CAPEX, net profit and ARPU ' 2003 - 2007 22
Table 26 ' Far EasTone mobile subscribers and annual change ' 1998 - 2008 22
Table 27 ' Far EasTone mobile subscribers and ARPU ' 2006 - 2008 24
Table 28 ' KG Telecom mobile subscribers and annual change ' 1998 - 2006 24
Table 29 ' Taiwan Mobile financial data and ARPU ' 2001 - 2009 25
Table 30 ' Taiwan Mobile revenue breakdown per business segment ' 2007 25
Table 31 ' Taiwan Mobile subscribers and annual change ' 1998 - 2008 26
Table 32 ' Taiwan Mobile selected operational data ' 2006 - 2008 27
Table 33 ' APBW mobile subscribers and annual change ' 2003 - 2008 28
Table 34 ' VIBO Telecom mobile subscribers and annual change ' 2005 - 2008 29
Table 35 ' Cable subscribers per major operator ' 2005 - 2008 30
Table 36 ' Internet users and subscribers ' 1995 - 2008 34
Table 37 ' Internet subscribers by access method ' 2007 34
Table 38 ' International Internet bandwidth capacity ' 2001 - 2007 35
Table 39 ' Internet host computers ' 2001 - 2008 35
Table 40 ' Broadband subscribers, penetration & proportion of Internet subscribers ' 2000 - 2008 43



Table 41 ' Broadband subscribers and households - September 2008 43
Table 42 ' Broadband subscribers and annual change by access ' September 2008 43
Table 43 ' DSL subscribers ' 2001 - 2008 46
Table 44 ' Chunghwa Telecom broadband subscribers by technology & market share ' 2001 - 2007 46
Table 45 ' Chunghwa Telecom HiNet subscriber and ARPU ' 2004 - 2006 46
Table 46 ' Chunghwa Telecom broadband charges for ADSL and FTTx ' January 2009 47
Table 47 ' Breakdown of xDSL and cable download speeds ' 2007 47
Table 48 ' Pay TV subscribers by platform ' 2002 - 2007 50
Table 49 ' Cable TV operator revenue & investment in select countries ' 2004 - 2006 50
Table 50 ' Key broadcasting statistics ' 2006 52
Table 51 ' Media consumption in Taiwan (historical) ' 2006 52
Table 52 ' Mobile subscribers and penetration rate ' 1995 - 2008 56
Table 53 ' 3G mobile subscribers and market share ' 2003 - 2008 57
Table 54 ' 3G mobile subscribers and market share (operator data) ' June 2008 57
Table 55 ' Mobile services revenue ' 1992 - 2008 57
Table 56 ' 2G and 3G mobile services ARPU ' 2005 - 2007 58
Table 57 ' Mobile operators, subscribers and annual change ' June 2008 61
Table 58 ' Mobile subscribers, market share and ARPU by operator ' 2008 61
Table 59 ' Mobile net additions by operator ' Q2 2008 61
Table 60 ' Mobile share by service revenue for top 3 operators ' Q4 2008 62
Table 61 ' Prepaid 2G subscribers ' market share ' 2000 - 2007 62
Table 62 ' PHS subscribers ' 2001 - 2007 63
Table 63 ' Mobile data service revenue as portion of total mobile revenue ' 2001 - 2007 63
Table 64 ' SMS message volume and revenue ' 2001 - 2007 64
Table 65 ' Mobile Internet subscribers ' 2001 - 2007 64

LIST OF EXHIBITS

Exhibit 1 ' Major global/regional submarine cables with landing point in Taiwan - 2008 32
Exhibit 2 ' Taiwan 2.5GHz spectrum winners 37
Exhibit 3 ' Major broadcasting organisations in Taiwan 52
Exhibit 4 ' Mobile data licence winners 63
Exhibit 5 ' Mobile TV trial broadcasters 65



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Taiwan - Telecoms, Mobile and Broadband - 15th ed