|TELECOMMUNICATIONS MARKET PROFILE: TAIWAN |
Key Statistics (2004)
Sources: World Markets Research Centre, and AIT
|Population||22.5 million |
|GDP ||$308.2 billion |
|Per capita GDP||$13,652 |
|Main telephone lines||13.5 million |
|Cellular mobile subscribers||21.8 million |
|Internet users ||8 million |
|Broadband subscribers||3.6 million|
|Telecom service revenues||$9.8 billion (2003)|
|U.S. equipment imports||$307 million|
Taiwan has one of the most sophisticated telecommunications infrastructures in Asia and one of the world’s highest cellular mobile phone penetration rates. Taiwan has an Internet penetration rate of more than 35% and 3.6 million of its Internet users have access to broadband. Taiwan has liberalized its telecommunications sector in keeping with efforts to modernize communications networks. Future growth in the market will be driven by broadband and 3G deployments.
In 2004, sales of telecommunications equipment in Taiwan totaled $4 billion, with imports accounting for about 73% of the total. The majority of Taiwan-produced telecom equipment is for export, mainly cellular phone handsets, WLAN, ADSL, LAN switches, modems, cable modems, and GPS devices. Given the ongoing network construction projects of fixed-line and third-generation (3G) mobile services licenses, Taiwan’s market demand for telecom equipment is projected to remain constant through 2006.
While Taiwan has 100% optical fiber as its telecom backbone and for metropolitan networks, most local loop or last mile networks are twisted-pair. Chunghwa Telecom, the dominant fixed line carrier, is currently upgrading its backbone transmission network based on Synchronous Optical Network/Synchronous Digital Hierarchy (SONET/SDH) technologies. Local loop access networks deployed solutions include DSL, VDSL, FTTC and FTTB. Broadband fixed wireless solutions, such as Local Multipoint Distribution System (LMDS), are not prevalent in Taiwan due to a rainy climate and dense urban areas. WiFi or public WLAN for high-speed Internet access is widely available from pubic hotspots, such as airports and cafes, in major cities. Voice/data convergence networks are well established. Chunghwa Telecom initiated its Multimedia On Demand service through its fixed-line network in March 2004 with approximately 30,000 subscribers. Taiwan cable networks have moved from straight coaxial cable to Hybrid Fiber/Coaxial (HFC). Direct broadcast satellite services such as DTH are not prevalent in Taiwan due to high cable penetration.
Telecom Service Providers
Chunghwa Telecom Co. is the largest telecommunications service provider in Taiwan and has the largest market share in all its key business lines. The company provides an integrated and full range of telecommunications services that include fixed-line services such as local, long-distance and international services; wireless services such as cellular and paging services; and Internet and data services which include dial-up connectivity, asymemetrical digital subscriber line (ADSL) services and leased line services. Chunghwa has 98% of the local service market in Taiwan, 80% of the domestic long distance market, and 53% of the international services market. The company employees 28,500 people and had revenues in 2004 of $6.8 billion. Website: www.cht.com.tw
The Ministry of Transportation and Communications (NOTC) issued three fixed-line licenses (for Type 1 services) in March 2000 to New Century InfoCom (in which Singapore Telecommunications is a partner), Taiwan Fixed Network (partnering with GTE), and Eastern Broadband Telecommunications, controlled by China Rebar Group.
For value-added (Type 2) services, 19 licenses have been issued. VPN services are provided by global and regional carriers such as MCI, NTT and Hong Kong Telecom. VOIP services can be provided via permit and are classified as a Type 2 service. They are open to 100% foreign equity holdings.
The Directorate General of Telecommunications, Ministry of Transportation and Communications
The Directorate General of Telecommunications (DGT) was established in 1943 to assume the dual roles of regulating telecommunications enterprises and providing telecommunications services. In the early 1990s, efforts were made to amend the Telecommunications Act and restructure DGT as part of liberalizing the telecom sector. A new telecom act and an organizational statute of the DGT were promulgated in February 1996. The DGT now specializes in the formation of telecom policy and market management. Its role is to prepare integrated telecom development plans, supervise telecom enterprises, and promote the development of an information society. DGT has five departments in charge of general planning, public telecommunications, dedicated telecommunications, radio and TV broadcast technology, and radio wave regulation. DGT remains an office of the Ministry of Transportation and Communications (MOTC).
A current regulatory issue of importance is the privatization of Chunghwa Telecom. The government has indicated it wants to sell off more of its stake in the firm, but this has not been accomplished to date.
Telecom Trade Agreements
As a member of the World Trade Organization (WTO), Taiwan has undertaken trade commitments in basic and value-added telecommunications services; its commitments became effective January 1, 2002. Taiwan completely liberalized the supply of value-added services and adopted the pro-competitive Reference Paper. For basic telecom services, the major market access limitations relate to foreign direct investment. The foreign ownership limit on wireless and wireline telecommunications firms is 60%, including a direct foreign investment limit of 49% for the state-owned Chunghwa Telecom Co, while indirect foreign investment is limited to 20%.
The Directorate General of Telecommunications (DGT)
U.S. Department of Commerce
International Trade Administration
Office of Technology and Ecommerce
Daniel W. Edwards, Sr. Telecom Analyst
U.S. Commercial Section, American Institute in Taiwan
Jacy.Huang, Commercial Specialist