Telecommunications Industry

An Expert's View about Wired Telecommunications in Taiwan

Last updated: 30 Jun 2011

Summary
Mobile phones, broadband, and wireless chips are the major trends in Taiwan’s telecommunications industry. Taiwan’s fixed-network carriers, mobile operators, and broadcasters (terrestrial TV, radio, and CATV networks) are upgrading their network infrastructure to increase market competitiveness. Since 2008, the Taiwan Authorities have collaborated with Intel Co. and invested $1.3 billion to develop and promote Worldwide Interoperability for Microwave Access (WiMax) services to further develop Taiwan’s information technology sector, and provide seamless mobile and wireless Internet to the public. However, Intel closed its Taiwan WiMax Program office in June 2010, and the WiMax project has been postponed while they re-evaluate its benefits versus Long Term Evaluation (LTE) 4G technology. LTE 4G technology is supported by the world’s major telecommunications companies including Nokia, Notel, Alcatel-Lucent, AT&T and Taiwan’s Chunghwa Telecom. The Taiwan Authorities have not abandoned WiMax, but most of the Taiwan industry players have changed to the LTE solution.

Market Demand
Digital Convergence

Benefiting from the growing global “stay at home” economy, mobile devices open platforms for application services and digital publishing and other related sectors have seen tremendous growth. Some of Taiwan’s main investments include digital games, digital publishing and mobile application services. The sectors leading these high sales growth rates are: digital publishing including e-books (34.8%), mobile application services (29.98%), digital learning (27.68%), and digital games (17.06%).

Taiwan is a leader in the telecommunications industry, with an internet penetration rate that is in the top 10 globally, and a solid digital content infrastructure environment. Taiwan Authorities are pushing to be a leader for entertainment and innovative multimedia applications, as well as a successful example of the development of global digital content. Although the U.S. and Japan currently lead in quality and technology, the U.S. and Europe lead in the key core technologies and standards. In order to keep the industry developing, Taiwan needs professional technology and expertise. The Taiwan Authorities have inputted $342 million into this project.

For Taiwan consumers, digital content developments and demand will be based on the following three trends:

1. Multi-channel offerings and differentiating audience groups: IPTV penetration rate has reached 52%. For mobile video, 39% prefer to watch videos via laptops while 27% prefer to watch them via mobile phones. 54% wish to use TVs to receive the digital content. The largest digital content viewer group is the movie fans (73.3%).

2. New video groups are forming and changing the entertainment consumption module: The digital TV operators offer a variety of services to different groups based on their viewing patterns. Digital content will combine with other multi-media to satisfy the needs of Taiwan consumers. For example, restaurants and tourist attractions shown in films will attract visits from loyal fans.

3. Commercial groups are promoting a new interactive model: In the past, TV operators obtained funds from businesses and the consumers. The businesses paid the TV operators to show their commercials and the consumers paid subscription fees to the cable TV operators. With new digital video services and interactive functions, businesses are not able to only purchase the commercial air time from the TV operators, but can also purchase the broadcast rights from the digital TV operators.

Broadcasting
The Taiwan Authorities launched “The Development of Digital Convergence Program” in 2010 and it will be completed by 2015. Through the high-speed broadband network, Taiwan is able to promote the convergence of telecommunications services and accelerate the process of digital television in order to construct new video services, and promote communication and dissemination of industrial upgrades. Taiwan’s goals are to obtain 6 million fiber optic subscribers, 2 million wireless broadband subscribers, a digital Cable TV penetration rate of 50% of all households, and a new video service penetration increase of 50% by 2015.

Cable TV

Taiwan’s cable TV system has been divided into fifty-one regions. Currently, pricing differs among regions and Taiwan Authorities are now planning a uniform pricing structure.

Subscribers currently pay about $20 each month for more than one hundred cable TV channels. However, there are only a few high quality channels. The Taiwan Authorities determine the basic cable pricing model. Operators can compete in the non-basic channel market with high quality programs to attract subscribers. These subscribers pay fees in accordance with their desired programming content needs.

According to the digital convergence policy, new operators will be required to have fully-equipped digital content devices. Operators will have to complete the digitalization process by 2015 before they are able to renew their licenses. By 2015, the penetration rate of TV digitalization is estimated to be above 50%. The subscribers will have to change to the digital TVs or add set up boxes to their current analog TVs.

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Posted: 30 June 2011, last updated 30 June 2011

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