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Chunghwa Rides High in Taiwan

Catherine Haslam
News Analysis
Catherine Haslam
3/31/2009

The dominant position of Taiwan's incumbent carrier, Chunghwa Telecom Co. Ltd. (NYSE: CHT), will continue unhindered despite efforts of the national regulator to increase competition, according to a new report from Pyramid Research , Communications Markets in Taiwan.

"With 98 percent of the PSTN and dial-up markets, 55 percent of the VoIP market, and 71 percent of the broadband sphere, it would be difficult, if not impossible, for any operator to pose a serious threat to Chunghwa in the near term," the report states.

The company’s 71 percent share of broadband services and 100 percent control of IPTV, together with its aggressive rollout of fiber to the home, are likely to protect Chungwa’s leadership position in the longer term.

Chunghwa Telecom has seen the proportion of its broadband subscribers connected by fiber increase from 12.6 percent at the start of 2008, to 21.9 percent by the year's end, according to the report. It further predicts that total fiber subscriptions in the country which has a population of 22.8 million, will reach 4.1 million by 2013.

Pyramid further reports that Chunghwa is targeting the conversion of DSL and narrowband users to fiber by reducing the price and bundling the offer with IPTV, something its competitors cannot currently compete with.

The other two major operators, Far EasTone Telecommunications Co. Ltd. and Taiwan Mobile Co. Ltd. , have attempted to challenge Chunghwa with their own bundled portfolios of fixed, broadband, and mobile services, but they have both struggled to acquire more than 20 percent of the overall Taiwanese market, according to Pyramid.

The National Communications Commission (NCC) has been pressuring Chungwa Telecom to lower wholesale and service tariffs, but, the reports states, while this action will benefit consumers, it will not alter Chunghwa’s market position.

In an attempt to increase competition, the NCC has licensed WiMax and is expected to issue mobile TV licenses in the middle of the year. The report points to these as new ways for Far EasTone and Taiwan Mobile to challenge the incumbent.

— Catherine Haslam, Asia Editor, Light Reading

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