Pyramid: Ruling Slows Taiwan Recovery
In January 2010, the National Communications Commission (NCC) mandated that Taiwan's operators must cut their fixed monthly tariffs by 5.68 percent, and their mobile 2G and 3G services by 5.87 percent. The idea was that it would make life a little easier for recession-hit consumers.
The flip side, however, is that times are tougher for the telcos, says the report, and as a result of the enforced cuts, and increasing competition, they're expanding their focus on value-added services such as mobile data, mobile content, and fixed broadband access and applications. (See Envivio Powers Chunghwa Mobile TV, BNS Wins IPTV Deal in Taiwan, and Tzu-Han Huang, Chunghwa Telecom.)
Certainly, voice isn't where it's at in Taiwan at the moment: Fixed voice saw an 11 percent year-on-year contraction in 2009, and, in the light of the January ruling, Pyramid predicts that fixed voice services will drop another 5 percent and mobile voice services drop 1 percent in 2010.
Recognizing that broadband could be the cash cow of tomorrow, incumbent Chunghwa Telecom Co. Ltd. (NYSE: CHT) -- which lays claim to 87 percent of the market's fixed revenues -- has been busy rolling out its fiber network. (See Chunghwa Rides High in Taiwan.)
According to the report, Chunghwa has set itself a target of 83 percent coverage of the country via its fiber network by 2013. The corollary of this is the decline of DSL: 1.2 million DSL lines have been disconnected between 2006 and 2009, says the report, as the migration to fiber hit its stride. It predicts that FTTx will replace DSL as the most subscribed-to broadband technology by 2011.
There are broadband alternatives, though, especially from the country's mobile WiMax players. Tatung InfoComm Co. Ltd. , Far EasTone Telecommunications Co. Ltd. , VMAX , Global Mobile Corp. , and Vee Time have all launched services in recent months, and Fitel is preparing to launch in late 2010. (See Far EasTone Launches WiMax.)
Chunghwa's also pushing the boundaries in the wireless market, where it's preparing for a mobile data future by dipping its toes into Long Term Evolution (LTE) waters, with a trial network using equipment from Nokia Networks already in place. Far EasTone is also getting in on the act, setting up a TD-LTE (the time-division duplex version of LTE) trial with China Mobile Communications Corp. (See Chungwha Trials LTE in Taiwan and Samsung Targets WiMax 2 in 2011.)
Developments such as these could put an end to Taiwan’s days as a laggard in the mobile data stakes. As the report points out, just 13 percent of its mobile service revenue currently comes from data, which is some way behind its regional peers.
In terms of hard figures, the report predicts that mobile broadband revenues will grow at a compound annual growth rate (CAGR) of 15 percent between 2010 and 2015, ultimately reaching US$352 million.
This, however, is the bright light in the overall gloomy prognosis for Taiwan’s wider telecom market, for which Pyramid predicts a CAGR of only 1.1 percent over the same period, the lowest in the Asia-Pacific region.
— Paul Rainford, Freelance Editor, special to Light Reading