2011 Taiwan - Telecoms, Mobile, Broadband and Forecasts

3G and FttX at a tipping point to drive ARPU

Taiwan has one of the most advanced telecommunications networks in Asia. Increasing land and labour costs have forced Taiwan to concentrate on technology, and it is now a leading high-tech centre in Asia Pacific. 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.

Taiwan has rapidly become a significant player in broadband Internet access. Going into 2012, the total broadband penetration had been lifted to over 100% when considering both fixed-line and wireless. The proportion of the population who are Internet users has exceeded 70%. The market has rapidly moved to broadband and FttX became the dominant form of access technology in 2011.

Taiwan has a competitive mobile environment and still has high expectations for WiMAX There is significant investment in this area underpinned by the government and companies among which is Intel. Data services continue to grow as a percentage of revenues, as the take-up for 3G increases. 3G subscribers now account for nearly 75% 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. Competition has meant more focus on leading edge, often bundled services to subscribers, who have considerably more choice in operator and service selection.

The 2008 financial crisis and subsequent economic slowdown in 2009 had an impact on many of the operators’ strategies. Faced with diminishing opportunities in the home market, Chunghwa Telecom continues to look for acquisitions overseas, concentrating its efforts in China and emerging markets as part of its mid-term strategy.

Market highlights:

• Taiwan’s mobile operators had signed up close to 21 million 3G subscribers going into 2012. 3G handset users account for more than 70% of all mobile subscribers;
• The new operators, Vibo and APBW gained close to 65% of net additions during 2011, increasing the pressure on the three big players;
• 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. Entering 2012 the company provided fibre access to 2.4 million residential and business subscribers.
• WiMAX networks became operational in 2010 but slow uptake resulted in the first industry consolidation towards end 2011 with the original six players becoming five;
• The NCC continues to delay awarding two mobile TV licences.

Taiwan – Key performance indicators – 2009 - 2012

(Source: BuddeComm based on industry data)

For those needing high level objective analysis on Taiwan, this report is essential reading and gives further information on:

• Chunghwa Telecom’s ambitious program, which includes increasing the coverage of its fixed-line network exceeding 100Mb/s speeds to 97% of its network by 2016
• A warming of relations between China and Taiwan in recent years, raising the prospect of significant investment flows.
• Analogue switch off beginning in the remote islands during 2008 and then in the eastern area of Taiwan in 2009, with the completion of analogue switchover in 2013.
• Chunghwa Telecom planning to upgrade its mobile infrastructure to HSPA+ technology and then start testing an LTE network from 2011 in anticipation of licensing in 2013.