Taiwan’s National Communications Commission (NCC) regulator said that an ongoing price war in the Taiwanese mobile industry could hamper the development and deployment of 5G, according to an article in the Taipei Times.
The warning came after Chunghwa Telecom introduced a fourth-generation (4G) service plan earlier this month that targets government workers, teachers, school staff and military personnel, charging users NT$499 per month for unlimited access to mobile Internet and unlimited phone calls between subscribers of the same network. Taiwan Mobile, Far EasTone Telecommunications and Asia-Pacific Telecom quickly followed suit, introducing the same plan to attract subscribers.
NCC spokesperson Wong Po-tsung (翁柏宗) said that the commission respects a free market system, but added: “If telecoms simply want to boost their market shares and revenue by luring subscribers from competitors, rather than with innovative business models, it would not be positive for the development of 5G in the nation.”
“What they are doing does not help to make the pie bigger. They are not benefiting from innovative business models that could sustain them through the maintenance and operation of 4G services, the auctioning of the 5G service spectrum and finally commercial operation of 5G,” Wong said.
“That would hamper sustainable development of the nation’s telecommunications industry,” he added.
While carriers in other countries have sought to provide original content by buying content producers or have expanded their businesses overseas, Taiwanese telecoms are unlikely to do so, Wong said.
“Either none of them are big enough to develop their businesses overseas, or the acquisition of content providers is out of the question because of regulations that ban the government, political parties and the military from investing in media,” Wong said.
Carriers need to have courage and stop offering unlimited data and call service at unreasonably low prices, which would hurt their development in the long term, Wong said.
It is not the first time that telecoms have engaged in price competition to attract subscribers since 4G was launched in 2014. Average monthly fees dropped from about NT$1,300 to below NT$1,000 within one year of the service being launched, in a bid to motivate people to upgrade to 4G. The tactic was revived last year, with prices dropping further to NT$599 per month.
NCC statistics showed that mobile carriers’ revenue has declined from NT$53.2 billion (US$1.81 billion) in the second quarter of 2016 to NT$49.4 billion in the fourth quarter of last year.
Apart from a continued decrease in revenue from voice communication and a rapid increase in data transmission, industry experts have also attributed the decline in revenue to an ongoing price war. Offering unlimited data and call services at unreasonably low prices will hurt operators’ development in the long term, the regulator added. Operators are already grappling with declining revenue as a result of the price war, coupled with the continued decline in voice revenues.
As noted above, NCC does not believe that Taiwan’s operators will be able to follow the models their overseas counterparts have been pursuing to sustain growth – such as expanding overseas. pursuing acquisitions, or diversifying into original media content – due to Taiwanese operators’ relatively small size and regulatory restrictions.