Taiwan Regulator: Price Wars Negative for 5G Development & Deployments

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.


One thought on “Taiwan Regulator: Price Wars Negative for 5G Development & Deployments

  1. Qualcomm to establish 5G R&D center in Taiwan

    Qualcomm has revealed plans to establish three technology and testing centers in Taiwan as part of efforts to collaborate with the Taiwanese government and businesses on the commercial development of 5G and other advanced technologies.

    The company has revealed plans to establish a 5G module research and design center in Hsinchu in the north of the nation in 2019, Digitimes reported.

    The center will seek to develop plug-and-play solutions to help small and medium sized enterprises enter the 5G market without a huge capital outlay.

    Qualcomm plans to work with Taiwanese companies to develop 5G related technologies and accelerate time to market for the solutions, the report states.

    According to the report, this facility will be accompanied by a millimeter wave testing center and a biometric sensor facility, also in Hsinchu.

    Together, the three facilities will form part of the Center for Operations, Manufacturing Engineering and Testing (COMET), which will also be Qualcomm’s new operations hub in the region. Qualcomm has already announced plans to establish multimedia and AI centers in Taiwan next year.

    In August, Qualcomm agreed to make investments in Taiwan as part of a settlement agreement reversing nearly 90% of a TW$23.4 billion fine imposed on the company by Taiwan’s Fair Trade Commission.

    The original fine had been imposed in 2017 after the regulator accused Qualcomm of abusing its monopoly over key mobile device standards and violating local laws by refusing to supply products to clients disagreeing with its licensing conditions.

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