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If you are looking for information on the media applications pertaining to mobile phones in Taiwan, go to Taiwan: Commercial and Social Mobile Applications.
1. General Information
In theory, Taiwan will be an attractive market for foreign firms during the forecast period. The political system is democratic and reasonably stable (although the poor relationship between the government and the opposition parties has undermined consumer and investor confidence). The population is generally well educated and open to foreign influences. Average income levels are also high. GDP per head at market exchange rates is forecast to grow to US$21,316 by 2011.
Income is distributed fairly equally across society. However, inequality has risen since the 1970s, primarily as a result of rising land prices. In 1980 the share of income of Taiwan's top quintile of earners was 4.17 times that of the bottom quintile, but by 2003 this multiple had risen to 7.2.
The popularity of mobile phones is the main reason that growth in the fixed line market will stagnate. However, given the saturation in the mobile market, significant growth is unlikely to occur until mobile phone service provide.
[Taiwan - Mobile Communications - Major Operators and Services. Paul Budde Communication Pty Ltd, 2008. 27 May 2008 http://www.budde.com.au/buddereports/2915/Taiwan_-_Mobile_Communications_-_Major_Operators_and_Services.aspx]
Because some of the figures mentioned here are in TWD (Taiwan Dollar), to have a consistent overview amongst the other data and countries, the currency exchange rate to convert to USD as on 30th May, 2008 is as follows:
2. Mobile Phone Statistics and Forecasts
Taiwan’s mobile market has been a remarkable phenomenon. By early 2002, the country had reached the milestone of one mobile service for every person on the island. This meant that it had the highest penetration of any mobile market in the world at the time. After peaking at a penetration of 114% in late 2003, the market declined in 2004/05; by 2008, penetration was sitting at around 105%.
The number of mobile telephones in Taiwan has exceeded the entire population of the island, putting Taiwan atop the world in terms of per capita mobile phone ownership, according to the latest government statistics.
[Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International Limited, 2007. 14. 27 May 2008]
[EIU IndustryWire - Forecast. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2008. 1-2. 27 May 2008]
3. Competitive Landscape
There are 3 big telecommunication companies that are dominating the mobile market industry. They are:
[EIU IndustryWire - Background. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2005. 1-4. 27 May 2008]
3.1 The mobile market remains saturated
Given that penetration levels have at times surpassed 100%, the days of rapid and relatively easy growth in the mobile-phone market are over. This does not mean the end of the handset market: existing subscribers will continue to buy new phones to replace more outdated models, with the speed of this substitution cycle being buoyed by robust growth in the wider economy. Taiwan's mobile-phone market is dominated by Chunghwa Telecom (the partly state-owned former monopoly) and two other local operators, FarEasTone and Taiwan Mobile Company (known as Taiwan Cellular until 2005). There are three other operators. For the mobile-phone operators, the challenge over the forecast period will be to convince consumers of the need for more sophisticated services, as the maturity and saturation of the market hold out little hope for an expansion of their client base.
Companies have never managed to encourage the widespread use of wireless application protocol (WAP) services; the number of subscribers reached around 700,000 at the end of 2002, but has fallen back from this level since then. The promotion of general packet radio service (GPRS)--enhanced second-generation (2.5G) technology that allows the transmission of data and photographs as well as connection to the Internet--has been more successful, with the number of subscribers rising from 31,000 at the end of 2001 to around 5m at the end of 2006. Voice over Internet protocol (VoIP) applications have also proved popular, but these are expanding from a small base. The low level of non-voice revenue on current second-generation (2G) and 2.5G networks suggests that voice services will underpin the industry's future development over the forecast period.
There is still a low adoption rate for 3G mobile in Taiwan. As the National Communications Committee continues to reduce fees on ADSL and 2G monthly fees, operators need to accelerate the 3G migration in order to maintain the ARPU numbers. Approximately 50% have 3G handsets and hence use 3G services. Adoption rate among all mobile phone users is still approximated at 15%
The number of customers actually using 3G services, although rising, is said to be about one-tenth of subscriber levels. Given that service providers have invested so much money in developing 3G, it seems likely that they will push the technology and handsets aggressively. However, profits are disappointing.
in February 2003. Foreign players may have been put off in the past, however, by the continued power of Chunghwa, which enjoys close links with the government. The playing field will be gradually levelled as the government completes Chunghwa's privatisation; the Ministry of Transport and Communication's formerly controlling stake in the company had been reduced to 35.4% by March 2007.
[Yuanta Research Center Initiating Coverage 27th March 2008]
4. Technological Infrastructure: Wimax
Wimax licenses were awarded to 5 companies in late July 2007. These companies were:
The 2 big companies Chunghwa and Taiwan Mobile failed in their bids to secure Wimax licenses.
Wimax allows:
5. Government Regulations
The telecoms industry was long a protected sector of the economy, under the monopoly of the government’s Directorate-General of Telecommunications (DGT). In recent years, however, officials have implemented a sweeping liberalization of this area, with the aim of transforming the island into a regional telecoms hub serving the financial, shipping and tourism industries.
As part of the government's liberalisation drive, limits on foreign participation in the telecoms sector have been eased. The government agreed to raise the direct and indirect stakes that foreign investors are allowed to hold in telecoms companies from a combined 49% to 60%
6. SWOT Analysis
[(Q2 2007). Taiwan Telecommunications Report. London: Business Monitor International Ltd.]
[ Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International, 2007. 11. 27 May 2008]
Additional Information:
Soundbytes
Sean Gowran, president of Ericsson Taiwan, says mobile communication holds obvious attractions for the Taiwanese. "People spend the majority of their time outside the home and mobile devices allow them to keep in touch and stay informed," he says
Until now, data usage has been limited - even SMS uptake has been sluggish - but Gowran says that, with the advent of 3G, that is about to change. "In a market where there is heavy competition for voice, operators are turning to data services to differentiate their offerings," he says. "The difficulty of inputting Chinese language characters and the low cost of voice services have impeded SMS development, but this will not be a barrier to more advanced data services. Internet access, music and video downloads are already popular services."
Gowran says mobile broadband growth is inevitable. "At the moment, about 90 percent of 3G data usage comes from just 10 percent of users. As the market matures, the aim for operators is to grow data traffic by increasing the percentage of active data subscribers."
Pyramid Research predicts that the trend towards greater data usage will continue, as operators make up for shrinking mobile voice revenues, and account for 16 percent of total mobile revenues by 2011. In an already overcrowded market, operators have to develop richer content to maintain customer loyalty and prevent churn.
["Taiwan 3G on the Move." 19 Oct. 2006. 27 May 2008 http://www.ericsson.com/solutions/operators/news/2006/q4/20061019_taiwan.shtml ]
References
1. Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International, 2007. 11. 27 May 2008
2. Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International Limited, 2007. 14. 27 May 2008
3. EIU IndustryWire - Background. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2005. 1-4. 27 May 2008
4. EIU IndustryWire - Forecast. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2008. 1-2. 27 May 2008
5. "Taiwan 3G on the Move." 19 Oct. 2006. 27 May 2008 http://www.ericsson.com/solutions/operators/news/2006/q4/20061019_taiwan.shtml
6. Taiwan - Mobile Communications - Major Operators and Services. Paul Budde Communication Pty Ltd, 2008. 27 May 2008 http://www.budde.com.au/buddereports/2915/Taiwan_-_Mobile_Communications_-_Major_Operators_and_Services.aspx
1. General Information
In theory, Taiwan will be an attractive market for foreign firms during the forecast period. The political system is democratic and reasonably stable (although the poor relationship between the government and the opposition parties has undermined consumer and investor confidence). The population is generally well educated and open to foreign influences. Average income levels are also high. GDP per head at market exchange rates is forecast to grow to US$21,316 by 2011.Income is distributed fairly equally across society. However, inequality has risen since the 1970s, primarily as a result of rising land prices. In 1980 the share of income of Taiwan's top quintile of earners was 4.17 times that of the bottom quintile, but by 2003 this multiple had risen to 7.2.
The popularity of mobile phones is the main reason that growth in the fixed line market will stagnate. However, given the saturation in the mobile market, significant growth is unlikely to occur until mobile phone service provide.
[Taiwan - Mobile Communications - Major Operators and Services. Paul Budde Communication Pty Ltd, 2008. 27 May 2008 http://www.budde.com.au/buddereports/2915/Taiwan_-_Mobile_Communications_-_Major_Operators_and_Services.aspx]
Because some of the figures mentioned here are in TWD (Taiwan Dollar), to have a consistent overview amongst the other data and countries, the currency exchange rate to convert to USD as on 30th May, 2008 is as follows:
2. Mobile Phone Statistics and Forecasts
| Taiwan Telecom Sector - Mobile Data | ||||||||
| 2004 | 2005 | 2006 | 2007 | 2008f | 2009f | 2010f | 2011f | |
| No. of Mobile Phone Subscribers ('000) | 21521.0 | 21198.0 | 21495.0 | 21840.0 | 22170.0 | 22440.0 | 22730.0 | 23120.0 |
| No. of Mobile Phone Subscribers /100 | 94.0 | 91.4 | 91.5 | 92.9 | 94.3 | 95.5 | 96.7 | 98.4 |
| No. of 3G Phone Subscribers('000) | 450.0 | 1200.0 | 3450.0 | 5320.0 | 8129.0 | 1260.0 | 15220.0 | 17450.0 |
| No. of 3G Phone Subscribers /100 | 1.9 | 5.1 | 15.0 | 23.1 | 35.3 | 54.8 | 64.8 | 74.3 |
| 3G Market as % of entire mobile market | 2.1 | 5.7 | 16.1 | 24.4 | 36.6 | 56.1 | 67.0 | 75.5 |
Taiwan’s mobile market has been a remarkable phenomenon. By early 2002, the country had reached the milestone of one mobile service for every person on the island. This meant that it had the highest penetration of any mobile market in the world at the time. After peaking at a penetration of 114% in late 2003, the market declined in 2004/05; by 2008, penetration was sitting at around 105%.
The number of mobile telephones in Taiwan has exceeded the entire population of the island, putting Taiwan atop the world in terms of per capita mobile phone ownership, according to the latest government statistics.
[Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International Limited, 2007. 14. 27 May 2008]
[EIU IndustryWire - Forecast. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2008. 1-2. 27 May 2008]
3. Competitive Landscape
There are 3 big telecommunication companies that are dominating the mobile market industry. They are:
| Teleco Company | Year Founded | Listed Exchange:Symbol | Market Cap (USD) | Major Shareholder |
| Chunghwa | 1996 | NYSE:CHT (ADR) TSE: 2412 (Dual listing) | $24.5 Bln | Ministry of Trasportation and Communication (35.41%) |
| Far EastTone | 1998 | TSE: 4904 | $5.3Bln | NA |
| Taiwan Mobile | 1997 | TSE: 3045 | $5.4 Bln | Taiwan Fixed Network(19%) |
[EIU IndustryWire - Background. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2005. 1-4. 27 May 2008]
3.1 The mobile market remains saturated
Given that penetration levels have at times surpassed 100%, the days of rapid and relatively easy growth in the mobile-phone market are over. This does not mean the end of the handset market: existing subscribers will continue to buy new phones to replace more outdated models, with the speed of this substitution cycle being buoyed by robust growth in the wider economy. Taiwan's mobile-phone market is dominated by Chunghwa Telecom (the partly state-owned former monopoly) and two other local operators, FarEasTone and Taiwan Mobile Company (known as Taiwan Cellular until 2005). There are three other operators. For the mobile-phone operators, the challenge over the forecast period will be to convince consumers of the need for more sophisticated services, as the maturity and saturation of the market hold out little hope for an expansion of their client base.
Companies have never managed to encourage the widespread use of wireless application protocol (WAP) services; the number of subscribers reached around 700,000 at the end of 2002, but has fallen back from this level since then. The promotion of general packet radio service (GPRS)--enhanced second-generation (2.5G) technology that allows the transmission of data and photographs as well as connection to the Internet--has been more successful, with the number of subscribers rising from 31,000 at the end of 2001 to around 5m at the end of 2006. Voice over Internet protocol (VoIP) applications have also proved popular, but these are expanding from a small base. The low level of non-voice revenue on current second-generation (2G) and 2.5G networks suggests that voice services will underpin the industry's future development over the forecast period.
There is still a low adoption rate for 3G mobile in Taiwan. As the National Communications Committee continues to reduce fees on ADSL and 2G monthly fees, operators need to accelerate the 3G migration in order to maintain the ARPU numbers. Approximately 50% have 3G handsets and hence use 3G services. Adoption rate among all mobile phone users is still approximated at 15%
The number of customers actually using 3G services, although rising, is said to be about one-tenth of subscriber levels. Given that service providers have invested so much money in developing 3G, it seems likely that they will push the technology and handsets aggressively. However, profits are disappointing.
in February 2003. Foreign players may have been put off in the past, however, by the continued power of Chunghwa, which enjoys close links with the government. The playing field will be gradually levelled as the government completes Chunghwa's privatisation; the Ministry of Transport and Communication's formerly controlling stake in the company had been reduced to 35.4% by March 2007.
[Yuanta Research Center Initiating Coverage 27th March 2008]
4. Technological Infrastructure: Wimax
Wimax licenses were awarded to 5 companies in late July 2007. These companies were:
- Far EasTone
- Global On Corp
- Joint Venture between Tecom and Vibo Telecom
- First International Telecom Corp
- Tatung
The 2 big companies Chunghwa and Taiwan Mobile failed in their bids to secure Wimax licenses.
Wimax allows:
> Connecting Wi-Fi hotspots with each other and to other parts of the Internet.
> Providing high-speed data and telecommunications services.
> Providing a diverse source of Internet connectivity as part of a business continuity plan.
> Serves as a means for increasing bandwidth for data intensive applications on mobile phones
>Allows operators to use Wimax to cover any gaps in network coverage.
5. Government Regulations
The telecoms industry was long a protected sector of the economy, under the monopoly of the government’s Directorate-General of Telecommunications (DGT). In recent years, however, officials have implemented a sweeping liberalization of this area, with the aim of transforming the island into a regional telecoms hub serving the financial, shipping and tourism industries.
As part of the government's liberalisation drive, limits on foreign participation in the telecoms sector have been eased. The government agreed to raise the direct and indirect stakes that foreign investors are allowed to hold in telecoms companies from a combined 49% to 60%
6. SWOT Analysis
[(Q2 2007). Taiwan Telecommunications Report. London: Business Monitor International Ltd.]
| Taiwan SWOT Analysis | |
| Strengths 1. Liberalised, highly developed telecoms sector with multiple mobile operators 2. High broadband take-up (22.5% penetration in 2006), with WiMAX licences to help contribute to higher growth and revenues for operators 3. Open economy with low levels of corruption. 4. Growing data services as percentage of revenues, thanks to acceptance of 3G | Weaknesses
|
Opportunities
| Threats
|
[ Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International, 2007. 11. 27 May 2008]
Additional Information:
Soundbytes
Sean Gowran, president of Ericsson Taiwan, says mobile communication holds obvious attractions for the Taiwanese. "People spend the majority of their time outside the home and mobile devices allow them to keep in touch and stay informed," he says
Until now, data usage has been limited - even SMS uptake has been sluggish - but Gowran says that, with the advent of 3G, that is about to change. "In a market where there is heavy competition for voice, operators are turning to data services to differentiate their offerings," he says. "The difficulty of inputting Chinese language characters and the low cost of voice services have impeded SMS development, but this will not be a barrier to more advanced data services. Internet access, music and video downloads are already popular services."
Gowran says mobile broadband growth is inevitable. "At the moment, about 90 percent of 3G data usage comes from just 10 percent of users. As the market matures, the aim for operators is to grow data traffic by increasing the percentage of active data subscribers."
Pyramid Research predicts that the trend towards greater data usage will continue, as operators make up for shrinking mobile voice revenues, and account for 16 percent of total mobile revenues by 2011. In an already overcrowded market, operators have to develop richer content to maintain customer loyalty and prevent churn.
["Taiwan 3G on the Move." 19 Oct. 2006. 27 May 2008 http://www.ericsson.com/solutions/operators/news/2006/q4/20061019_taiwan.shtml ]
References
1. Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International, 2007. 11. 27 May 2008
2. Taiwan Telecommunications Report Q2 2007. Business Monitor International. London: Business Monitor International Limited, 2007. 14. 27 May 2008
3. EIU IndustryWire - Background. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2005. 1-4. 27 May 2008
4. EIU IndustryWire - Forecast. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2008. 1-2. 27 May 2008
5. "Taiwan 3G on the Move." 19 Oct. 2006. 27 May 2008 http://www.ericsson.com/solutions/operators/news/2006/q4/20061019_taiwan.shtml
6. Taiwan - Mobile Communications - Major Operators and Services. Paul Budde Communication Pty Ltd, 2008. 27 May 2008 http://www.budde.com.au/buddereports/2915/Taiwan_-_Mobile_Communications_-_Major_Operators_and_Services.aspx
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