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Nov 8 2009, 11:26 PM EST (current) ElisaSilvestrini 6 words added, 13 words deleted
Nov 8 2009, 11:17 PM EST chitanya 1 word added, 24 words deleted

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Overview

I
Taiwan's Mobile Internet Users
Age % of age group using Mobile Internet

12-14 23.50%

15-20 43.70%

21-30 58.00%

31-40 48.00%

41-50 32.20%

51-60 26.70%

61-64 23.80%

65+ 17.70%
n the last decade Taiwan’s telecoms infrastructure has been upgraded significantly, undergoing a series of network adjustments. Today Taiwan’s mobile landscape continues to be like no other in the world. By early 2002, the country had reached one mobile service for every person on the island. At that time this was the highest penetration of any mobile market in the world. By 2009, mobile penetration was sitting at around 110%, with fixedline at a steady 55%. Total mobile sector revenues reached US$7.2 billion in 2008 as the highly penetrated market saw operators introducing value-added, higher-margin products.

Consistent with the performance of its impressive mobile sector, Taiwan has been energetically moving into the ‘next generation’ of mobile services. Mobile operators signed up more than 8 million 3G handset users by the end of 2008. Chunghwa Teleco, attributed to around 3 million of these users, with Far EasTone and Taiwan mobile following with 2.2 million and 1.8 million subscribers respectively.



Mobile Phone Statistics and Forecasts
Taiwan Telecom Sector - Mobile Data









2004 2005 2006 2007 2008 2009 2010 2011
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
(source: Taiwan Telecommunications Report Q2)

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 theisland. 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 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.



Competitive Landscape
Three telecommunication companies dominate and shape the mobile market with Taiwan:

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%)
(source: Euromoney Institutional Investor Company. Economist Intelligence Unit Limited)


The mobile market remains saturated

Given that penetration levels, 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.


Technological Infrastructure: Wimax
Wimax licenses were awarded to 5 companies in late July 2007. These companies were:
quickie
- Taiwan's Mobile Penetration Rate has surpassed 110%

- Mobile phones are still mostly used for making phone calls (65%).

- SMS/MMS usage is only 3% and internet access 2%
  1. Far EasTone
  2. Global On Corp
  3. Joint Venture between Tecom and Vibo Telecom
  4. First International Telecom Corp
  5. Tatung
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.


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%


SWOT Analysis
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
  1. Many telecoms sub-sectors at or near saturation, limiting scope for growth
  2. Mobile data average revenue per user (ARPU) low compared with regional peers
  3. Limited competition in local access market
  4. Low existing levels of foreign direct investment (FDI)
  5. Continued poor level of 3G take-up, with FarEasTone and TWM yet to break through FY06 targets
Opportunities
  1. Domestic economy expected to continue to perform strongly
  2. Strong post-paid subscriber base across major operators, should provide easier migration towards 3G service take up
  3. Reduction to mobile and internet/ADSL tariffs by NCC could help take-up
  4. Inactive users now eliminated, operators will begin to focus on future growth in the mobile sector
  5. Healthy level of competition among vendors should aid greater choice of handsets, and in particular those offering WVAS capabilities
 Threats
  1. Expensive handsets could hinder take up of 3G services, although greater availability will reduce prices
  2. Broadband ARPU could fall markedly with increased competition in mature market
  3. Slowdown in Chinese economy could impact upon Taiwan




































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 ]


Sources:
  1. Yuanta Research Center Initiating Coverage, 27th March 2008 http://www.cellular-news.com/story/36917.php?s=h
  2. Taiwan Telecommunications Report. London: Business Monitor International Ltd.
  3. Taiwan 3G on the Move, http://www.ericsson.com/solutions/operators/news/2006/q4/20061019_taiwan.shtml