With a population of only 23 million, one would probably think that its telecom market should soon reach saturation, especially with five major operators vying for the relatively small piece of pie. However, this telecom market continued to impress with its growth and market dynamics. In 2010, it was estimated that the mobile penetration rate had rose to over 120% and this was coupled with a stellar performance in the home broadband penetration rate, which chalked up 80% penetration. Despite heavy competition, the market continues to find new ways to grow.
Shi Min, Senior Industry Analyst for Frost & Sullivan’s Asia Pacific ICT Practice says, “Taiwan issued five 3G licenses in early 2002. Currently, 4 of the 5 operators – Chunghwa Telecom, Taiwan Mobile, Far EasTone, and VIBO Telecom Inc. (‘VIBO’), run WCDMA/HSPA network, while the remainder – Asia Pacific Broadband Telecom (APBT), run a CDMA2000 network.”
However, over the 9 years of 3G development, these operators have demonstrated mixed performances in customer acquisition and mobile revenues, as a result of high handset subsidies and price war among the operators. Taiwan is still a voice centric mobile market, with mobile data accounting for less than 20% of the total mobile revenue, significantly lower than the other developed markets such as Japan, Korea and Singapore.
“In order to grow revenue, Operators need to play a bigger role in the mobile content market. Chunghwa Telecom, Taiwan Mobile and Far EasTone invested significantly in the e-book market and application store to boost mobile internet market last year. As a result, operators have archived higher growth rate in mobile value added services despite the marginal growth in mobile connections. Chunghwa Telecom, for example, has reported 30.8% growth in mobile VAS and a modest 2.9% growth in mobile communication revenue in 2010,” Shi adds.
Another interesting phenomenon in Taiwan was that operators offered their own branded smartphone and tablet gadgets. VIBO, for example, launched its own brand tablet, VPad at a discounted price in 2010. However it is still too early to conclude whether such experiment can fulfill the operators’ ambition of better profitability.
“Taiwan has moved ahead with WiMAX despite the technology gaining less support worldwide in 2009, and the award of six WiMAX licenses has generated new vibrancy to Taiwan’s wireless broadband landscape. Among the mobile operators, only Far EasTone and VIBO were successful in securing WiMAX licenses. With strong government support, WiMAX was expected to be the dominant mobile broadband technology in Taiwan,” Shi adds. “However, data released by National Communications Commission (NCC) on WiMAX subscribers showed a rather lackluster uptake of slightly above 20,000 WiMAX subscribers by 2010, in comparison to above 18 million 3G million subscribers. WiMAX is still in its nascent stages in Taiwan.
“Near Field Communication (NFC) is an upcoming star in Taiwan’s market. It is one of the earliest markets to deploy contactless payment. After Far EasTone’s early launch of 'Beep 'N Go', Chunghwa Telecom and Taiwan Mobile began their close pursuit by deploying their versions of mobile payment services, which enabled subscribers to make payments and download coupons by ‘tapping’. The service has also been expanded to trains and buses. In 2011, popular smartphone brands like Apple, Blackberry and HTC are planning to release their NFC embedded handsets, which will further boost the mobile payment services in Taiwan.”
While the telecommunications market in Taiwan has been liberalized, there is still limited competition in the local broadband access market which is dominated by Chunghwa Telecom. The incumbent’s plan to wire up the entire island with its FTTH project is likely to increase its dominance in the fixed broadband markets. The network advantage also enabled Chunghwa Telecom to gain dominance in the IPTV market. Despite the heavy competition from cable TV providers, Chunghwa Telecom’s IPTV service ‘Multimedia on Demand’, has reached nearly 1 million subscribers in 2010, mainly through service differentiation and premium content expansion. Being an integrated service provider, Chunghwa Telecom is paving its way for triple play.
While the Taiwan telecom market is mature and competitive in both fixed and mobile sectors, there are still growth opportunity, notably through operators’ innovative service offering and collaboration among the players in the Taiwan ICT ecosystem. Moving forward, this market has the potential to continue to impress us through new initiatives and cross border collaboration.
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Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's research and consulting services empower clients to generate, evaluate, and implement effective growth strategies.