Taiwan – Telecom

Taiwan has developed a dynamic telecommunications industry defined by excellent telecommunications infrastructure and a very competitive mobile market. Taiwan’s fixed-line market continues to be dominated by incumbent operator Chunghwa Telecom despite competition and fixed mobile substitution eating into its market share and fixed-line revenue. However the market remains important due to the increasing popularity of fixed broadband which is undergoing a transition from predominantly DSL to fibre access based platforms.

Taiwan’s telecoms industry is served by six mobile operators and four fixed-line operators. However, many telecoms sub-sectors are at or near saturation which limits the scope for growth.

Taiwan boasts one of the world’s most advanced broadband networks and broadcasting infrastructure. To improve its position within the ICT value chain the Taiwanese government and private investors invested significantly in developing standards such as WiMAX. Private investors are attracted to Taiwan due to its regulatory certainty, market maturity, an educated workforce and highly clustered ICT sector that sits at the heart of Taiwan’s economic development.

The number of fixed-line subscribers in Taiwan grew gradually before peaking in 2005. Since then the trend has been one of gradual decline as fixed-lines are substituted with mobile phones. CHT has tried to arrest the decline in fixed-lines by focusing on selling fixed broadband products. Fixed line penetration has decreased gradually from 54.6 in 2011 to 49.7% in 2016.

Taiwan possesses a competitive mobile market comprised of six mobile network operators, of which three dominate the market. High mobile penetration means competition is intense to gain new subscribers hence the market was quick to embrace LTE due to the new subscriber opportunity it presented.

Annual market growth of the mobile subscriber market has been in low single digit figures from 2011 to 2014. Market penetration peaked in 2014 at 129. By 2015 the market saw a slight contraction due to a highly mature and saturated market. Market penetration declined to 128% in 2015 and 127% in 2016 with the market reaching 29.7 million subscribers.

LTE has experienced strong growth since the introduction of services, with LTE subscriber numbers growing at a faster rate than that of 3G. Taiwan’s mobile operators have focused on LTE as a means to increase ARPU to offset the continual year-on-year decline in overall ARPU levels. Mobile users are attracted to LTE due to improved quality of experience provided through faster speeds. Market penetration is expected to grow strongly over the next five years to 2021.

Taiwan has seen very strong growth in its mobile broadband subscribers over the past few years driven by strong growth of 4G services. Penetration has risen form 53% in 2015 to 76% in 2015 and 81% in 2016. Further strong growth is predicted over the next few years to 2019.

Taiwan possesses an advanced fixed broadband market, with services accessible through a variety of technology platforms including DSL, fibre, Hybrid Fibre Coax (HFC), leased lines and wireless. Fibre is the most popular platform and has underpinned Taiwan’s relatively high standing in global broadband rankings.

Chunghwa Telecom is the largest ISP in Taiwan, having successfully leveraging its ownership of the last mile to increase and consolidate its share of the fixed broadband market.

Recognising the ability of utilising ICT to improve both social and economic development, Taiwan has taken steps to develop a digital economy, encompassing digital media and e-services and building upon the high availability of fixed and mobile broadband networks. Private sector involvement is particularly strong in digital media, with digital media content widely accessible via HFC and IPTV networks. Telecom operators such as Chunghwa Telecom have also invested heavily in digital media as a means to cross-sell additional products to existing telecom customers.

Key developments:

  • Chunghwa Telecom continues to dominate Taiwan’s fixed-line sector
  • Chunghwa has managed to maintain its position through heavy investment in fibre access networks
  • Ericsson partnered with Far EasTone (FET) for a pre-commercial software-defined infrastructure (SDI) trial.
  • Far EasTone (FET) and Ericsson signed a 5G MoU to jointly accelerate 5G development for Taiwan.
  • Profitability remains challenging due to increased competition.
  • LTE introduction has increased the number of mobile network operators.
  • LTE take up is occurring at a faster rate than for 3G.
  • LTE provides an opportunity to reverse declining ARPU levels
  • Chungwha and Taiwan Mobile called on the government to continue to provide subsidies to 2G subscribers.
  • Fibre continues to grow at the expense of xDSL with speeds of up to 300Mb/s offered
  • Fibre as allowed Taiwan to maintain a relatively high standing in fixed broadband rankings
  • HFC is stable, with HFC operators looking to defined market share
  • Taiwan’s government has been a strong driver of e-government initiatives
  • Chunghwa Telecom continues to focus on IPTV as a cross-selling opportunity for its sizeable fixed broadband base.