Wed, Mar 27, 2002 - Page 17 News List

3G providers likely to face price war on opening day

TELECOMS After forking out nearly NT$50 billion in licensing fees, providers of third-generation mobile phone service may be jumping from the pan to the fire

By Annabel Lue  /  STAFF REPORTER

The nation's high-speed mobile phone service or third-generation (3G) market is expected to engage in price wars in 2005, with penetration rates set to jump significantly from then, a telecom industry analyst said yesterday.

"We estimate that about 13 percent of the domestic population will use 3G services in 2005, while the figure may reach 50 percent in 2007," said Su Yu-yi (蘇祐毅), a researcher at the Market Intelligence Center, a government think tank.

All 3G operators are expected to begin offering services by 2004, and the fierce competition is expected to generate price wars.

"For consumers, mobile-phone services are similar to entertainment products. Such types of users are generally attracted by lower prices," Su said.

Taiwan issued five 3G licenses in February, with bidding prices totaling NT$48.9 billion. Three of the five license winners -- Taiwan Cellular Corp (台灣大哥大), Far Eas-Tone Telecommunications Ltd's (遠傳電信) subsidiary Yuan-Ze Telecom Co (遠致電信) and state-run Chunghwa Telecom Co (中華電信) -- are already wireless operators, while Asia Pacific Broadband Wireless Communication Inc (亞太行動寬頻) and Taiwan 3G Mobile Network Inc (聯邦電信) are new to such business.

While the new entrants say they want to begin offering services early next year, the three industry veterans are more conservative in their projections, saying they won't open the door for 3G business until the market is ready.

Su expects current operators to join the market in 2004. "The timing of the launch should be the same as other 3G operators around the world since handset and 3G-network technology need to be matched," he said.

An insider said the schedule should be pushed forward.

"I believe current operators will launch services no later than six months after new entrants open their doors for business," a telecom professional surnamed Lin said.

To prevent new competitors from stealing their customers, current operators may be forced to jump into the market by the end of next year, he said.

The launching schedule will be difficult to control and is likely to change because mobile-service companies are still searching for "killer applications," he said.

A killer application is a revenue driver that will attract consumers to subscribe to 3G services and result in heavy use.

Another market professional said developing attractive mobile content is vital.

"For the public, 3G is not a technology but a new way to access information and to communicate," Taiwan 3G Senior Manager Alex Lin (林芝聖) said.

Possible contents and applications may include motion pictures, video phone calls, online games, browsing the Web and booking travel tickets, Lin said.

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