Chunghwa Telecom has a problem with government's rules

Slow approval from telecom authorities and local governments may dash the state-run Chunghwa Telecom Co's (中華電信) hopes of tapping into the digital broadcast market by providing multimedia-on-demand (MOD) services by the end of this year, sources told the Taipei Times yesterday.

The MOD service allows consumers to watch digital-content programs and conduct online shopping any time using a remote control.

With the largest number of ADSL subscribers, Chunghwa hopes to use MOD services for a bigger share of the promising digital TV market.

But a company official revealed that Chunghwa has not yet obtained a license from the Government Information Office or the Directorate General of Telecommunications to operate a digital TV broadcast.

"We can't be sure about the timetable as the licensing problem gets in the way. Besides, we still need approval from local governments to charge for the basic services of digital TV programs," the source said.

What the official said contrasted with remarks Chunghwa chairman Hochen Tan (賀陳旦) made in late October when he said the company already received the license to set up infrastructure for MOD services.

"We expect to provide service to northern Taiwanese households as early as December," Hochen said at that time.

The pricing issue is also a handicap for Chunghwa and other local cable TV operators which provide digital TV programs to expand their customer base.

China Network Systems Co (中嘉), which started providing digital TV programs in June, said slow approval from local govern-ments wanting minimal fee has capped the company's growth of subscribers.

"It's difficult for us to set a target for customer growth. It's frustrating that local governments are slow at giving the nod to our charging practices," said Daniel Cheung (張鎮平), chief operating officer of China Network.

As the company cannot agree on the price-cap set up by Taipei City Government on the price of set-top boxes, NT$3,000 per unit, China Network said it still received no approval from the city government to start operation in the capital.

"It's too low for us to cover our costs," Cheung said.

China Network currently serves around 4,000 residents in the Keelung and Taoyuan areas. The company said northern Taiwan will be the priority for it to provide such new services in the future.

Without licensing problems and pricing restrictions, Pure Technology Co (澤峰科技), an online digital content provider, yesterday launched Taiwan's first MOD service with the aid of fixed-line operators, including Chunghwa and Sparq (速博).

Pure, owned by digital set-top box maker Puretek Industrial Co (世峰), expects to have 10,000 subscribers by the end of the year and to enlarge its customer base to about 100,000 next year.

"We want to create business opportunities, as we see this year and next year will be an important turning point for the nation to develop digital TV business," said Pure president Wesley Wang (王重正).