Chunghwa promises lower rates

In response to pressure to lower fees for broadband Internet service, Chunghwa Telecom Co announced yesterday that it will cut prices for 2 megabyte (MB) and 1MB asymmetrical digital signal line (ADSL) service across the board beginning June 1.

For 2MB/128K service, the current monthly charge is NT$1,198. Under the new rates, the charge will be NT$880 a month.

The cost will fall by 26.5 percent, said Chunghwa Telecom president and CEO Lu Shyue-ching (呂學錦).

The new rates must be approved by the the nation's telecom regulator, the Directorate General of Telecommunications (DGT).

Chunghwa's concession came just hours after a Chunghwa Telecom Worker's Union protest in front of the Directorate General, during which DGT official Liu Chun-ming (劉峻銘) called on the company to lower prices within three days.

According to Chunghwa Telecom's marketing department, the lower rates will affect the company's 1 million 2MB subscribers and 1.5 million 1MB subscribers.

Currently, about 80 percent of ADSL subscribers in the country use Chunghwa Telecom's service, Liu said.

Given state-controlled Chung-hwa Telecom's monopoly on last-mile access -- the crucial final connection to a subscribers' residence or workplace -- Chunghwa is able to charge other providers, such as Taiwan Fixed Network Co (台灣固網), for use of the network.

To stay competitive, private providers have been forced to offer lower prices despite footing the cost of using Chunghwa's last-mile connections.

"Both Taiwan Fixed Network and Sparq (速博) have lower ADSL rates than Chunghwa because, even if they are not making a profit in the area, they want to get a piece of the market," said Gary Lai (賴晴風), a telecommunications analyst with Insight Pacific Investment Research (月涵投顧).

Whether Chunghwa's competitors follow the company's lead with steeper discounts remains to be seen.

According to Ally Chi (祁亞蕾), manager of Taiwan Fixed Network's corporate communications department, the company charges NT$938 a month for 2MB/128K broadband access, compared with Chunghwa's NT$1,198.

"Before June we will have to come up with countermeasures, but we will not necessarily blindly follow Chunghwa's example," Chi said.

Lai added, "The profits Chunghwa Telecom makes on ADSL is a major revenue source for the company because it is losing ground in other areas, such as local and overseas telephone calls."

Chunghwa also said yesterday it will consider cutting telephone rates for commercial subscribers while residential rates should remain unchanged.