Chunghwa pressured to reduce prices

Chunghwa Telecom Co (中華電信) came under more pressure to lower its broadband Internet rates yesterday as the Consumers' Foundation (消基會) said the company's newly adjusted asymmetrical digital signal line (ADSL) service fees would still be high compared with neighboring countries.

"Although Chunghwa Telecom claimed that the new rates are lower than the ADSL fees in Japan and South Korea, the charges are still high when taking gross domestic product into account," foundation general-secretary Cheng Jen-hung (程仁宏) told a press conference yesterday.

Bowing to pressure from local Internet users urging lower fees for broadband Internet service, Chunghwa Telecom on Tuesday announced that, starting June 1, it will lower its 2 megabyte (MB)/128K service from the current monthly charge -- including both access fee and Internet fee -- of NT$1,198 to NT$880, and cut the 1MB/64K access fee from NT$998 to NT$820.

However, Cheng said the price-cut was not enough. After calculating ADSL rates charged by Japanese telecommunications giant NTT DoCoMo in relation to Japan's GDP, Cheng suggested that Chunghwa Telecom should charge NT$515 a month for its 2MB service and NT$521 for its 8MB service. The company announced Monday it would launch its 8MB service in June with a monthly charge of NT$1,200.

A Chunghwa official claimed the company's pricing strategy was based on its cost structure.

"Overseas equipment sellers did not charge Chunghwa Telecom less just because of Taiwan's lower GDP in comparison with Japan's," responded Liu Pan-ho (劉伴和), a senior director at the telecom company's marketing department, at the press conference.

But critics argued that a key reason the company could maintain high ADSL service fees was its tight control over "last-mile" access -- the crucial final connection to a subscribers' residence or workplace.

With Chunghwa's monopoly on this access, it is able to charge other private operators for use of the network. Currently, the company has control of 97 percent of the domestic fixed-line market, and 80 percent market share in the broadband Internet segment.

Liberalization of "last mile" access also concerns the US government, which in a report on barriers to trade released in Washington earlier this month pointed out that the Ministry of Transportation and Communications had failed to declare local loop unbundling as a "bottleneck," as suggested by regulator Directorate General of Telecommunications.

However, the report said that as the government announced in November last year that it would invest NT$35 billion during the next five years to help local governments resolve the problems for telecom end-users and establish a second broadband network, the monopoly of Chunghwa Telecom will likely soon be broken.

Ching Yu-chen (荊宇珍), a Chunghwa Telecom division director, said that the company had long agreed to share "last mile" access to three fixed-line operators at a cost of NT$300 per fixed line per month. That offer was turned down by private operators as too expensive, she added.

Hsu Wen-jen (許文仁), an Internet activist who proposed organizing online users to surround the Legislative Yuan on May 1 to call for the liberalization of "last mile" access, said yesterday that the telecom infrastructure was built with taxpayers' money and should no longer belong to Chunghwa Telecom after it completes its privatization.