Number portability not a big boon for latecomers

Taiwan's wireless telecommunication industry may see further consolidation in the next few years as small entrants are unlikely to get a much-needed boost from the shift to number portability, the rating agency Taiwan Ratings Co (中華信評) said yesterday.

New players Asia Pacific Broadband Wireless Communications Inc (亞太行動寬頻) and Vibo Telecom Inc (威寶電信), which only offer third-generation (3G) service, count on new subscribers to stay in the market.

But Taiwan Ratings said number portability would not bring a large number of subscribers to the small players.

"Number portability will only add a limited number of subscribers to the telecom latecomers, as the pricey 3G service is not very attractive to most mobile users," Daniel Hsiao (蕭黎明), an analyst with Taiwan Ratings, said in a phone interview with the Taipei Times.

The nation's telecom regulator is scheduled to allow local wireless operators to offer number portability service in the middle of next month, which means mobile-phone users will be able to switch their providers without having to change their phone numbers.

A poll conducted last month by Business Today (今周刊), a Chinese-language weekly, found that around 4 million cellphone users are thinking of switching their service providers, once the number portability policy is implemented.

While the poll results hinted that the policy change might trigger a wave of rate-slashing, Hsiao said the major players, led by Chunghwa Telecom Co (中華電信), would continue to dominate the telecom market, which has a cellphone penetration rate of nearly 100 percent.

"New players will only secure a small market share. They will eventually be forced out of the market, through consolidation, when losses balloon," Hsiao said.

A new round of integration would occur in the market which has reached saturation, with the three major players -- Chunghwa Telecom, Taiwan Mobile Co (台灣大哥大) and Far EasTone Telecommunications Co (遠傳電信) -- competing head-to-head with each other, Hsiao said.

He said such a shake-out would happen in the medium term.

The industry has already experienced some consolidation.

In 2001, Taiwan Mobile Co (台灣大) merged with Trans Asia Telecommunications Co (泛亞電信) and acquired Mobitai Communications Co (東信電信) last year.

In 2003, Far EasTone merged with KG Telecommunications Co (和信電訊) to become the nation's No.2 wireless service provider.

Asia Pacific Broadband Wireless, which launched the nation' s first 3G service in 2003 on CDMA2000 technology, is struggling to make profits after two years in operation.

However, Vibo Telecom Inc (威寶電信), which is scheduled to start operations next month, is still setting itself a high target.

Chairman Rock Hsu (許勝雄) said he hopes the company will break even within two years after starting operations in June.

Hsu said Vibo aims to have captured a 20 percent market share next year by attracting 1 million subscribers.