Phone companies prepare for number portability

Sydney Wang, an employee of a software company in Taipei, is not enthusiastic but rather indifferent about the new mobile-number portability service.

"I'm not clear about the new service. I have no plan to switch operators," he said.

"But, I may consider moving to other carriers, if they offer lower tariffs and better handsets," said Wang, one of 8 million subscribers with Taiwan's top phone company Chunghwa Telecom Co (中華電信).

Wang, 27, represents a miniature version of the maturing Taiwanese telecommunications market that boasts high mobile penetration and sophisticated users.

Only one-fifth of Taiwan's 20.52 million mobile subscribers plan to change operators without losing their current cellphone numbers, according to a recent survey by the Chinese-language weekly Business Today.

Mobile-number portability, which is slated to take effect in mid-October, is part of the government's efforts to further liberalize the nation's telecom market.

But, liberalization brings challenges to the established players, as it would give an opportunity for industry latecomers to lure away subscribers from their rivals by offering lower charges.

"The launch of mobile-number portability will be an opportunity for latecomers like Asia Pacific Broadband Wireless Communications Inc (亞太行動)," said Ann Liang (梁嘉鈴), an analyst with market researcher Gartner Inc.

"However, staging a price war is the only way for them to grab a market share," Liang said.

To attract price-sensitive mobile users, Asia Pacific Broadband plans to offer new subscribers free handsets, free calls within its network for two years and will sponsor them with the NT$240 required to keep existing numbers.

The wireless operator, which is still struggling to make a profit after starting operating in 2003, hopes to boost its customer base to 850,000 by the end of the year. That will represent a 25 percent increase from its current 680,000 users.

In addition to Asian Pacific Broadband, another dedicated 3G player, Vibo Telecom Inc (威寶電信), is likely to wage a price war to snare mobile users, said Andrew Wang (王英裕), an industry analyst with Industrial Technology Research Institute.

"Vibo Telecom may offer much lower voice rates and cheap handsets to get market share, following the example set by Hong Kong's 3G operator Hutchison Whampoa Ltd (和記黃埔)," Wang said.

In some markets in Europe, Hutchison Whampoa started to make a profit after providing rates half of that of established players to attract more users, Wang said.

In order to offer lower-priced handsets, Vibo Telecom and Asia Pacific Broadband plan to offer cellphones made by Chinese phone vendors like Huawei Technologies Co (華為科技) and TCL Corp.

Vibo Telecom is scheduled to start operating next month. Vibo Telecom is an affiliate of Kinpo Group (金仁寶集團), which also owns laptop-computer maker Compal Electronics Inc (仁寶電腦) and handset maker Compal Communications Inc (華寶通訊).

Chunghwa Telecom and Taiwan's No. 2 mobile carrier, Far EasTone Telecommunications Co (遠傳電信), said they were not worried that the newcomer will undercut their customer base.

But they are very careful not to follow in the footsteps of Hong Kong's telecom carriers, which suffered greatly in a price war after the former British colony started offering mobile-number portability in 1999.

The weakening stock prices of Taiwan's three telecom companies showed investors' concern about the new service.