Aurora to offer 3G service on Vibo's network in July

Aurora Telecom Corp (震旦電信), 40 percent owned by the nation's smallest mobile carrier, Vibo Telecom Co (威寶電信), yesterday said it planned to offer niche wireless telecommunications services on Vibo's third-generation (3G) network next month.

The move would make Aurora the nation's first mobile virtual network operator, or MVNO, jumping into the wireless industry without investing in pricey infrastructure, licenses or towers.

"Aurora, which started as a handset distributor, will focus on the niche market by developing innovative value-added services catering to local consumers' needs on Vibo's 3G network nationwide," Aurora chairman Chen Yong-tzai (陳永在) said in a statement.

The company is slated to launch the services next month.

Chen said that as Taiwan's wireless industry was maturing and the growth for voice calls was limited, providing rich multimedia content on high-speed 3G networks would be a new battlefield for local players.

But Lu Chia-lin (呂家霖), who tracks the telecom industry for Yuanta Core Pacific Securities (元大京華證券), expressed doubts about the growth potential for MVNOs.

MVNOs such as Sprint Nextel Corp in the US make profits by providing telecom services tailored for local customers in large telecom markets, using airtime bought from established carriers, Lu said.

"Taiwan is a small island. The market for services particularly designed for a certain region or a certain group of users will be limited," Lu said.

For Vibo, the deal could boost its revenues by allowing it to lease out idled bandwidth, he said.

Six firms obtained the approval of the nation's telecom watchdog to offer MVNO services after the government lifted restrictions in mid-2003. Only a few of them started operations, given stiff competition in the wireless industry, said a government official who spoke on condition of anonymity.

Chunghwa Telecom Co (中華電信), Far EasTone Telecommunications Co (遠傳電信) and Taiwan Mobile Co (台灣大哥大) control more than 80 percent of the wireless industry. Each plans to invest around NT$10 billion (US$307.29 million) in new equipment this year, as they have done over the past years.