Sales of mobile phones in Taiwan may fall slightly this year as local mobile service operators reduce efforts to boost new 2G subscriptions because of lower tariffs imposed by the regulator, a Taipei-based market researcher said last week.
To offset declining revenues in the wake of the new rate cuts, service operators may focus their resources on pushing their 3G and 3.5G services, the Taipei-based Market Intelligence Center (MIC, 資訊市場情報中心) said in its latest report published on Thursday.
The operators' 3G services will not be affected by the newly imposed price scheme and usually enjoy approximately a 30 percent higher average revenue per user than on 2G services.
Local mobile service operators now only offer 3.5G, or high-speed downlink packet access services, for notebook computer users to connect to the Internet on data cards at 1.8 megabit per second or 3.6 megabit per second data transmission.
The government-funded MIC forecasts that sales of cellular phones may drop 2 percent year-on-year to 7.1 million units this year. It did not provide last year's figures.
"This year, we will bring down our handset subsidies from the current NT$2,500 [US$76] per unit for new 2G subscribers, while increasing 3G phone subsidies," Lu Shyue-ching (呂學錦), chief executive of Chunghwa Telecom Co (中華電信) said earlier this year.
To further boost competition in the nation's telecoms industry, the National Communications Commission (NCC) has requested local phone companies to lower voice tariffs for 2G users by 4.88 percent annually in a three-year period.
With the new rate cuts, "mobile operators will face challenges in bolstering their revenues," the report said.
Chunghwa Telecom expects revenues to decrease by up to NT$4 billion because of the tariff reduction coupled with another 5.11 percent annual drop for broadband subscribers.
Taiwanese telecom companies are expected to increase their promotion of value-added services, such as ringback tones, to minimize the impact of the new price scheme.
In the second quarter, sales of handsets in Taiwan are expected to decrease slightly to 1.7 million units from the 1.8 million sold in the first quarter on seasonal factors, the report predicted.
In terms of market value, sales of handsets grew 7.6 percent to NT$11.1 billion compared to the fourth quarter of last year, as vendors launched more affordable 3G models priced at less than NT$10,000 apiece, the report said.
The penetration rate of 3G subscribers rose to 22 percent in the first three months of the year, the report said.
The average selling price also increased to NT$6,116, the researcher said without providing comparative figures.
The world's major mobile phone brands, including Nokia and Motorola, accounted for 80 percent of market share in the first quarter, up from 75 percent in the final quarter of last year, the report said.