The nation’s telecoms are not aligning with the government’s eagerness to put Taiwan on the world’s 5G map as they balk at splurging on the expensive wireless technology that has no guarantees for quick returns.
The nation’s five wireless carriers have clearly said that they would not scramble to roll out 5G services, as they face big challenges ahead, including the absence of a profitable business model to sell the revolutionary technology, in spite of all the use cases that have been suggested.
A 5G use case and adoption survey released last week by Gartner Inc found that Internet of Things applications remain the most popular target use case for 5G, followed by video.
About two-thirds of organizations intend to deploy 5G by 2020, it said.
“We know enterprise clients will be early adopters of 5G technology. We also know the benefits of the technology, but people rarely talk about what will be the potential business models,” Chunghwa Telecom Co (中華電信) president Sheih Chi-mau (謝繼茂) said at a Taiwan Communications Society forum on Dec. 14.
“How to make profits from 5G technology is a real challenge for us,” Sheih said. “Whether 5G can create a blue ocean [for telecoms] remains a question mark.”
Local telecoms each burned up to NT$60 billion (US$1.95 billion) to obtain 4G spectrum and build 4G networks. Four years after the launches in 2014, carriers are still struggling to recover those investments.
Stiff price competition has been blamed for telecoms’ plight.
Over the past two years, 4G average revenue per user has dipped 32 percent to NT$555 in the second quarter of this year, government statistics showed.
Taiwan Star Telecom Corp (台灣之星) president Cliff Lai (賴弦五) made a bold forecast, saying that “5G technology will not be a profitable business by 2025.”
“We cannot even find a business case that would allow us to recover 5G investments in the short term,” Lai said at the forum.
Deploying a 5G network remains two to three times more expensive than the rollout of 4G, as telecoms would have to install many more base stations to ensure Internet connectivity to a massive amount of end devices that is 10 to 100 times faster and has a lower latency than 4G, Taiwan Star Telecom said.
Taiwan Mobile Co (台灣大哥大) is also conservative about jumping into capital-intensive 5G technology.
Company president James Jeng (鄭俊卿) said that the firm would not invest heavily in 5G within three years after the release of the 5G spectrum.
“Within the next three years we do not see any scalable business opportunities that are strong enough to support telecoms’ heavy investments on extensive 5G coverage like we did for 2G, 3G and 4G,” Jeng said.
The National Communications Commission has pushed back the issuance of 5G licenses from next year to 2020 due to technological hurdles and expensive telecommunications equipment in the initial phase.
Local telecoms are likely to commercially launch 5G services in the second half of 2020 or in the first half of 2021, about six months after the release of spectrum, Far EasTone Telecommunications Co (遠傳電信) president Yvonne Li (李彬) said.
In other words, Taiwanese telecoms would lag their global peers such as US telecom giants AT&T Inc and Verizon Communications Inc by about two years in offering 5G services. In the US, major wireless service providers have already begun providing 5G services.
Other markets where significant 5G subscriber volume is expected include South Korea, Japan and China, Telefonaktiebolaget L.M. Ericsson said in an annual mobility report released last month.
Flawed government policy has stalled local telecoms’ investment in 5G and they also learned a harsh lesson during the migration to 4G.
WiMAX service providers, the strongest supporters of a government drive to build a local WiMAX ecosystem, were all forced out of the market in 2015 after admitting defeat in a battle for 4G supremacy with LTE technology.
On the cusp of entering the 5G era, the government aims to build a new 5G supply chain in Taiwan by teaming up with global 5G pioneers like Qualcomm Inc, with the ultimate goal of transforming the nation into a “digital economy.”
The Ministry of Economic Affairs has created a 5G Technology Program Office tasked with spurring collaboration to lead local chipmakers, base station suppliers and networking equipment manufacturers into the global 5G market.
The domestic market could serve as a testing ground for the local 5G supply chain if telecoms spearhead the rollout of 5G services, the ministry said.
However, telecoms have not shown interest in the proposition.
“The ministry has built a bad reputation,” Lai said, citing the WiMAX fiasco. “Taiwan should seek to be a smart follower, rather than a 5G leader.”
Alphabet Inc’s Google on Tuesday announced plans to buy a New York office building for US$2.1 billion, confirming its push into the US’ largest city despite the COVID-19 teleworking trend. This is the largest real-estate purchase in the US for an office building since the beginning of the global spread of COVID-19, the Wall Street Journal quoted Real Capital Analytics as saying. Google already rents the premises in Manhattan, which are located on the site of a former railroad terminal in the Hudson Square neighborhood. The Silicon Valley giant envisions a campus with a total surface area of 160,000m2 by mid-2023
‘CORE VALUES’: The contract chipmaker did not specify why the employees were dismissed, but media reports said they had leaked information about customer orders Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has fired seven of its employees for violating the company’s “core values,” the world’s largest contract chipmaker said yesterday. While the company did not disclose exactly why it fired the seven employees, local media reports earlier in the day said that the employees had leaked confidential information about customer orders. In a statement, the company said that it fired the seven at once, adding that it released an internal notice last week to inform the entire company of the move ahead of the four-day Mid-Autumn Festival holilday, which ended on Tuesday. TSMC said it fired the seven
MILD ADJUSTMENT: Two previous efforts failed to curtail mortgage financing, although the new measures should not affect property prices, the central bank governor said The central bank yesterday tightened credit controls for second-home mortgages in specific areas and purchases of plots of land, especially in industrial parks. However, the nation’s top monetary policymaker kept its policy rate at a record-low 1.125 percent for the sixth consecutive quarter, despite revising up its GDP growth forecast for this year from 5.08 percent to 5.75 percent. “Board members factored in economic uncertainty at home and around the world,” central bank Governor Yang Chin-long (楊金龍) said, adding that growing inflationary pressure was a temporary phenomenon induced by bad weather and a low base effect for oil prices. International fuel price increases
DOWNCYCLE: Most buyers are wary about placing new orders, and although the decline could also be as little as 3%, it would be the first drop since the start of the year The average selling price of DRAM chips next quarter is expected to decline by up to 8 percent quarter-on-quarter, with memory chips used in notebook computers and consumer electronics seeing the steepest decline due to excess inventory and a shortage of components, market researcher TrendForce Corp (集邦科技) said yesterday. That means the DRAM industry is entering a new downcycle after experiencing a boom for three quarters, the longest uptrend in the history of the industry. The Taipei-based researcher said it expects the balance between supply and demand to begin tilting toward a surplus in the final quarter of this year. Most DRAM