Competition spurs cut in calling rates

TELECOMS: Altough Chunghwa Telecom is not saying how much or how soon, one report claims that long-distance calling rates will be cut by anywhere from 20 to 50 percent due to upcoming competition


Wed, Feb 28, 2001 - Page 17

Against a backdrop of tougher challenges on the horizon, Taiwan's state-run telecom giant Chunghwa Telecom Co (中華電信) is drafting a proposal to cut fees for international and long-distance calls, a company official said yesterday.

The proposal will be submitted to the regulatory Directorate General of Telecommunications soon, he said, declining to disclose the exact size of the fee cuts or when the new rates will become effective.

"The new package will be announced in the most timely manner possible," he said.

The Chinese-language Commercial Times yesterday reported that the average rate cuts will range from 20 percent to 50 percent, and that the new rates will be implemented in early April.

The official would not comment on the report, but said that among others, international calls to China and the US, which combine to account for around 50 percent of total international calls made from Taiwan in terms of minutes, will enjoy the biggest cuts in fees.

International calls, which have been growing about 10 percent a year in the past few years in minutes terms, make up slightly above 10 percent of Chunghwa Telecom's total revenues, which stood at close to NT$190 billion last year, he said.

The new rates have been drawn up to preempt a large bite into Chunghwa Telecom's revenues by the three private fixed-line telecom network operators, the first of which is expected to start operations towards the middle of March.

The measures, he added, are also worked out in response to a cut by China's telecom authorities in the cost of calls made to Taiwan. China authorities have recently cut Taiwan-bound calling rates by up to 60 percent.

According to the paper, the rate cut may cost Chunghwa Telecom upwards of US$6 billion in lost revenues.

In related telecom news, Chunghwa Telecom, a potential bidder for a new mobile phone license in Taiwan, picked Nokia Oyj to operate an experimental network, Nokia said in a statement.

Chunghwa Telecom will use the results from the trial to introduce advanced mobile services and Internet access in Taiwan, the statement said.

Nokia, the top mobile-phone maker, will provide the core and radio network, network management system and technical consultancy services.

Taiwan's government plans to award the right to deploy a mobile Internet network with so-called 3G licenses by October.

The cost of winning a license and building a 3G network mean that companies are eager to start the service as soon as possible to generate revenue and pay down debts.

Chunghwa Telecom shares, down 12 percent this year, fell 2.9 percent to NT$67.