Most companies are more cautious about investing in new capacity or infrastructure this year because the spreading European debt problem and nascent US economic recovery make any rebound in private consumption unpredictable.
In a period of economic uncertainty, consumers tend to skimp on luxuries and anything else they can live without — such as new PCs and TVs. Global chip companies are expected to cut spending on new equipment by about 19.5 percent to US$51.7 billion this year, from last year’s US$64.2 billion, as chip demand falls, market researcher Gartner Inc forecast.
People may delay upgrading their PCs, but they cannot live without the Internet: telecommunications operators are bucking the investment downtrend. They plan to spend lavishly on increased wireless bandwidth to satisfy the burgeoning demand for faster transmission, as the adoption of Apple Inc’s iPhones, iPods and similar products boosts the growth of mobile Internet usage.
Fourth-generation (4G) technology, or Long-Term-Evolution (LTE), is regarded by most wireless service providers as the ideal solution to the Internet traffic jam, and looks set to spur a new wave of growth for telecoms companies.
However, in Taiwan, 4G seems set to be a development of the distant future, not an immediate solution to the Internet jam.
The government has yet to decide on moving ahead with a 4G launch in 2017. The WiMAX technology backed by the government lost the global battle for 4G dominance long ago as Intel, its biggest promoter, quietly cut its development team.
The National Communications Commission (NCC), has also yet to set a schedule for the auction of the 4G spectrum. On top of this, development of LTE technology has not been included in the key policies President Ma Ying-jeou’s (馬英九) administration pledged to adopt to boost economic growth over the next decade, to 2020.
Back in 2005 or 2006, local telecoms operators had reason to be proud of their achievements at being among the first in the world to develop 3G technology and provide high-speed Internet — but they have long since been left behind.
Telecoms equipment maker Ericsson recently forecast that LTE coverage will reach 40 percent of the global population by 2016 — at a time when Taiwan will not have even begun its commercial launch.
This is despite the fact that all local telecoms have said that they are ready to deploy the LTE network, because most of their new 3.5G base stations can be easily upgraded to support the new technology.
To speed up Internet connectivity, local telecoms operators are either upgrading their existing equipment, or expanding the number of hotspots by sharing the heavy loads via short-range Wi-Fi technology.
Chunghwa Telecom Co said it planned to invest NT$6 billion (US$198 million) this year to build more base stations, up 30 percent from the NT$4.8 billion budgeted for last year, to cope with fast growth in its mobile Internet usage. Subscribers to the company’s mobile broadband service, mPro, are expected to increase 60 percent to 1.6 million users this year.
Without the 4G network, that is the best local operators can do for now to calm angry subscribers complaining about slow service — until the NCC gets its act together. Hopefully the NCC and government will answer the call for action on 4G and LTE.