Telecom price war will be good for consumers

People ringing family and friends overseas will soon find their phone bills dropping fast thanks to Chunghwa Telecom Co (中華電信) and its competitors.

A day after Chunghwa announced it would implement new long distance and international calling rates up to 57 percent lower than current fares, Taiwan's three new fixed-line telecom companies said they would undercut Chunghwa by up to 10 percent in every pricing category.

"We'll be applying to lower our calling rate soon, but we have not yet determined the best possible pricing structure. ... The final rate will probably be five to 10 percent lower than [Chunghwa's]," said Chou Hen-wu (鄒衡蕪), spokeswoman at New Century Infocomm Co (新世紀資通).

Chou explained the lower rate would mirror every aspect of Chunghwa's new pricing structure, making calls to China up to 67 percent lower and calls to Hong Kong, Canada and the US up to 64 percent lower than current fares.

The nation's two other fixed line firms, Taiwan Fixed Line Network Co (台灣固網) and Eastern Broadband Telecom Co (東森寬頻), also plan to cut rates, at a more modest three to five percent.

All four companies must gain approval from the Directorate General of Telecommunication under the Ministry of Transportation and Communications in order to change their calling rates.

Chunghwa's new rate cut will take effect April 1, while only one of the new fixed-line companies, Eastern Broadband, has formalized its April 6 launch date.

Eastern Broadband was the first to sign an interconnection agreement with Chunghwa, necessary to allow calls between Chunghwa's network and Eastern Broadband's system.

Since Chunghwa owns the nation's entire fixed-line telephone network, all new firms have to sign an interconnection agreement in order to gain access to customers.

Officials from New Century and Taiwan Network said yesterday they have signed agreements with Chunghwa but are still testing their systems. Both firms expect to launch services around mid-April.

The three new companies are already signing up customers for international and local long-distance calling. People need only contact one of the companies and sign a billing agreement in order to take advantage of the lower rates.

One analyst said that the rate cuts would be good for customers, but not so good for Chunghwa Telecom's bottom line.

The state-run giant has maintained high long-distance calling prices -- and generated high profits -- for years, and the current reductions are only bringing prices down to "reasonable levels" compared to other countries around the world.