NCC, Chunghwa rate talks continue

HOLD THE LINE::With the abolition of long-distance charges around the corner, no agreement has yet been reached on what the new landline call rates should be

By Shelley Shan  /  Staff Reporter

Thu, Oct 13, 2011 - Page 2

The National Communications Commission (NCC) yesterday said it would continue its discussions next week over the new landline rates submitted by Chunghwa Telecom to be implemented after the nation cancels its long-distance service, adding that the goal of making Taiwan a single service area by January remains unchanged.

Commission spokesperson Chen Jeng-chang (陳正倉) said that Chunghwa Telecom president Chang Shiao-tung (張曉東) made the presentation at the commission yesterday and proposed two new landline service plans in addition to those they have at the moment.

However, the commissioners still had doubts and ruled to continue the discussions next week, Chen said.

Chen said that Chunghwa Telecom first proposed that the company not make any change to its rates for the landline service.

Currently, Chunghwa Telecom customers are charged NT$1.6 per three minutes for local calls or NT$5.7 per three minutes for long-distance calls.

He also said that another service plan would be to set an identical rate of NT$1.8 per three minutes for both local and long-distance calls, adding that the two new service plans would not involve any change to the monthly rental charges.

“Chunghwa Telecom said that nearly half of its landline customers do not use the long-distance service at all,” Chen said. “These customers would end up paying more if you set an identical rate.”

Meanwhile, Chen said that the company has forecast that its revenue generated from its long-distance service would fall from NT$6.5 billion last year to NT$4.8 billion this year.

The company said the revenue would be reduced by NT$1.27 billion if the long-distance service drops from NT$5.7 per three minutes to NT$1.8, and if the long--distance rate is be made identical to the current local call rate, the revenue would be further decreased by NT$2.8 billion, meaning that the company could potentially lose up to NT$400 million in profits.

“The company had indicated that its rate of return on the fixed network service was minus-8 percent overall, but its long-distance service remains profitable,” he said. “You really have to ask if it is reasonable to turn a profitable service into an unprofitable one.”

Chen said that telecommunications services should be granted a reasonable rate of return, as with any public utility or part---government owned firm.

“If they are not profitable, they will lack the funding to replace old facilities, which is not necessarily a good thing for consumers,” he said.

Chen said the company was asked to provide more information on how the rates were calculated to help the NCC determine which rate they should choose or if there is a third path to consider.

The legislature’s Transportation Committee passed a resolution in January this year asking the commission to make the entire nation one telephone service area within a year, including Taiwan proper, as well as Penghu, Kinmen, Matsu and other outlying islands.

The resolution essentially terminates the long-distance telephone service and landline users should all be charged local call rates.