National Communications Commission (NCC) Chairperson Howard Shyr (石世豪) said yesterday that the commission would not require Chunghwa Telecom (CHT) to establish an independent enterprise to manage local loops, also known as the “last mile” of fixed network services.
The last mile refers to the final leg of telecoms networks’ delivery of communications connectivity to retail customers. It is controlled by Chunghwa Telecom, the state-run company in charge of building most of the nation’s telecoms infrastructure.
The commission amended Article 25 of the Telecommunications Act (電信法) to authorize the administrative agency to ask dominant market players in the fixed-network service sector to make local loops a separate business entity, “functional unbundling,” if it deems competition in the market to be insufficient.
However, Chunghwa Telecom opposed the amendment, saying it would affect the company’s revenue and employees’ benefits. The amendment was also turned down by the Executive Yuan, which was in charge of reviewing and approving it.
Shyr said the commission would now revise Article 25.
“We will not use the term ‘functional bundling,’ which is too abstract,” he said. “We will state specifically what operators should do.”
Shyr said that the commission would have to intervene and regulate the intermediate costs which all the telecoms carriers have to bear, such as the costs of the connection between networks, if the facilities are controlled by one company.
He said the Telecommunications Act already requires telecoms companies to establish separate accounting systems to calculate profits and losses.
The commission would go further in requiring each operator to produce a separate accounting statement for each service that it offers for sale, including last-mile operations, he said.
“It [accounting unbundling] was also one of the unbundling regimes recommended by the European Union [to keep account of the services available],” Shyr said, adding that the commission would ensure that control of the local loops would not be used as a tool to impede competition from other market players.
Shyr added that a separate accounting statement would show the costs, expenses and incomes of each fixed-network service, allowing the commission to determine if Chunghwa Telecom has offered fair prices for other telecoms carriers to lease its last mile.
As dominant market players would be required to observe the requirement, Shyr said that the commission would have to review the definition of a dominant market player.
“In the past, the dominant players in the telecoms market were determined by the number of subscribers a given telecoms service had. We might have to change that because we think it is important,” he said.
Andy Hsieh (謝煥乾), director of the commission’s legal department, said the amendment would ensure that Chunghwa Telecom and other telecoms carriers would all pay the same price for use of the last mile.
“The biggest blind spot we have in regulating prices is that nobody knows what the real costs are,” Hsieh said. “That is a real problem.”
Hsieh said his department planned to submit the amendment to the Telecommunications Act for NCC commissioners to review before the Lunar New Year, adding that it might be resubmitted to the Executive Yuan after the holiday.