Fri, Dec 31, 1999 page20

• Review III: Chatty mobile phone users pass all expectations

  Roughly 47 percent of Taiwan's population today are now mobile phone users, meaning big returns for the phone companies

  • By Tu Po-heng / STAFF REPORTER
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  For Taiwan's mobile phone operators, the year 1999 has exceeded all expectations. Less than two years after private mobile phone operators started operations at the beginning of 1998, the number of mobile phone users has sky-rocketed from 1.4 million in 1997 to 10.3 million as of November.

  In 1999 alone, the number of users doubled from 5 million in January. The rise pushed the penetration rate of mobile phone users in Taiwan up from 7 percent in 1997 to 23 percent in early 1999, and 47 percent as of November, according to the Directorate General of Telecommunications under the Ministry of Transportation and Communications (交3q3?q信總局).

  One of the biggest contributors to this impressive growth has been Pacific Communications Services Co Ltd (台灣?j-?j). The company increased its subscriber base from nothing in 1997 when it started operations to 3 million this year.

  

  PHOTO: FILE

  "We are very lucky to have caught Taiwan's telecom liberalization train. If the company were born ten years earlier or later, we would have missed it," said James Tsao, (曹萬鈞), vice president of Pacific Communications.

  Last year, Pacific Communications registered sales of NT$12.4 billion and profits of NT$4.1 billion. This year, the company expects sales to increase to NT$24 billion and profits to hit NT$9 billion.

  Tsao said that every party in the process of Taiwan's mobile phone liberalization -- both the market players and the government -- has "played hard and well."

  Still, there remains room for improvement. For example, Taiwan needs coherent and comprehensive telecom regulations, Tsao said.

  Also, "One simple but important matter that the government needs to deal with is to define the real number of mobile phone users. This is a basic but very important piece of information to market players," said Tsao, who believes the actual number of users has yet to exceed 10 million.

  Many people believe that foreign investors have contributed greatly to the development of Taiwan's telecom industry, Tsao said, but "that's not the case with Pacific Communications. We are a local company and we are run by local people.

  "If foreigners are better than us, we have to emulate them. But, if we can do things by ourselves, we should try not to depend on them. As the Chinese saying goes: foreign monks don't necessarily chant better than local monks. It's because we know the market better."

  The company's success can also be attributed to its willingness to take bigger risks than its competitors.

  "When the government announced on Jan. 13, 1998 that we had won the license to operate mobile phone services, the equipment we needed to build our base stations was being loaded onto ships headed for Taiwan," Tsao said.

  "The decision [to order the equipment several months earlier] was very risky but it allowed Pacific Communications to launch services ahead of other private operators," he said.

  Another byproduct of the liberalization of the telecom market was the creation of a massive and growing playground of mobile phone users for makers to test new products. This allowed the technical enhancement of mobile phones and helped to play a part in the rapid growth of Taiwan's telecommunication industry, Tsao said.

  Tsao used the case of Acer Peripheral Inc to illustrate his point. The company received an order for 500,000 mobile phone handsets from Taiwan Pacific earlier this year. The experience and knowledge Acer acquired locally helped it to subsequently win a contract from Motorola.

  A market report released by Computer and Communications Research Laboratories under the Industrial Technology Research Institute (?u研院1q3q所) supports Tsao's view.

  The report said Taiwan produced 2.8 million mobile phone handsets this year, up significantly from just 35,000 units in 1998. This year's output value will grow from NT$190 million last year to NT$3.62 billion in 1999, the report said.

  After the boom that has characterized the last two years, some analysts say Taiwan's mobile phone market expansion will start slowing next year after having reached a nearly 50 percent penetration rate.

  But Tsao is of a different view.

  "It depends on how you look at the market. If you only look at the growth of the penetration rate, it might slow down," Tsao said. "But, if you look at the demand, it will continue to increase at a fast rate due to the rapid development of e-commerce."
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