In a bid to grab market share before three new companies enter the fray, Taiwan's largest Internet service provider (ISP), Chunghwa Tele-com's HiNet (中華電信網路), slashed rates for its ADSL high-speed Internet service by 60 percent yesterday. Pundits, however, warn fast connection speeds will be short lived as new users fill the wires.
Much faster than regular 56k home Internet modem connections, ADSL or asymmetrical digital subscriber lines accelerate Internet download speeds to 512k (kilobits per second) and take uploading to 128k.
Under the reduced price scheme available to customers who sign up by the end of the year, HiNet plans to offer household and individual users a rate of NT$7,000 a year for ADSL service, down from NT$17,000. Corporate users will pay NT$60,000 a year, down from NT$150,000, not including modems or installation fees.
Installation fees were reduced from HiNet's original fee of NT$7,500 to NT$1,500 now. The company has offered students an additional 10 percent off price and installation -- for a total 70 percent discount.
Analysts expect the rate cut to impact current ISP operators as well as give HiNet an edge on new competition. As part of the government's telecom market liberalization plan, three new providers will begin operating Jan. 1, 2000 -- New Century InfoComm (
These three new players expect to sell telephone as well as Internet services.
Chunghwa's 60 percent discount is the latest volley in ISP price wars started earlier in the year. SeedNet, the second-largest Internet service company in Taiwan, slashed the cost of its service for corporate customers earlier this year from NT$134,000 to NT$65,000. SeedNet is expected to follow with its own price reductions.
According to TranSend manager Carl Nicolai, HiNet's new ADSL price levels are close to US prices and are "going to be really hard to compete with by anybody else."
The strategy of winning market share early by offering lower prices now, however, may be a waste of time. According to Nicolai, who runs TranSend -- an Internet service provider -- serious Net surfers expect top quality service and high connection speeds.
"Internet users will change companies fast if there is a problem with speed or service," he said.
The tendency for ISPs in Taiwan to sell service to too many new subscribers, clogging lines and slowing the service, eventually sends frustrated customers in search of better service.
VenueTBA, a dotcom company that depends heavily on reliable high-speed Internet access for research and communication decided to forego ADSL in lieu of Internet service over cable TV lines from provider GigaMedia (和信超媒體).
"We decided to go with Giga-Media because getting an ADSL line hooked up took too long," said Kevin Rahm, ADSL's director.
Chunghwa wanted the company to wait six to eight weeks for installation.
Internet service over cable TV lines is another alternative for high speed Internet access, and VenueTBA pays only NT$990 per month for unlimited usage. This service also requires a deposit for a cable modem, but signals run at 1.5 mbps (megabits per second) download, 512k upload.
Rahm did point out, however, that the service speed has been slowing as GigaMedia adds new customers.
"We started out using EThome, but after a few months, it was slower than a normal [56k] modem," Rahm said. "Too many people on the line."
According to Chunghwa officials, booming worldwide demand for ADSL services has created a shortage of needed parts.
Although nearly half of the ADSL subscribers signed up by HiNet are still waiting for installation of the service, the company believes that the parts shortage will be alleviated next month.
From June through August, HiNet's ADSL customer base soared 250 percent to 102,500 subscribers. The company expects new ADSL subscribers to top 150,000 by the end of the year due to increased interest in high-speed Internet access.
The Institute for Information Industry (III,
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