The president of the US' most powerful business groups involved in Taiwan trade and investment offered suggestions for Taiwan's teleco-mmunications sector, saying the Ministry of Transportation and Communications should set Chung-hwa Telecom Inc (中華電信) free.
"If Taiwan is to realize its potential in a rapidly emerging global Chinese Internet environment ... the government [must] take an unprecedented step back from participation in the telecommunications sector," said Rupert Hammond-Chambers, president of the US-ROC (Taiwan) Business Council, during a speech last week.
"This can be achieved through the total privatization of Chunghwa Telecom, the independence of the Directorate General of Telecommunications (電信總局), and an equitable awarding of 3G licenses that does not place onerous burdens on incumbents in the wireless space or on potential new entrants,"
The US-ROC (Taiwan) Business Council is considered the most important private organization involved in unofficial relations between the US and Taiwan, by government and business leaders in both nations.
The president of the ROC-US Business Council, Taiwan's counterpart, is Jeffrey Koo (
Hammond-Chambers compared the privatization of Chunghwa Telecom with the break up of Bell Telephone in the US, saying deregulation of the telecom sector in Taiwan would spark innovation, investment, and entrepreneurial activity throughout the industry.
He admonished the govern-ment's tendency to maintain a 51 percent hold of former state-run entities and further warned against continued delays in selling off Chunghwa's stock. Under the government's original plan, 33 percent of Chunghwa was to be sold last year, but only 2 percent of the company was actually bought by private investors.
The Ministry of Transportation and Communications has been delaying the share market listing in order to get a better price.
"We have seen the problems confronted -- or not, as the case may be -- by the privatization of Chunghwa Telecom. Here, certain stakeholders have undermined this important component of the privatization and deregulation process in Taiwan," Hammond-Chambers said.
Under significant budget strains, the government has come to look at the privatization of Chunghwa Telecom and awarding of third-generation (3G) mobile Internet licenses as important sources of capital.
However, Hammond-Chambers said, it is not clear if the government fully understands that companies will stay away from Taiwan if terms and conditions remain unfavorable.
If the deregulation of the market and licensing of 3G licenses is bungled, he said the nation "will fall behind" in the race to develop new networks and content for broadband Internet and mobile telecommunications.
Linking the development of the telecommunications industry with new product development and expertise, Hammond-Chambers said Taiwan should move forward into the development of intellectual property.
Taiwan's telecom equipment manufacturing will hit US$4.92 billion in 2001, up 72.6 percent from a year ago, according to the semi-government Institute for Information Industry (
In the production of wireless transmission equipment alone, local manufacturers saw a growth rate of 38.7 percent from 1999 to 2000. Companies such as Ericsson have recently sought original equipment manufacturing relationships in Taiwan for their mobile phones.
Hammond-Chambers believes the freer Taiwan's telecom market is, the more chances manufacturing firms here will have to make equipment, generate capital and develop their own products.
In addition, he said the government must seek to create an independent regulatory body, able to make decisions in the best interest of the telecommunications sector and free from the government's agenda.
He said the "independence of the directorate general of telecommunications would represent an important step in Taiwan's evolution in telecommunications. It should then be allowed to operate as a fair and objective overseer of Taiwan's rapidly changing telecommunications environment, unimpaired by political wrangling," he said.
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