The proposed merger of Taiwan Mobile and Taiwan Star Telecom would give Taiwan Mobile “extra bandwidth,” which its competitors say is unfair and against regulations, but returning the bandwidth could affect Taiwan Mobile’s subscribers, creating a dilemma for the National Communications Commission (NCC).
At the heart of the dispute is spectrum distribution of prime frequency bands below 1 gigahertz (GHz), which could lead to major changes in the nation’s telecom industry, as following the merger, Taiwan Mobile would own a much bigger slice of the available spectrum than the Regulations for Administration of Mobile Broadband Businesses (行動寬頻業務管理規則) allow. The telecom is set to control a 60 megahertz (MHz) band of the 700MHz to 900MHz band, exceeding the limit of 50MHz — or one-third of the total 150MHz auctioned. Rivals Chunghwa Telecom and Far EasTone Telecommunications own 40MHz and 50MHz in the “golden band” respectively.
The new Taiwan Mobile would enjoy the benefits of significant cost savings in base station deployment, while optimizing its 5G network, given the low-band’s special properties. Industry association GSMA says that lower frequencies have superior propagation characteristics, and to provide the equivalent 5G speed coverage of a mid-band such as 700Mhz, operators within the 1.8GHz spectrum would need three to four times the number of cell sites.
At a public hearing about the merger on Thursday, Chunghwa Telecom and Far EasTone, who had both earlier vied for the coveted frequencies in high-priced auctions, urged Taiwan Mobile to return the 10MHz, so that it could be put up for auction again. They also called on the commission to uphold the “legitimate expectation” created by the mobile broadband regulations. The companies said they had invested heavily on spectrum acquisition during the 4G and 5G auctions, while Taiwan Mobile skipped two rounds, citing stiff competition.
Taiwan Mobile has insisted that it is allowed to keep the extra bandwidth under special circumstances. Telecoms can apply for exceptions such as being able to utilize a spectrum more efficiently, or factors related to mergers, acquisitions or changes in the marketplace. They can also own larger portions of spectrum if it is in the interest of the public. No telecom has applied for an exception since the regulations came into effect.
Taiwan Mobile said that returning the bandwidth would damage the public interest and curb market competition, as it would reduce its bandwidth by 6 percent, affecting the quality of mobile data service of about 10 million Taiwan Mobile and Taiwan Star subscribers. In exchange for keeping the bandwidth, the telecom offered to build more base stations and optimize its network in rural and urban areas.
As the merger depends on the outcome of the disputes over broadband distribution, a delay in the deal or allowing it to fail could lead to the collapse of Taiwan Star, as the smaller operator has registered NT$32.4 billion (US$1 billion) in losses, and its closure could mean the loss of about 1,000 jobs and the disruption of mobile service to thousands of users.
To safeguard the public interest and protect competition in the marketplace, the NCC should ask Taiwan Mobile to return the spectrum, which would have a smaller impact on its users, or seek other approaches to end the dispute. The standoff has to be resolved, if the public interest is to be safeguarded.
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