Amid an outcry over the government's decision to lease out Chunghwa Telecom Co's fixed network at a wholesale price last month, the Chunghwa Telecom Workers' Union yesterday filed lawsuit against Minister of Transportation and Communication Lin Ling-san (林陵三) and directorate general of telecommunications chief, Chien Jen-ter (簡仁德), accusing them of profiting from telecom conglomerates at the expanse of the national interest.
Since the government liberalized the telecommunications industry four years ago, three companies -- Taiwan Fixed Network (
Under the contract with the government, these companies are obliged to build their own Internet infrastructures and put at least 1 million households online by 2006. But each of these Internet Service Providers (ISP) has connected less then 500,000 homes.
The Union argues that these ISP firms together spent only NT$55.5 billion on infrastructure development, a sparse 27 percent of the total NT$205.4 billion these ISP firms made in 2000.
In this context, the union said, to lease out fixed network at a low price is tantamount to convincing these companies to sit idle while raking in exorbitant profits.
According to the union, the government has failed in its role as a telecom industry watchdog.
"How can the government give free rein to private companies rather than prodding them to step up their [infrastructure development] efforts," said Chunghwa Telecom union president Chang Hsu-chung (
"Chunghwa Telecom's fixed network is funded by taxpayer money and built by the government. It is public property," Chang said.
"To lease a fixed network at wholesale prices is driving down Chunghwa Telecom."
The state-run company controls nearly 80 percent of the market for broadband ADSL subscribers. Last year alone, it contributed about NT$50 billion to national coffers.
The union staged a protest yesterday in front of the Taipei District Prosecutor's Office which included a street theater skit portraying Lin in cahoots with the three "profiteers," by giving them golden eggs laid by the government's biggest hen, Chunghwa Telecom.
Telecom officials dismissed the union's argument as a groundless conspiracy theory, saying that the government does not benefit from the arrangement.
"We do not take in any money from the deal," said Kao Kai-sheng (高凱聲), the deputy director of the directorate general of telecommunications.
"There is no under-the-table thing," he said, adding that the market is the best method of determining prices.
According to Kao, it is now "premature" to predict if these ISP firms will fail to meet the 1 million household mark by 2006. "If they violate the terms of contract, their license will be annulled," Kao said.
Currently, the three ISP firms are negotiating with Chunghwa Telecom about the rent of the local loop -- the piece of copper wire between a house or business and a local area network.
By lowering the fixed network rent, the ministry is trying make the market more equal, putting private ISP firms on an equal footing with the state-run monopoly.
"We welcome more companies to cultivate business ties with us," said Chunghwa Telecom's chairman Ho Chen-tan (賀陳旦), hinting that the huge costs in infrastructure development could scare away private investors.
Ho's words are in line with the government's policy to open up the fixed network market.
"The more ISP firms there are in the market, the more variety there will be for customers," Kao said.
However, Ho said the government should act as the telecom industry's watchdog.
"The government should not interfere with the price in the market, but it is the government's responsibility to monitor whether the Internet infrastructure is constructed on schedule as promised," he said.
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