After months of bickering over how to maximize profits on 3G mobile Internet airwaves, government officials finally decided to auction off five 3G licenses by the end of the year.
Third generation or 3G telecommunications will allow people to access the Internet anywhere, anytime from mobile phones, personal digital assistants (PDAs) and notebook computers at speeds 50 times faster than current technology.
At a telecommunications meeting convened by Minister Without Portfolio Lin Neng-bai (
"A bottom price hasn't been finalized yet," said Lee Min-chung (
He explained that the Executive Yuan might decide not to announce a minimum bid on the premise that industry players will aim their initial bids higher without one.
One industry player who requested anonymity voiced concern over the lack of transparency in a minimum bid. He said without a minimum price, the auction could still end up costing more than mobile phone companies can afford.
"Nobody has proven they can make money on this kind of service anywhere outside of Japan," he said. "What could end up happening is we pay a high price for the license with very little left over for developing 3G services that draw in consumers..."
Taking a cue from the financial carnage left over from the massive bids run up during European 3G license auctions last year, however, the government says it will allow license winners to make payments over a 10 to 15-year period, instead of collecting a lump sum payment right away.
The transportation ministry said 30 percent of the bidding price would be collected initially as a deposit and the rest would be paid off in an as yet undecided fashion.
"There are many different ways to collect the fees ... we are still researching which method will work best," Lee said.
In order to take part in the auction, industry players will have to turn in detailed applications, including business plans and a report on how much money they expect to earn from running a 3G network. Applications will be handed out in October and the companies that qualify to take part in the bidding process will be notified by November.
Some pundits called the rules "industry friendly" because they "show the government wants to help build the 3G industry in Taiwan," said Nathan Lin (林宗賢) telecom industry analyst at National Securities Corp (建弘證券) in Taipei.
A slowing economy has forced the government to consider any and all ways to create jobs across the nation. By encouraging mobile communications firms to begin building their 3G networks, officials hope to stimulate job growth.
Taiwan's four major mobile telecom service providers, Taiwan Cellular Corp (台灣大哥大), KG Telecommunications Co (和信電訊), Far EasTone Telecommunications Ltd (遠傳電信) and Chunghwa Telecom Co (中華電信) are all expected to win licenses. Lin predicts the fifth license will go to Taichung-based Mo Bi Tai Communications Corp (東信電訊) and its partner, the Cathay Group (霖園集團).
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