Mon, Aug 27, 2001 page18

• Alcatel chief targets high-speed Internet

  With the number of Web-addicted consumers who sign up for ADSL Internet connections continuing to show strong growth in Taiwan, staff reporter Annabel Lue spoke recently with the president of the company that forms the backbone of the country's high-speed broadband network, Alcatel Taiwan's Andrew Young

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  Taipei Times: What is Alcatel Taiwan and what is its position in the local telecom market?

  Young: We've been in the local market since 1973 when Alcatel started a joint venture with Chunghwa Telecom (中華電信) for the purpose of bringing switching technology to Taiwan.

  

  Andrew Young, president of Alcatel Taiwan.

  PHOTO: CHIANG YING-YING, TAIPEI TIMES

  That venture was know as TAISEL (Taiwan International Standard Electronics), or Alcatel TAISEL.

  We have a number of business interests here in Taiwan including handsets, electronic equipment and this year we are the number one ADSL (Asymmetrical Digital Subscriber Line) provider to Chunghwa.

  We enjoy great success in that business and provide our services to Chunghwa via the TAISEL joint venture.

  Alcatel's headquarters is located in Paris and operates in more than 130 countries around the world.

  Last year Alcatel Taiwan grew 50 percent overall and this year we are also at the top of the market.

  We stand pretty well in terms of the local competition and we are concentrating on ADSL technology in particular.

  For customers, what we do is provide high speed Internet -- an always-on Internet service -- accessed from existing copper telephone lines.

  If you have copper lines in your home or business, ADSL is the most natural solution to access broadband.

  To bring full broadband service to the community we really need a number of components. One is the last mile and the others are the infrastructure and the interconnection between them.

  Alcatel is bringing the last mile together.

  TT: In March, Alcatel Taiwan won the NT$7.1 billion ADSL contract with Chunghwa Telecom to become the top ADSL provider. How does Alcatel see the broadband market developing in Taiwan?

  Young: Taiwan is a very sophisticated market and about 40 percent of the public have Internet access.

  Notable are the mobile users, who make up some 90 percent of the public -- the number is amazing.

  The population makes good use of technology and ADSL is the next mature stage. People talk about ADSL user numbers going up to a million by the end of this year.

  The government sets the policy to wire Taiwan and this is how you do it: If you want broadband, you have to support the infrastructure and then put the content in.

  Generally, I think the government sets the policy and the industry follows. Probably this is also influenced by Chunghwa which has a strong commitment to ADSL.

  TT: Do you have any on-going talks with other local fixed network companies like Eastern Broadband Telecom Co Ltd, Taiwan Fixed Network Co Ltd and New Century Information Tech Co?

  Young: We have provided the complete network to Eastern Broadband, basically switching parts, transmission parts and intelligent networking.

  For other customers like New Century we supply transmission equipment and also provide infrastructure to Taiwan Fixed Network as well.

  We actually bring in the full range of our products to the Taiwan market.

  TT: How about cooperation with local fixed-line companies in the supply of ADSL lines?

  Young: The new fixed line operators are still in the initial investment stage and they are now expanding their networks and business plans.

  One way Alcatel can help is the intelligent network service, an area where we are really strong in Taiwan.

  The intelligent network is a software product allowing customers to configure their service quite quickly and conveniently, so they can differentiate themselves from other providers. Alcatel is the number one provider in this market. Chunghwa, Eastern Broadband, Far EasTone Telecommunications Co Ltd and Mobitai Co Ltd Telecommunication are all using Alcatel's intelligent network services now.

  TT: The Market Intelligent Center estimates ADSL user growth in Taiwan to go from the current 580,000 to 1.08 million by the end of the year. How much market share does Alcatel have and how will you compete for a bigger piece of the pie?

  Young: Chunghwa is always the market leader in the ADSL service market and this year we got the contract for millions of lines with it -- which are starting to be rolled out now.

  With Chunghwa's domination of the market, probably 95 percent of the line supply comes from Alcatel.

  TT: How does Alcatel differentiate its ADSL service from other providers?

  Young: There are a number of differences and one is the product itself: we develop the Alcatel chipset by ourselves and the same chipset is used in the transmission equipment. This allows all of our equipment to speak the same language. Another thing is the ability to meet supply demands quickly. Last year Alcatel globally shipped 10 million ADSL lines.

  TT: Can you elaborate on the shareholder background of the Alcatel/Chunghwa joint venture TAISEL?

  Young: Alcatel controls 60 percent of the venture and Chunghwa has 40 percent.

  TT: What is Alcatel Taiwan's plan for the December 3G [third generation] licensing?

  Young: Taiwan's 3G market is very open and we will consider any potential partners. 3G is much more than just a radio network, it is content as well. It is a portal for content providers to access the advanced network and they can be charged for it. 3G is actually a content link for operators and for system subscribers.

  The interesting part is that in Taiwan, 3G is described as mobile Internet, which means people know what they want from it.

  So I see the development of 3G in Taiwan growing very rapidly and we are likely to see high penetration quite quickly too.

  TT: With 3G licenses in Europe being called overpriced, do you have any suggestions for the government about license numbers and prices in Taiwan?

  Young: You have to keep in mind the goal you are looking for, which is to have successful 3G businesses with large numbers of capable operators. In Europe recently, several licensees gave their licenses back because they couldn't afford to start any new projects. The people who bid for 3G licenses in Taiwan must be able to afford to invest in the infrastructure, get the service up and running, get the penetration necessary and make the business work.

  TT: Does Alcatel have any plan to stop manufacturing mobile handsets in Taiwan and outsource?

  Young: From a global position, Alcatel recently made a commitment to outsource handsets in Europe from another company. This is a strategic move, since handsets are not Alcatel's core business now. For example, some of our factories have been converted to produce electronic components that are high-value goods in Alcatel's core business. In Taiwan, we never actually outsource mobile handset manufacturing, although we buy components from Taiwanese industries. Alcatel currently manufactures handsets in Suchou, China.

  TT: What are Alcatel's priorities in the Taiwan telecom market?

  Young: Alcatel's core business [priorities] are switching equipment, transmission equipment, intelligent networking and bringing 3G technologies to Taiwan. Because of deregulation, mobile operators are very excited about Taiwan's market and now they are well established with high penetration.

  This year Alcatel Taiwan expects to grow again and I think that's because this segment of the market is still profitable.

  TT: Does Alcatel Taiwan focus more on the supply of equipment rather than consumer products?

  Young: No, our mobile handsets have been very successful in Taiwan and to maintain that position we have to create new products all the time. But we'd like to become stronger in the mobile handset area. Because my background is from the network side, I talk more about equipment, but I shouldn't forget about the consumer side.

  TT: Will the economic downturn slow handset consumption?

  Young: I believe that this will happen and it is pretty natural in this environment. Besides, the handset penetration rate is very high, so we have already started to look for a replacement market.
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