Today I saw news from CNA: “Asia Pacific Telecom Opposes Free Network Interconnection.” It turns out that both APT and Chunghwa Telecom (CHT) oppose the NCC’s proposal for a free network resource exchange scheme—I suspect the only one happy about this is Mr. Hsu (Chairman of Far EasTone).
Under the guise of “resource sharing” among several telecom operators (CHT, Far EasTone, APT, Taiwan Mobile), there is a bizarre logic: why should Chunghwa Telecom, which possesses a sea-like abundance of resources, be forced to pour its “sea water” into small, stagnant streams?
💰 The NCC’s “Low-Price Robbery” Strategy
If we view network resources as equivalent to cash, this is like the NCC taking a gun bought at a low price from operators like Far EasTone and using it to hijack a cruise ship full of cash belonging to Chunghwa Telecom.
Although NCC scholars solemnly state that the condition for free sharing is that operators must reach a certain scale first, from another perspective, operators like Far EasTone only need to focus on developing their domestic customer base. Once they hit the threshold, they can use Chunghwa Telecom’s international bandwidth for free.
This results in:
- Market Predation: Chunghwa Telecom’s domestic customers will be lured away by the low prices offered by competitors who don’t have to pay for backbone infrastructure.
- Cost Shifting: CHT still has to spend its own money maintaining the lines for competitors to use for free.
- Vicious Cycle: Competitors can use the saved costs to lower prices even further, stealing more of CHT’s customers.
Price Monopoly and Market Distortion
Paradoxically, the NCC has not regulated the extent of price reductions for Far EasTone but has limited Chunghwa Telecom from being too cheap.
Consequently, competitors don’t have to lower their prices, and Chunghwa Telecom, burdened by costs, cannot lower its prices. In this vicious cycle, domestic internet prices remain high, and ordinary citizens can only continue to complain. Our national network environment won’t improve one bit, while certain big bosses profit even more.
😡 Official Proclamations, Private Burdens
The NCC could simply open the market to complete free competition, allowing Chunghwa Telecom to decide its own pricing while the NCC serves as a supervisor and mediator.
However, for some unknown reason, the government seems terrified that competitors like Far EasTone lack the financial strength and might collapse (is that even possible?). Thus, Taiwan’s network environment remains a case of “official talk, private burden”—similar to how Tatung Electronics was “protected” into its current state of decline.
And the big bosses who get the best of both worlds will still turn around and threaten to move their industries overseas. This is the disappointing reality of such regulatory interference.
Note: This commentary reflects views on telecom policy in 2013.