Gov't urges flexibility in 4G move as telecoms blast auction scheme
By Ted Chen, The China PostTAIPEI, Taiwan -- In light of the rapidly escalating bidding battle for operation licenses for the upcoming fourth-generation (4G) mobile broadband network, Minister Without Portfolio Simon Chang (張善政) yesterday urged enterprises contending in the auction to employ innovations and develop new business models in the 4G era.
October 2, 2013, 12:09 am TWN
This year's auction eclipsed numerous records last seen in the bid for the preceding third-generation (3G) network. Following 20 days and 190 rounds of bidding, this year's 4G auctions have exceeded the 19 days and 180 rounds last seen during the bid for the 3G network. After a grueling auction process, total bids have surpassed the NT$70 billion mark, exceeding the base bid of NT$35.9 billion by nearly twofold, or a premium of 97.5 percent, to the dismay of some companies participating in the auction.
In light of rising concerns over the exorbitant bidding results, which may significantly challenge a number of companies' ability in fulfilling infrastructure investment obligations, Chang urged the industry to seek innovative business models in the 4G era.
Chang stated that although bidding has been more zealous than anticipated, the government retains the stance that it will not interfere with market forces once the rules of the auction has been set.
Participating companies should have anticipated the outcome of the auction, said Chang, while expressing confidence that the industry will be able to recover costs through innovative business models. Chang also urged operators of the forthcoming 4G network to not simply pass on the burden of costs to consumers, and instead offer better and innovative services.
Minister Urges Pricing Restructure
Most notably, Chang noted that currently most 3G operators are adopting a more rigid pricing model lacking in options, and urged companies to offer a more comprehensive pricing structure based on usage and quality of services provided.
New 4G pricing structures proposed by operators will still require the approval of the National Communication Commission, Chang said.
Chang also noted that following the conclusion of the auctions, winning contenders are required to pay their portion of the base bid to the national treasury by the end of the year in a single lump sum, while the premium may be paid over the next 15 years. The influx of payments is expected to mitigate concerns over Taiwan's mounting fiscal shortfall. However, Chang emphasized that the interests of consumers remain his primary concern.
In a previous industry conference on Sept. 27, telecoms carriers blasted ongoing 4G license bids as tantamount to government backed gambling. In the event, several telecoms operators, including Chunghwa Telecom and Far EasTone, reportedly expressed the sentiment that bandwidth is a finite resource, and that the popular unlimited usage pricing model adopted by many consumers is unsustainable. A number of companies participating at the conference cited international precedents, such as AT&T, spelling a likely end to “all you can eat” bandwidth usage schemes in Taiwan in the 4G era.