Taipei, May 25, 2009 (CENS)--As the validity of the licenses held by Taiwan`s telecom service providers to run second-generation (2G) cellular service is to expire in 2012 after 12 years of validity, the license holders hope the government extend the validity whereas non-holders think otherwise.

The Ministry of Transportation and Communications (MOTC) is drawing up new regulations to make the allocation of limited frequency-spectrum resource more efficient in the post-2G market.

However, 2G-service providers-Chunghwa Telecom Co., Ltd., Taiwan Mobile Corp. and Far EasTone Telecom Co., Ltd.-are contending the licenses should be extended after their validity end in 2012.

They reason that nearly half of the island`s cellular subscribers are still using 2G service, stressing recalling the licenses would hurt their interest. Besides, stopping 2G service will seal Taiwan off the world as 2G subscribers still account for the major portion of the cellular subscribers outside Taiwan. The 2G incumbents also contend that each of them has installed 8,000 cell towers islandwide and the license cancelation would leave the signal transmission net well woven around the facilities idle.

Currently, around 700 million of the world`s three billion cellular subscribers are using 3G service, suggesting the number of 2G subscribers remains dominant in the market. However, world shipment of 3G handsets has exceeded that of 2G phones so far this year. Industry watchers estimate world 3G population will increase to 1.6 billion in 2012.

3G-service providers Vibo Telecom Co., Ltd. and Asia Pacific Broadband Wireless Communications Inc. and WiMAX service providers urge the government to take back the 2G spectrum and allocate the resource to 4G service providers in line with global trend. They say the government can inject the money it gets from auctions of the spectrums it takes back from 2G providers into national coffer.

Although the island`s 3G service providers have signed up a total of 12 million subscribers or so since they launched the service in 2003, compared with some 11 million 2G-service subscribers islandwide, they contend that the number can tell at most the amount of subscriber identification cards, which far outnumbers actual users.

As 2G service has been the major profit maker of the island`s cellular-service providers, industry watchers believe 2G service providers will lobby as hard as they can to convince the government to extend the term of their licenses. 2G service is estimated to brining the three providers profit of at least NT$3 per share in past years.

According to the island`s industry watchers, although local 3G providers have each signed up at least one million subscribers, they are still in red as a result of late entry.

Taiwan`s Top Five Cellular Service Providers and Their Operations

Provider	Chunghwa	Far EasTone	Taiwan Mobile	Vibo	Asia Pacific
Subscriber Number	Nine million	6.2 million	6.2 million	One million	1.98 million
Cellular System Technology	WCDMA+GSM	WCDMA+GSM	WCDMA+GSM	WCDMA	CDMA2000
License	2G+3G	2G+3G	2G+3G	3G	3G
2008 Revenue	NT$201B	NT$62.5B	NT$69.3B	NT$4.4B	NT$10.4B
2008 Earnings	NT$45B	NT$10.1B	NT$15.3B	Loss	Loss

Sources: The providers

(by Ken Liu)