Newsletter
DEVELOPMENTS IN THE LEGAL FRAMEWORK FOR FIXED NETWORK TELECOM OPERATIONS
In support of the ROC government's policy of liberalizing the telecom industry, the Directorate-General of Telecommunications (DGT) announced the Regulations Governing Fixed Network Telecommunications Business on 20 July 1999. Since that date, the DGT has been accepting applications from private-sector enterprises for fixed network operating licenses, and will continue to do so until 30 December 1999. It expects to select the successful applicants, and publish a list of operators to whom an construction/incorporation approval will be issued, in late February or early March 2000. Four years after the first new operator receives an construction/incorporation approval (i.e. in 2003), the government plans to fully deregulate the telecommunications market.
Under the regulations, the minimum required capital for a fixed network operator is NT$40 billion. When a private business intending to operate a fixed network applies to the DGT, it must submit evidence of bank deposits of NT$10 billion, and on receiving an construction/incorporation approval must deposit a further NT$10 billion. Within six years of receiving the approval it must have constructed and made available a network with a capacity of not less than one million subscriber ports, of which 150,000 ports must be completed before the operator may apply for a special license.
Since the ROC's three major statutes governing telecommunications (the amended Telecommunications Law, the Organic Statute of the DGT, and the Statute Governing Chunghwa Telecom Co., Ltd.) came into force in 1996, they have brought about structural changes in the development and regulatory environment of Taiwan's telecom industry. In response to the diversification of the telecom market, and in order to establish a healthy competitive environment, further amendments to the Telecommunications Law were adopted by the Legislative Yuan. These amendments will allow the gradual introduction of regulations and measures relating to network interconnection, universal services funds and other matters. They also relax the limit on foreign investment, introduce price capping for charges and impose regulatory controls on Type I dominant carriers. These developments will not only speed the pace of deregulation of fixed network business, but should also encourage both domestic and overseas operators to invest in such business.
Take the regulation of network interconnections as example. To meet the needs of the liberalization of mobile telecom business, on 4 October 1997 the DGT introduced the Regulations Governing the Interconnection of Mobile Telecommunications Networks, which set out the principles governing network interconnection, points of interconnection, interconnection charging and charge allocation, and interconnection agreements. The regulations also reiterate the duties of fixed network operators regarding network interconnection, and give the DGT powers to investigate and impose penalties. Following the liberalization of satellite and fixed network business, the DGT proposes to replace these regulations with its draft Regulations Governing Interconnections between Type I Telecommunications Operators, which would regulate the linking of networks operated by all Type I carriers (i.e. mobile, fixed network and satellite operators).
Paragraph 1 Article 3 of the draft interconnection regulations provides that when a Type I carrier requests interconnection with the network of another Type I carrier, the second carrier may not refuse the request. Thus Type I carriers are only obliged to enter into negotiations for network interconnection when requested to do so by other Type I carriers. However, this would appear to mean that if an investor who wishes to enter the ROC telecoms market, but who has not yet gained Type I carrier status, requests an incumbent carrier to negotiate for network interconnections, the incumbent carrier may refuse such a request.
Further, Article 43 of the Regulations Governing Fixed Network Telecommunications Businesses provides that when one operator requests another operator to establish network interconnections between them, the other operator may not refuse such a request except insofar as laws or regulations provide otherwise. But operator here means a fixed network carrier holding a special license from the MOTC. By the same reasoning, here too Chunghwa Telecom could refuse a request for network interconnection negotiations from a new entrant who has not yet received a license. This creates a competitive inequality between incumbent and new carriers likely to hinder the immediate establishment of a healthy competitive environment after the opening of fixed network business to competition.
As well as the situation outlined above concerning the regulation of network interconnection, other important issues for telecom liberalization and the regulatory supervision of competition include number portability, circuit leasing and sharing of network infrastructure facilities. Following the opening of various areas of telecom business to competition and the passing of the amendments to the Telecommunications Law, there is an urgent need to gradually bring such matters into the regulatory framework. For the spirit of telecom liberalization to be realized in practice, it is necessary to have the interactions among the incumbent operators, new operators, the DGT and other regulatory agencies.