Executive Summary

Hong Kong has been, and continues to be, one of the most sophisticated and dynamic telecommunications markets in the world. This Special Administrative Region (SAR) of China has built itself world-class telecoms infrastructure. At the start of 2005, the territory had 3.8 million fixed telephone lines in service, giving a penetration of 55%, amongst the highest teledensities in Asia as well as in the world. Whilst the fixed-line market has now flattened out, the mobile market has been booming. At the beginning of 2005, it claimed an amazing 8.1 million mobile subscribers, representing an impressive world-leading penetration of almost 120%. This market has probably peaked and, as happened in Taiwan, we can expect to see some rationalisation of the mobile subscriber base during 2005 and into 2006.

Digitalised since 1995, the territory has been wired with 400,000km of optical fibre. This extensive broadband network covers the vast majority of households and provides the basis for a wide range of existing and future telecommunications services. As a result of its extensive infrastructure roll-out, Hong Kong moved quickly to provide more than 90% of households with broadband access. Broadband subscribers in Hong Kong had jumped to 1.6 million by early 2005, having increased by 1 million in just three years.

The contribution made to progress in the telecommunications sector by the Office of the Telecommunications Authority (OFTA), Hong Kong’s regulator is of particular note. Since 1998 the government has adopted a strongly proactive attitude to telecommunications, aimed at turning Hong Kong into a major regional technology hub.

Macau, also a Special Administrative Region (SAR) of China, has remained very low profile compared with Hong Kong in the development of its telecommunications market. Macau has systematically gone about building itself a strong modern telecommunications infrastructure and can now claim a highly penetrated telecom market. Fixed lines reached a saturation point at 40% teledensity a few years ago. Now attention is focused on the mobile market, where by early 2005 there were nearly 460,000 mobile subscribers, representing a penetration of 94%. Macau has also been a busy adopter of Internet in its various forms with strong encouragement from the administration. More recently, broadband Internet access, using Asymmetrical Digital Subscriber Line (ADSL), has been developing quickly and by March 2005 over 60% of all Internet subscriptions in Macau were broadband based.

Taiwan - With its strong focus on the role of technology in its economy, it is not surprising that Taiwan has one of the most advanced telecommunications networks in Asia. Most high profile in this regard has been the remarkably booming mobile sector. Having moved past 100% subscriber penetration in early 2002, the mobile market peaked at around 116% in 2003. Then followed a year of market rationalisation and by early 2005 mobile subscriber numbers had dropped back to 21.3 million or a penetration of 94%.

The Taiwan telecom market seems to simply find new ways to grow, however, and the country has been energetically moving into the ‘next generation’ of mobile services. Following the awarding of 5 licences for Third Generation (3G) services in 2002, one of the new licensees, APBW, launched its cdma2000 1xRTT service in mid-2003. The new operator claimed 550,000 subscribers by early 2005, having expanded at an annual rate of almost 200% in 2004. The other operators granted 3G licences had announced plans to launch new services in 2005.

The broadband market in Taiwan is also one of the more heavily penetrated in the world. With around 90% of households having some form of Internet access, about 55% of these have access to the Internet provided by some form of broadband. With DSL as the dominant platform the broadband market was still expanding at an annual rate of 15% coming into 2005.

The role of the government in creating a liberalised telecom market in Taiwan should not be underestimated. First there was the strong push for competition to incumbent Chunghwa Telecom and to generally make the market more accessible to new operators. More recently the focus has been on achieving the privatisation of the incumbent and, although there were a number of political issues yet to be resolved before the proposed sale of a further 17% stake, this looked like happening in 2005.

1. EXECUTIVE SUMMARY
2. HONG KONG
2.1 Key statistics
2.2 Telecommunications market
2.2.1 Overview of Hong Kong’s telecom market
2.2.2 Fixed Telecommunications Network Services (FTNS)
2.2.3 International telecommunications services
2.3 Regulatory environment
2.3.1 Overview
2.3.2 Regulatory authority
2.3.3 Telecom sector liberalisation
2.3.4 New licence awards
2.3.5 Telecommunication (Amendment) Ordinance 2000
2.3.6 Telecommunications (Amendment) Bill 2001
2.3.7 Regulatory developments
2.3.8 Proposed ‘super regulator’
2.4 Major players in the market
2.4.1 Pacific Century CyberWorks (PCCW)
2.4.2 City Telecom (HK) Ltd
2.4.3 Hutchison Whampoa Ltd
2.4.4 Wharf New T&T Hong Kong
2.4.5 New World Telephone
2.4.6 China Motion
2.5 Telecommunications infrastructure
2.5.1 Overview
2.5.2 National
2.5.3 International
2.5.4 Satellite networks
2.6 Fixed voice market
2.6.1 Mainland connection
2.6.2 Full liberalisation of FTNS market
2.6.3 Fixed network development
2.7 Internet market
2.7.1 Market overview
2.7.2 ISP market
2.8 Broadband in Hong Kong
2.8.1 Broadband access
2.8.2 Wireless broadband
2.8.3 Internet via satellite
2.9 Content and E-Services
2.9.1 E-commerce
2.9.2 E-Government
2.9.3 E-entertainment
2.9.4 E-communications
2.10 Mobile communications
2.10.1 Market overview
2.10.2 Regulatory
2.10.3 PCS
2.10.4 Mobile voice services
2.10.5 Mobile data services
2.10.6 Major mobile operators
2.11 Broadcasting market
2.11.1 Overview
2.11.2 Regulatory environment
2.11.3 Free-To-Air (FTA) broadcasting
2.11.4 Digital TV
2.11.5 Pay TV
2.11.6 Satellite TV
2.11.7 Interactive TV
3. MACAU
3.1 Key statistics
3.2 Telecommunications market
3.2.1 Overview
3.3 Regulatory environment
3.3.1 The regulator
3.3.2 Liberalisation
3.4 Major player in the market
3.4.1 Compahnia de Telecomunicações de Macau
3.5 Telecommunications infrastructure
3.5.1 Domestic and international
3.6 Data market
3.6.1 Data network
3.6.2 Macaupac
3.6.3 ISDN
3.7 Internet market
3.7.1 Market overview
3.8 Broadband in Macau
3.8.1 ADSL
3.9 Mobile communications
3.9.1 Mobile services
3.9.2 Mobile operators
3.10 Broadcasting market
3.10.1 Cable TV
3.10.2 Satellite TV
4. TAIWAN
4.1 Key statistics
4.2 Telecommunications market
4.2.1 Overview
4.3 Fixed network voice services
4.3.1 Market overview
4.3.2 VoIP services
4.4 Regulatory environment
4.4.1 Regulatory authorities
4.4.2 The 1996 Telecom Bill
4.4.3 Privatisation of Chunghwa Telecom
4.4.4 The deregulation process
4.4.5 Foreign investment
4.4.6 Licence fee and rental charges
4.5 Fixed network operators in Taiwan
4.5.1 Chunghwa Telecom Co Ltd
4.5.2 Eastern Broadband Telecom
4.5.3 New Century InfoComm Tech Co Ltd (Sparq)
4.5.4 Taiwan Fixed Network Telecom
4.6 Telecommunications infrastructure
4.6.1 National
4.6.2 International
4.6.3 Response to Asian Tsunami – 26 December 2004
4.7 Data market
4.7.1 Data infrastructure
4.7.2 Data services
4.8 Internet market
4.8.1 Market overview
4.8.2 Domain names
4.8.3 Profile of Internet users
4.8.4 Public Internet access
4.8.5 Direct Internet access network
4.8.6 TWGate
4.8.7 ISP market
4.9 Broadband in Taiwan
4.9.1 Overview
4.9.2 ADSL
4.9.3 Cable modems
4.9.4 Wireless broadband
4.9.5 Fibre-to-the-Home (FttH)
4.9.6 Advanced broadband options
4.9.7 Video-on-Demand (VoD)
4.9.8 High-speed ISP services
4.10 E-Services
4.10.1 Overview
4.10.2 E-commerce
4.10.3 E-banking
4.10.4 E-government
4.11 Mobile communications
4.11.1 Overview of Taiwan’s mobile market
4.11.2 Major mobile operators
4.11.3 Mobile services
4.11.4 Mobile handset market
4.12 Broadcasting market
4.12.1 Overview
4.12.2 Terrestrial TV
4.12.3 Cable TV and Pay TV
4.12.4 Satellite TV
4.12.5 Interactive TV
5. GLOSSARY OF ABBREVIATIONS


Exhibit 1 – Licensees
Exhibit 2 – The original PCCW deal
Exhibit 3 – Capex commitments of new wireless local FTNS licensees
Exhibit 4 – Fixed Telecommunications Network Services (FTNS) licensees – August 2004
Exhibit 5 – International calling card service operators – 2003
Exhibit 6 – Mobile Virtual Network Operator licensees* – August 2004
Exhibit 7 – Overview of TV broadcasting licences
Exhibit 8 – Mobile data licence winners
Exhibit 9 – Major broadcasting organisations




Table 1 – Mobile subscriber growth Hong Kong, Macau and Taiwan – 2003 - 2005
Table 2 – Country statistics Hong Kong – 2005
Table 3 – Telephone network statistics – 2005
Table 4 – Internet provider statistics – 2005
Table 5 – Internet user statistics – 2004
Table 6 – Broadband statistics – 2005
Table 7 – Mobile statistics – 2005
Table 8 – National telecommunications authorities
Table 9 – Fixed telephone lines vs mobile subscriptions and penetration – 1998 - 2005
Table 10 – No. of telecoms licences by category – February 2005
Table 11 – Fixed lines in service and teledensity – 1994 - 2004
Table 12 – Internet user growth – 1996 - 2004
Table 13 – Internet access types – August 2004
Table 14 – Internet host computers – 1994 - 2003
Table 15 – Internet traffic volume (PSTN)* – 1997 - 2005
Table 16 – Internet traffic volume (Broadband)* – 2000 - 2005
Table 17 – Registered domain names – March 2005
Table 18 – Average residential Web usage – May 2004
Table 19 – Broadband subscribers – 2000 - 2005
Table 20 – PCCW’s ADSL subscriber base – March 2004
Table 21 – i-Cable broadband subscribers – 2000 - 2004
Table 22 – Average residential Web usage – May 2004
Table 23 – Mobile subscriber growth – 1995 - 2005
Table 24 – Mobile service revenue – 1992 - 2003
Table 25 – Prepaid SIM card growth – 1997 - 2005
Table 26 – Monthly SMS volume* – 2002 - 2004
Table 27 – 2.5G subscriber growth – 2002 - 2005
Table 28 – Mobile subscribers by operator – December 2004
Table 29 – Operator market share by subscribers – 2003 - 2004
Table 30 – Hong Kong CSL* subscriber growth – 1998 - 2004
Table 31 – New World Mobility subscribers and annual growth – 1998 - 2004
Table 32 – Hutchison subscribers and annual growth – 1998 - 2004
Table 33 – Peoples subscribers and annual growth – 1998 - 2004
Table 34 – SmarTone subscribers and annual growth – 1998 - 2004
Table 35 – Sunday* subscribers and annual growth – 1998 - 2004
Table 36 - Broadcasting services - 2004
Table 37 - Pay TV subscribers by platform – 2001 - 2005
Table 38 – Country statistics Macau – 2003
Table 39 – Telecom revenue and investment statistics – 2002
Table 40 – Telephone network statistics – October 2004
Table 41 – Internet provider statistics – 2003
Table 42 – Internet user statistics – October 2004
Table 43 – Broadband statistics – October 2004
Table 44 – Mobile statistics – November 2004
Table 45 – National telecommunications authorities
Table 46 – Fixed-line growth and teledensity – 1991 - 2004
Table 47 – Internet users – 1996 - 2004
Table 48 – Internet host computers – 1994 - 2003
Table 49 – Mobile subscriber growth – 1990 - 2004
Table 50 – Mobile subscribers by operator – September 2004
Table 51 – Broadcasting statistics - 2002
Table 52 – Country statistics Taiwan – 2005
Table 53 – Telephone network statistics – February 2005
Table 54 – Internet provider statistics – February 2005
Table 55 – Internet user statistics – 2004
Table 56 – Broadband statistics – February 2005
Table 57 – Mobile statistics – February 2005
Table 58 – National telecommunications authorities
Table 59 – Fixed telephone lines v. mobile subscriptions and penetration – 1997 - 2005
Table 60 – Chunghwa Telecom’s subscriber base – August 2004
Table 61 – Fixed lines in service and teledensity – 1995 - 2005
Table 62 – Internet users – 1996 - 2004
Table 63 – Internet subscriber access – June 2004
Table 64 – Internet host computers – 1993 - 2003
Table 65 – Broadband subscriber growth – 2000 - 2005
Table 66 – Broadband subscriber by access – 2004
Table 67 – Chunghwa’s HiNet subscriber base – March 2004
Table 68 – GigaMedia broadband subscribers – 1999 - 2004
Table 69 – Mobile subscriber growth and penetration – 1995 - 2005
Table 70 – Mobile services revenue – 1992 - 2003
Table 71 – Mobile subscribers by operator and annual growth – 2004
Table 72 – Operator market share by subscribers – 2004
Table 73 – Chunghwa Telecom mobile subscribers and annual growth – 1998 - 2004
Table 74 – Far EasTone subscribers and annual growth – 1998 - 2004
Table 75 – KG Telecom subscribers and annual growth – 1998 - 2004
Table 76 – Taiwan Cellular subscribers and annual growth – 1998 - 2004
Table 77 – WAP subscriber growth – 2001 - 2005
Table 78 – GPRS subscriber growth – 2001 - 2005
Table 79 – Key broadcasting statistics – 2004
Table 80 – Pay TV subscribers by platform – 2002 - 2005