Despite the limited size of its market, Taiwan remains a key player in the telecommunications industry. The Taiwanese government has been an important backer of WiMAX technology since its early days. However, its WiMAX operators (FITEL, Tatung, Global Mobile, FarEastone, VMAX Telecom, and Vee Telecom) grappled with WiMAX commercial service launch issues for quite some time. This has been a major concern for the government since it has also affected its M-Taiwan program. M-Taiwan (Mobile Taiwan) is aimed at ensuring people all over the country, including those living in remote mountain villages and offshore islands, have wireless Internet access. WiMAX is an important part of this program. The Taiwanese government has offered research grants and co-investment to companies on the island to help jumpstart WiMAX services.

The WiMAX market should have already reached maturity in Taiwan after the six licenses were issued for rollout in 2007, but this has not been the case. The combined WiMAX subscriber base of these 6 operators stood at just 22,935 as of the end of Q3 2010. The government is now trying its best to reassure investors and the public that there is a long-term future for WiMAX in Taiwan. 

In October 2010 the Taiwanese Ministry of Economic Affairs approved a WiMAX development plan that will see the government invest an estimated US$215 million in developing the country’s WiMAX infrastructure over the next three years. Government agencies will begin to adopt WiMAX technology for various applications, including disaster relief, transportation regulation and police patrols, as well as for educational and medical uses in remote areas. 

Intel is feeling political pressure to continue its support to WiMAX from Taiwanese authorities. According to Digitimes, Intel CEO Paul Otellini recently met with the president, Ma Ying-jeou, to give his assurances that Intel will continue to support WiMAX in Taiwan. The Taiwanese government feared that Intel was withdrawing its support for WiMAX after the company closed its Taiwan WiMAX Program Office in June of this year. 

Although the government is fully committed to boosting the WiMAX supply chain, it is also considering LTE’s development potential and is ready to put its might behind it. At the WiMAX Forum Congress Asia 2010 held in Taipei in April 2010 the Taiwanese Telecom Regulator, the National Communications Commission (NCC), revealed that it is considering to assign the 700 MHz band in future for the LTE rollout. 

Military and police organizations have been using a large portion of the 700 MHz band for a long time and it is expected that the shift to other bands to make way for LTE operation should take about three years. However, LTE operation will not begin right away when that process is done, because the government will need another one to two years to release licenses for LTE, and licensees will need another two years to rollout the network. 

The expected delay in the allocation of the 700 MHz band for LTE has not stopped Taiwanese operators from jumping on the LTE bandwagon. Alcatel-Lucent has announced that it will cooperate with Chunghwa Telecom Laboratories to conduct LTE trial, using both the 2.6 GHz and 700 MHz bands. The trials, which are to begin in Q4 2010, will enable Chughwa to test the performance of LTE-based services and multimedia applications, and assess the related business models. Chunghwa Telecom is firmly committed to LTE, but delays in 700 MHz spectrum (seen as the main band for LTE in Taiwan) allocation could delay its deployment plans. 

There are some WiMAX operators in Taiwan who have also started to consider LTE. FITEL, for example, is studying the possibility of deploying LTE in the future. It has included LTE migration in its network development plan, but it says its priority remains WiMAX. FITEL believes that it can generate profit from a healthy WiMAX subscriber base once it has matured, and furthermore, that a solid WiMAX business model should be in place before LTE is launched. It also expects that WiMAX can be migrated to TDD-LTE, and will be a good complementary technology for HSPA now, and FDD-LTE in future.  

TD-LTE will entail the world's two fastest growing markets (China and India) driving the momentum. Yet the appeal of TD-LTE has of course widened well beyond China and India. Taiwanese operator Far EasTone has revealed that it will jointly develop a next generation TD-LTE mobile network in Taiwan for testing purposes with China Mobile. 

Far EasTone will co-open a laboratory with HTC in northern Taiwan to test devices built on TD-LTE technology for Taiwan`s suppliers. Once completed, the laboratory will help the island’s suppliers push into mainland Chinese, American and European markets. The laboratory will be open to both local and foreign manufacturers producing TD-LTE products from chips to end-user equipment. It will help Taiwan`s manufacturers save testing time and costs, which are now spent at overseas laboratories.

Even if some Taiwanese WiMAX license holders have started to focus on LTE, the fact is that none has received approval from the government to migrate to LTE. The Taiwanese regulator has stated that it will have to consult with other government agencies before allowing WiMAX licensees to migrate, since some licensees have received government subsidies to set up their WiMAX networks. Maravedis believes that Taiwanese operators will become more committed to LTE deployments once the government gives the green light for migration to LTE, and as the networks and devices become more readily available and commercially mature.

MARAVEDIS is a premier global provider of market intelligence and advisory services focusing on 4G and broadband wireless technologies, regulation and markets.

Author: Basharat Ashai, Market Analyst, APAC & MEA