Abstract

The worldwide failure of WAP and Japan's success in the wireless Internet market offer lessons for development of wireless Internet in other nations. There are complex issues related to industry and culture, but after all is said and done, there are two keys to the market success of wireless Internet in any nation. First, a market must have sufficient scale and the infrastructure must be complete, making it easy for most people to become wireless Internet users. Second, at least two mobile operators need to lead wireless Internet service promotion and provide diverse and convenient services to meet market demand.

Regarding the development of Taiwan's broadband networks, during the initial period for ADSL, service fees were charged based on usage time, but later, a system of fixed monthly fees was used, allowing unlimited online time. In the cable TV segment where online subscribers were more limited, from the very beginning, a system of fixed monthly fees was adopted for unlimited online time. For this reason, Taiwan's mobile operators have adopted an unlimited wireless online model, and this is likely to stimulate demand for wireless Internet usage in Taiwan.

Mobile Operators Play Key Role in Wireless Internet Development

While Taiwan's broadband networks have become more pervasive, such content as online games, online A/V applications, e-learning and logistics-free electronic commerce have created the potential for fee-based services. However, most subscribers expect free online services.

The revenue-sharing model for content providers and portal companies has always depended on advertising revenue. But in Taiwan, operation for many portals has been quite difficult, and they have also had to provide a part of advertising revenue to content providers. The weakness of the revenue mechanism in Internet services raises additional concerns for Internet development in Taiwan.

For this reason, given the number of wireless Internet subscribers in Taiwan, the attitude of mobile operators naturally has become key to wireless Internet development. The main obstacle that needs to be overcome is the task of designing promotional plans that subscribers can accept, and to demonstrate the advantages of wireless Internet, helping subscribers get in the habit of using wireless Internet.

Furthermore, because mobile operators play an intermediary role with content service providers, companies can use this symbiotic relationship to create a reasonable revenue-sharing mechanism, allowing all companies involved in the service value-chain to co-exist and prosper. This is key to Taiwan's development of wireless Internet.

Consumer Demand Needs to Be Stimulated

Although Taiwan's mobile phone penetration rate exceeds 90% and Chunghwa Telecom, Taiwan Mobile, and Far EasTone have all started 3.5G HSDPA services, the penetration rate for mobile data services remains low. The most popular mobile data services are still short messages, ringtone downloads and MMS (Multimedia Message Service). However, GPRS systems can already satisfy demand for such applications and services.

For this reason, for Taiwan's mobile operators to make 3G/3.5G increase mobile data service revenue, the priority is to design attractive fee plans combined with various applications and services to educate consumers and help them get in the habit of using wireless Internet.

In addition, mobile operators worldwide have two concerns regarding development of HSDPA. First, consumers have not become used to 3G applications and services, and therefore the need to upgrade mobile networks to HSDPA may not be very pressing. Second, HSDPA terminals have not become widely available, and the time may not be ripe for a market entry. These two concerns are the reason why Taiwan's attitude toward developing HSDPA has been relatively conservative.

The aim is that by using high-volume subscribers to establish and popularize usage habits among other groups, a new wave of demand will boost market scale for Taiwan's wireless Internet services.

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