1. Bottleneck of last mile. Any solution? :

2. Outline last mile introductionsIndustry CharacteristicsBottleneck introductionsBackgroundFixed–line existing situationGovernment viewsCompetitors viewsChunghwa Telecom viewsForeign solutionsConclusion

3. What is last mile? the local loops between the city's Telecommunication Local Switch main distribution frame(MDF) to the Customer Premise Equipment(CPE)

4. Categories of last mile Wired systems 1.cooper twisted line2.Cable3.Optical fiber( FTTx)4.Power Line Wireless systems 1.Wifi2.Wimax3.1G~4G LTE4.Satellite communications

5. The last mile-defined by NCC Directorate General of Telecommunication (DGT) era laid telephone line=>cooper twisted line (XDSL). "open the last mile" => Not including the fiber-optic

6. Industry Characteristics Natural Monopoly Vertical integration Public Utility Capital Intensive Bottleneck

7. Whats bottleneck ? 1.Themselves unable to build in a reasonable period2. No other feasible alternative technologies3. competitors can ask for share the facilities Fixed Communications Business Management Rules

8. The reasons of bottlenecks Subscriber loop :difficult to achieve effective competition Others cant have the same economies of scale in short period No "alternative service" concept Not including the fiber-optic

9. Background 1996: pass the :three-stage opening of telecommunications services, mobile, satellite, fixed-line business liberalization. 2000: apply the licenses2001: issue licenses 2002:CHT Eastern Broadband Asia Pacific Broadband Taiwan Fixed Network New Century InfoComm (FET) The industry started to toward privatization.

10. Background Governing Fixed Network Telecommunications Businesses ( 22 22-1): Governing Fixed Network Telecommunications Businesses ( 22 22-1): 1. 1. must provide one million fixed-line number in six years 2. switching equipment and connected CPE of the subscriber loops. Funds: Eastern Broadband 65.7 billion / Taiwan Fixed Network 92.2 billion /New Century InfoComm 47.5 billion Last mile lines no future but to invest the FTTx, so government ask CHT to take over Scandal: PEWC: embezzled17.1 billions/Asia Pacific embezzled 27.2 billions pressure the government to claim last mile

11. Fixed–line existing situation 2013 FTTx subscribers annual growth rate of 10.49 %, ADSL decline to 12.69% fixed broadband business benefited from fiber grow. cut tariffs / increases the speed service automatically Telecommunications Law draft amendments to the "last mile" of Telecommunications Law has not passed Equipment depreciation costs highest proportion (26.41%)

12. The Government views NCC(1/4) In Taiwan, when the building is being constructed, the pipeline almost will be constructed in order to give operators pull the line, but the pipeline is designed to Chunghwa Telecom specifically and other carriers need to pay additional fee to the building or construction company.

13. The Government views NCC(2/4) the laying of the pipeline to each household, which belongs to the "critical facilities" of the network building to avoid monopolize, the owners of critical facilities should provide equal opportunities for all entrants closing to the facility This is the "Telecommunications Law "draft intent

14. The Government views NCC(3/4) "The draft amendments to the Telecommunications Law," added requires the last mile of Chunghwa Telecom to be set up an "independent sector" or "independent company." regulates Chunghwa Telecom must release the subscriber loop (Local Loop) infrastructure of pooling conduit, manholes, hand holes and other pipelines used cost price by law. 25 45

15. The Government views NCC(4/4) After returning the Act to NCC to redraft by the Executive Yuan Accounting Separation The costs of last mile, revenues and other accounts should be independently calculated, in other words, An independent accounting statements cannot be combined with other services in the CHT accounting items. supported

16. The Government views the Ministry of Transportation(1/1) 1.Releasing last mile only let them enjoy the public goods. 2. Other carriers coveted is probably financing several hundred billion continued laying fiber-optic network. 3.Chunghwa Telecom is a listed company, the business separation could harm shareholders' equity. Opposed

17. The Government views the Executive Yuan(1/1) the government invested NT $ 30 billion to promote the "M-Taiwan Plan" for other carriers to rent but they actually rented only about 1800 km. Low willingness The performance of implementation is ineffective supported

18. Competitors views -Government Background of Government paid by the national tax and the fee was budgeted by the government Government hold stocks about 35.29%

19. Competitors views -laying pipes Road-smoothing project Social costs More complete network construction provide better services Unreasonable tariffs of CHT.

20. Competitors view -the buildings pipeline occupied by CHT most of the pipeline were designed to China Telecom. need additional pay to the builders. Bottleneck=> resulting in the new entrants of fixed-line were acquired by mobile service operators.

21. Chunghwa Telecom views(1/3) Income of fixed line in Taiwan accounted 32.2% of CHTs revenue in the first half of 2013, its about NTD 36.2 billion.

22. Chunghwa Telecom views(2/3) Other operator didnt want to participate in construction and maintenance.

23. Chunghwa Telecom views(3/3) CHT have devoted a significant amount of money, which ups to 300 NTD billions to build the networks connecting to its customers for 15 years since 1999, and it is unfair to demand them to share their networks with other competitors.

24. Foreign solutions Japan: According to the ITU's report, the development rate of broadband in Japan is the world's highest, the price is lowest in the world. The key to success lies in a completely open of last mile market. urging the Type I & Type II telecommunications business to become convergence. allows the broadband speed different by each Japans ISP and product differentiation occurs

25. Foreign solutions Korea: The government pick winning carriers to build the basic network construction used specific and the government also gives financial assistance. The carrier owns a bottleneck facility is limited to use symmetric for all public network access to all carriers and cannot discriminate. The market of cable networks facilities also be regulated, the provision is that the construction of network should adopt competing way in the new apartments.

26. Foreign solutions United Kingdom: They implement functional separation to establish Openreach, the competitive carriers are reluctant to invest to build fiber-optic networks due to existing low circuits available. causes the costs increased it hikes up the circuit price from 82 pounds three years ago to 91.5 pounds last year

27. NCCCHT Operators

28. Conclusion(1/3) NCC needs to consider the pros and cons about enforcing CHT to offer its local loop to its rivals at cost price or farm out the companys last mile service to an independent company.

29. Conclusion(2/3) According the NCC's plan, CHT should also break up and create a separate and independent division or a subsidiary to handle the services related to the last mile sector.

30. Conclusion(3/3) Recently theres a news claims that Institute for Information Industry(III) is to develop Superwifi, which communicate in the white space of spectrum.

31. Thank you for listening