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Broadband Business In Taiwan An ADSL Case Study in Chunghwa Telecom Chi-Mau Sheih Chunghwa Telecom

Broadband Business In Taiwan An ADSL Case Study in Chunghwa Telecom Chi-Mau Sheih Chunghwa Telecom. Contents. Overview of Telecom Services in Taiwan Overview of Chunghwa Telecom A Case Study – ADSL in CHT A Coming New Era for CHT Conclusions. Overview of Telecom Services in Taiwan.

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Broadband Business In Taiwan An ADSL Case Study in Chunghwa Telecom Chi-Mau Sheih Chunghwa Telecom

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  1. Broadband Business In Taiwan An ADSL Case Study in Chunghwa Telecom Chi-Mau Sheih Chunghwa Telecom ATIE2002/11/30

  2. Contents • Overview of Telecom Services in Taiwan • Overview of Chunghwa Telecom • A Case Study – ADSL in CHT • A Coming New Era for CHT • Conclusions ATIE2002/11/30

  3. Overview of Telecom Services in Taiwan • Population: 22 millions • GNP per Capital: US$ 12,982 • Fixed-wired lines per 100 Population: 57.9 • Cellular subscribers per 100 Population: 104.7 • PC penetration rate: 0.61 per household • Internet users/penetration rate: 8 M / 36% • Fully Opened Telecom Market - 4 Fixed Network Operators, 6 2G-Mobile Operators, 5 3G-Licenses Issued, … ATIE2002/11/30

  4. Market share(%) Unit : 1000 users user user Overview of Telecom Services in TaiwanDSL and Cable Modem in Taiwan ATIE2002/11/30 ATIE2002/11/30 4

  5. Overview of Telecom Services in TaiwanTaiwan is the Top 2 DSL Density Country in the World SOURCE : Point Topic, Aug. 2002 ATIE2002/11/30

  6. Overview of Chunghwa Telecom • Date of Establishment : July 1st, 1996(reformed from DGT) • Total Capital : NT$96.5bn (US$2.8bn) • Total Asset : NT$455.7bn (US$13bn) • Total Liability : NT$77bn (US$2.2bn) • Stockholders’ Equity : NT$378.7bn (US$10.8bn) • Total Revenue for year 2001 : NT$182.2bn (US$5.2bn) ATIE2002/11/30

  7. Overview of Chunghwa Telecom CHT: a Full Services Telecom Operator Total Revenues (Year 2001) US$ 5.20 bn • Leading Fixed-line Operator Local 30% DLD 10% ILD 11% Internet & Data 16% Mobile 32% • #1 Mobile, #1 ISP (HiNet) and #1 Broadband Access ATIE2002/11/30

  8. Overview of Chunghwa Telecom Statistics of Services (Sep, 2002) Business Customers / Volumes Market Share 12.95mn Local 99.6% 5.2bn Minutes FixedLine Domestic 92.6% (2002 Jan~Sep) 1.0bn Minutes International 66% (2002 Jan~Sep) Customers：30.4% Mobile 7.23mn Revenue：34.7% ISP(HiNet) 40% 3.15mn Broadband Access(HiNet) 1.6mn 81% ATIE2002/11/30

  9. Fixed line Mobile Internet and data Others Overview of Chunghwa Telecom Migrating Rapidly to a Growth Portfolio Revenue breakdown 1% 1% 100% 13% 16% Data Data 80% Mobile 26% 32% Mobile 60% 40% 60% 51% 20% Fixed Fixed 0% Jan - Dec 2000 Jan - Dec 2001 Growth biz now represents 55% of our business (June,2002) ATIE2002/11/30

  10. Overview of Chunghwa Telecom The Growth of Key Services 7,300 7,000 6,233 Mobile 6,000 Subscribers(’ s) ooo 4,662 5,000 ISP(HiNet) 3,423 3,480 4,000 2,748 3,000 2,180 2,103 2,000 2,000 1,296 920 840 1,000 ADSL 99 0 1998 1999 2000 2001 2002 ATIE2002/11/30

  11. ADSL in CHT ADSL - Values for Customers 1. Faster speed 2. Always on 3. Frees up phone line 4. Access to better Contents ATIE2002/11/30

  12. HiNet Core Net. PC ATU-R DSLAM ADSL in CHT ADSL Access NetworkArchitecture ATM Network BRAS PPPoE Client username@hinet.net RADIUS Server ATU-R: ADSL Remote Terminal DSLAM: Digital Subscriber Loop Access Multiplexer BRAS：Broadband Remote Access Server RADIUS Server : Remote Access Dial-in User Service Server Authentication Authorization Accounting ATIE2002/11/30

  13. ADSL in CHTADSL - Target Customers All three markets of Residential Consumers, Business and Government are addressed • Residential Consumers • Business • Government ATIE2002/11/30

  14. ADSL in CHTADSL product portfolio ATIE2002/11/30

  15. ADSL in CHT ADSL Subscribers in Terms of Rate 10,000,000 1,000,000 100,000 10,000 1,000 100 10 1 512k/64k 768k/128k 1.5M/384k 3M/512k 6M/640k 512k/512k 1.5M/64k Subs 1,560,000 65,000 58,000 450 130 17,000 16,000 % 91% 4% 3% 1% 1% (Oct., 2002) ATIE2002/11/30

  16. Broadband access revenue and subscribers REVENUE CMGR = 7% 900 1,600 800 1,400 REVENUE CMGR = 7% 700 1,200 600 1,000 Revenue (NT$m) 500 Subscribers ('000s) 800 400 600 300 400 200 200 100 0 0 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2001 2002 Revenue Subscribers Source: CHT Phenomenal growth in broadband ATIE2002/11/30

  17. Price Value Slot Uniqueness Risk ADSL in CHTSPURADSL comes with Key Successful Factors • Right Time Slot • Acceptable Price • Uniquely Designed for ILECs • Low Risk ATIE2002/11/30

  18. ADSL in CHTSPUR – time Slot • Right Time Slot PRICE • Customers need it, vendors have it, CHT cannot wait for it • Time to Mass • Aim it, time to it： • Global Main Market Trend Value SLOT Uniqueness RISK ATIE2002/11/30

  19. ADSL in CHTSPUR - Price • Acceptable Price • Meet customer’s expectation  CATV : entertainment only • Monthly Rental NT$600 • 4 M subscribers  CABLE MODEM : NT$800+  ADSL : entertainment + Internet • NT$1000+ PRICE Value SLOT Uniqueness Risk ATIE2002/11/30

  20. ADSL in CHTSPUR - Uniqueness • Uniqueness Every ISP needs ADSL CHT Telephone Coverage near 100% (ADSL Coverage 98.75%) ADSL is Uniquely Designed for ILEC CHT is a National-wide Provider of ADSL Price Value Slot Uniqueness Risk ATIE2002/11/30

  21. ADSL in CHTSPUR - Risk Price • Low Risk Value Slot Uniqueness • ISP : Dial up  ADSL • Modem  ATU-R • Business: Symmetric ADSL • ModemATUR & DSLAM Risk ATIE2002/11/30

  22. 2M lines in Service (Dec., 2002) 1.7M lines in Service (Oct., 2002) Procurement of 1.16M lines (Feb., 2002) 1M lines in Service (Jan., 2002) 710K lines in Service (Aug., 2001) Procurement of 1.27M lines (Mar., 2001) Procurement of 230K lines (Jan., 2001) Procurement of 240K lines (Mar., 2000) Broadband Accessibility by Elementary and High Schools (Jun., 1999) Procurement of 20K lines (Feb., 1999) Field Trial in University Campus (Nov., 1997) ADSL in CHT ADSL Road Map in CHT ATIE2002/11/30

  23. 400,000 100% 95% 300,000 90% 200,000 85% 80% 100,000 75% - 70% 2001 Q1 2001 Q2 2001 Q3 2001 Q4 2002 Q1 2002 Q2 2002 Q3 Applications 107,267 174,331 229,380 265,863 232,364 272,532 341,113 82% 94% 94% 97% 99% 100% 100% Provision rate Applications % of Provisioning within 7 days ADSL in CHT Provisioning Statistics of ADSL Installed • 5,000 Lines/day • Auto provisioning system • User self-diagnosis • Call Center ATIE2002/11/30

  24. ADSL in CHTHiNet– the Best ISP in Taiwan HiNet - the all seasons best award winner • Best Choice of IT Managers: 1997,1998,1999,2000,2001 • Best Choice of users: 1997,1998,1999,2000’2001 • Best ADSL: 2001 (1997) (1998) (1999) (2002 IT Outsourcing) (2000) (2001) ATIE2002/11/30

  25. ADSL in CHTWireless LANand ADSL • 802.11b - 11Mb/s in 2.4 GHz - 4,500+ hot spots (July, 2002) - 10,000+ home/business (Nov., 2002) • Complement to ADSL Access solution = WLAN + ADSL ATIE2002/11/30

  26. A coming new era for CHTBright Future -- e-Taiwana View from CHT Taiwan has set a 6-year “e-Taiwan” project, Telecom related issues including: • 6M broadband users • 95% FTTC coverage • 1,250Gbps island-wide backbone bandwidth • 250Gbps international bandwidth • 1.15M Wireless LAN users ATIE2002/11/30

  27. A coming new era for CHTEnhanced BB Services • More bandwidth, more applications Entertainment Contents New Applications Household Electronic Entertainment Home Networking BB Access ATIE2002/11/30

  28. Pure Fibre Future Today Hybrid Fibre/Copper FTTH Enhanced Copper FTTB + ADSL/VDSL ADSL ISDN VoicebandModem A coming new era for CHT CHT is on the Way to FTTH ATIE2002/11/30

  29. Conclusions • ADSL is successful and to be growing to 3 millions in 2003 in Taiwan • ADSL is growing, dial-up is fading out • Holding time is getting longer, from 20~30 min to 100~120 min • ADSL is a strategy to transform an ILEC to an NGN Telco • Before FTTH, ADSL or xDSL is the best way to the market • CHT has successfully leveraged ADSL in various aspects • e-Taiwan project will promote B2C, B2B, G2B, G2C business and CHT is the key player ATIE2002/11/30

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