WORLD TRADE  
ORGANIZATION  TN/S/W/18 
26 February 2004  
 
(04-0817) 
Council for Trade in Services 
Special Session Original:   English 
 
 
 
COMMUNICATION FROM THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, 
PENGHU, KINMEN AND MATSU 
 
Assessment of Trade in Services  
 
 
 The following communication, dated 17 February  2004, from the Delegation of the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Ma tsu is being circulated to the Members of the 
Council for Trade in Services. 
_______________ 
 
 
I. INTRODUCTION 
1. This submission has been prepared by the Se parate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu as our contribution to discussions  on “an assessment of trade in services in overall 
terms and on a sectoral basis with reference to  the objectives of this Agreement” pursuant to 
Article XIX:3 of the GATS under the Council for Trade in Services Special Session and for the 
reference of other WTO Members only.1 
2. The paper starts by touching brie fly on the liberalization of trad e in services in the pursuit of 
our broad economic interests, then moves on to elaborate specifically on our progress in telecommunications liberalization and how the results have affected the overa ll expansion of our trade 
in services.  The paper concludes by drawing on the lessons learnt to arrive at implications for our 
trade in services in general, and telecommunications services in particular. 
II. DEVELOPMENT AND LIBERALIZATIO N OF OUR SERVICE INDUSTRIES 
3. While our economic achievement has been driven mainly by export-oriented industrialization, 
manufacturing muscle alone can no longer be sole ly depended upon for our continued economic 
development.  At its record peak in the mid-1980s, the manufacturing sector accounted for nearly 
40% of our GDP, but by 2002 this figure had declined significantly to a mere 25.7%.  By contrast, the 
service sector’s share of GDP grew from 47% to 67.1% over the same period (see Table 1).  Similarly, since 1988, employment generated by the service sector has outpaced that of the manufacturing sector and in 2002 accounte d for 57.3% of employment overall. 
4. Looking at a breakdown of the whole services trade sector, three main sub-sectors stand out: 
banking, insurance and real estate; wholesale, retailin g and catering; and social and personal services.  
As shown in Table 1, these three areas together acc ount for nearly half (47.05%) of our total GDP 
                                                     
 
1 In no way does this paper prejudge any positions that the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu might take in the negotiations on Trade in Services. TN/S/W/18 
Page 2  
 
by 2002.  The transport, storage and communication sector has been the only sub-sector of the service industry to significantly increase its share of GDP, from 6.67% in 1998 to 8.31% in 2002
2. 
Table 1: GDP by Major Sector and Sub-Service Sector 
Unit:% 
 1986 1998 1999 2000 2001 2002 
Agriculture 5.5 2.5 2.6 2.1 1.9 1.9 
Manufacturing 39.4 27.4 26.6 26.4 25.6 25.7 
Construction 3.8 4.4 3.9 3.4 2.9 2.6 Industry 
Electricity, Gas and Water 3.5 2.3 2.2 2.2 2.2 2.3 
Services 47.3 63.0 64.3 65.5 67.0 67.1 
Wholesale, Retailing & Catering N.A. 17.30 17.38 17.51 17.46 17.19 
Transport, Storage & Communication N.A. 6.67 7.36 7.83 8.26 8.31 
Banking, Insurance & Real Estate N.A. 20.36 20.35 20.05 20.49 20.82 
Business Services N.A. 2.33 2.39 2.47 2.59 2.48 
Social and Personal Services N.A. 8.29 8.40 8.44 9.01 9.04 
Other Services N.A. 7.48 7.30 7.47 7.23 6.91 
Source: Council for Economic Pl anning and Development (2003) 
 
5. In the process of industrialization, several of our domestic service sectors were subject either 
to benign neglect or to heavy regulations.  As the economy has matured since the mid-1980s, 
emphasis on the promotion of the service sectors ha s increased, the underlying rationale being that as 
distinctive key elements a number of the service sect ors are indispensable to the further development 
of the economy and of society as a whole.  
6. In the 1990s, a greater emphasis was placed on ins titutional reform and soft infrastructural 
development, which were seen as the new comp etitive paradigms for evolving towards a highly 
liberalized economy in the Asian Pacific region.  Sub-sectors, such as telecommunications, finance, insurance, transport, and distribution have been the subject of an intensive liberalization process 
through regulatory reform and market opening, albe it applied at differing degrees.  More recently, 
efforts to liberalize the service sector have been stepped up even further in the hope of developing a 
more knowledge-based economy and of strengthening the logistics aspect of manufacturing activities.  
7. The transformation of the telecommunications service sector, as discussed below, offers an 
interesting case study of the impact of liberaliza tion, for two reasons.  First, the opening of the 
telecommunications sector arguably provided an ex cellent opportunity for foreign as well as domestic 
firms to penetrate an under-exploited market, leading to  a certain level of foreign participation in the 
local market.  In light of this, the liberalization policy as implemented has had a definite positive 
impact on inward investment, which in turn has profoundly affected the local telecommunications 
landscape.  Second, with the recent downturn in economic growth, the promotion of domestic and 
inward investment increasingly has become a key policy issue.  A particular point of interest, 
therefore, has been to see how much the liberali zation programme has mobilized, and will continue to 
mobilize, private investment and what the in troduction of private competition means to the 
development of the industry and economy as a whole. 
                                                     
 
2 It is worth noting that statistics on trade in serv ices are often drawn from international balance of 
payments data, which might give rise to some difficulties when it comes to detailed analyses and international 
comparisons.  TN/S/W/18 
 Page 3 
 
 
III. CASE STUDY:TELECOMMUNICATIONS LIBERALIZATION 
A. OVERVIEW  
8. Long gone are the days of telecommunications service sectors around the world being 
governed entirely by state monopolies. While global  liberalization and, in our particular case, 
accession to the WTO, have hastened the process, inte rnal forces have also worked to promote the 
liberalization of the services sector.  Specifically, telecommunications liberalization has been driven 
by the following strategic goals: 
(a) hastening investment in the telecomm unications infrastructure through the 
introduction of competition from private ope rators so as to achieve the goal of 
building an information society;  
(b) transforming our economy into a telecommunications hub that can host the operating 
centres of multinational companies (MNC) by the upgrading of our telecommunications service sector as a result of competition; and 
(c) helping our telecommunications enterprises acquire overseas market opportunities by 
bringing in foreign capital and expertise. 
9. To achieve these goals, it was necessary to  reform the legislation governing the 
telecommunications market.  This was accomplishe d through the passing of three telecommunications 
reform acts (Amendment to the Telecommunicati ons Act of 1958, Amendment to the Organizational 
Statute of the DGT [Directorate-General of Telecommunications] and establishment of the 
Organizational Statute of CHT [ChungHwa Telecom Company] in January 1996.) 
B. P
ROGRESS IN TELECOMMUNICATIONS LIBERALIZATION  
10. Before 1995, the scope for competition in our telecommunications services was limited and 
involved mainly the deregulation of the Customer Premises Equipment (CPE) market, access to telecommunications networks and value-added network (VAN) services.  However, new momentum 
was gained following the enactment of the thr ee telecommunications reform acts in 1996.  
11. One of the key steps was the separation of the commercial operations from the regulatory 
functions of the former DGT.  In July 1996, th e DGT was re-organized as an independent industry-
specific regulator.  At the same time, the CHT, a state-owned company, was established to assume 
responsibility for telecom services. 
12. The framework for reform of our telecommunications services sector divides 
telecommunications enterprises into two distinct t ypes.  A Type I telecommunications enterprise is 
one that installs telecommunications line f acilities and equipment in order to provide 
telecommunications services.  A Type II telecommuni cations enterprise is one that does not fit the 
description of a Type I enterprise.  In other wo rds, a Type I telecommunications enterprise is a 
facilities-based operator and a Type II telecomm unications enterprise is a non-facilities-based 
operator.  The extent of regulator y control differs between Type I and Type II enterprises.  A Type I 
telecommunications enterprise shall not operate w ithout a franchise and licence issued by the MOTC 
(Ministry of Transportation and Communications).  A Type II telecommunications enterprise shall 
apply to the DGT for an operating licence.  There is no limitation on foreign ownership for a Type II enterprise, but for a Type I telecommunications enterp rise, the total direct shareholding by foreigners 
may not exceed 49% and the sum of direct and indi rect shareholding by foreigners may not exceed 
60% (Table 2).  TN/S/W/18 
Page 4  
 
13. To achieve a fast roll-out of broadband networ ks and to provide incentives for local service 
providers to continuously invest and upgrade the te lecommunications network, we have deliberately 
adopted a phased approach towards liberalizati on, introducing facilities-based competition before 
service-based competition.  In other words, to avoi d any possibility of a “creaming off” effect, it was 
considered essential at first to support the sustainabl e development of facilities-based players that will 
compete vigorously and effectively in the marketplace and thus provide a full range of basic 
telecommunication services.  This will, in turn, lay the necessary foundation to support a plethora of 
innovative and equally vigo rous value-added services. 
Table 2: Regulatory Framework fo r Telecommunications Enterprises 
 
Industry Framework  Type I Enterprises Type II Enterprises 
A. Business Activities Own and operate telecom circuit 
facilities. Use telecom circuit facilities leased 
from Type I operators. 
B. Start-up of Services Franchise and operating licence issued 
by the MOTC  Operating licence issued by the DGT 
C. Foreign Capital Limitation Direct: 49%;  including indirect: 60% No limitation 
D. Retail Prices Control Price-Cap regulation applied 
Prior approval is required for dominant 
operator’s major services. 
Prior notification is applied for non-dominant operator and dominant 
operator’s non-major services. No regulation 
Source: DGT  
14. Since 1996, several milestones have  been achieved on the road to market liberalization in our 
telecommunications service sector.  Firstly, the libera lization of four kinds of mobile communications 
services (i.e. radio paging, mobile phones, trunke d radio and mobile data communications) was 
introduced in 1997 and subsequently 44 licences were  awarded. Secondly, the opening up of the 
satellite communications market, including mobile  satellite services (MSS), fixed satellite services 
(FSS) and satellite TV programme relay services, took  place in 1998.  Thirdly, four licences for fixed 
network services were issued in 2000. And last but not least, competition in the international 
submarine cable leased-circuit service was intr oduced in the same year. As a result, our 
telecommunications market had been fully opene d up to competition before our accession to the 
WTO.  In addition, five licences for the third generation mobile telecommunications services (3G) 
were issued in 2002, via a competitive multi-run bidding process.  Today, there are more than 530 operators providing basic and value-adde d telecommunications services (Table 3).   TN/S/W/18 
 Page 5 
 
 
Table 3: Competition Status of the Telecommunications Service Sector 
 
Services Year of Competition 
Introduction Total Existing Operators as 
of Sep. 2003 
2G 1997 6 Mobile 
phone  3G 2002 1* 
Radio paging 1997 5 
Mobile data 
communications 1997 6 
Trunked radio 1997 12 
Digital low-powered 
cordless phone 
(1900MHz) 1999 1 Mobile  
CT-2 1995 2 33 
MSS 1998 0 
FSS 1998 13 Satellite  
Satellite TV program 
relay services 1998 6 19 
Fixed network 2000 4 
Domestic Leased Circuit 2000 36 T 
Y 
P 
E 
I 
Fixed  
Submarine cable 2000 3 43 
Internet Access 1995 166 
Voice Simple Resale 2001 49 
I-phone 2001 41 T 
Y 
P 
E 
II Other Value-Added services Since 1987 180 436 
*The first 3G operator launched its services on 29 July, 2003. 
Source: DGT 
 
15. Some market segments, notably the mobile  phone and internati onal telephone services 
markets, are witnessing viable competition, while others are experiencing market stagnation or are 
waiting for market competition to take root.  This  has much to do with the market overlap of 
competing networks and the increasingly blurred bo undaries between them.  For instance, the opening 
of the radio paging service initially met with an as tonishingly high penetrati on rate, with the number 
of subscribers reaching an all-time peak of 4.32 m illion within two years. But by September 2003, this 
figure had shrunk to 1.46 million.  Its demise can be  mainly attributed to the success of mobile phone 
services.  On the other hand, while the dig ital low-powered cordless phone (1900MHz) service 
(known as PHS) functions in a similar way to the mobile phone services, its operator has still been able to find a market niche and gain a strong ma rket foothold, capturing more than half a million 
subscribers to date.  
16. During our accession process to the WTO, we ma de additional commitments to accommodate 
all the provisions of the WTO Basic Telecommunica tions Reference Paper.  Staring with of  
amendments to the Telecommunications Act in 199 6, we embarked on a programme of regulatory 
reform and established certain measures to prohibi t anti-competitive practices, e.g. interconnection 
regulation, an accounting separation system, a univers al service scheme and price-cap tariff regulation 
(see Appendix).  Moreover, in the true spirit of  transparency, we introduced a public comments 
system.  In January 1998, we set up a Fixed Network Liberalization Task Force to develop the 
licensing framework for fixed network services.  Th is task force comprised government officials, 
academic experts, industrial practiti oners, consumers, fair trade advocates and equipment vendors.  It TN/S/W/18 
Page 6  
 
took one year for the task force to finalize th e licensing terms and cond itions for fixed network 
services.  Meanwhile, the regulatory regime has been gradually fine-tuned to ensure fair competition.  
For example, in response to the deregulation of fixed network services, the Interconnection 
Regulation for Mobile Communications was amende d to extend its covera ge to fixed network 
communications and was renamed in November 1999, the Interconnection Regulation for Type I 
Telecom Enterprises. 
C. I
MPACT ON THE DOMESTIC SCENE  
17. Two immediate consequences of telecommunicati ons liberalization have been the opening up 
of market access and the subsequent proliferation of  private operators.  Following the passing of the 
three telecom reform acts, some 95 firms had become Type I operato rs by the September of 2002 and 
the number of Type II operators had reached 436. At the same time, telecommunications revenues 
increased their share of total GDP from 2.11% in 1997 to 3.42% in 2002, which is on a par with the 
OECD average of 3.35% (OECD, 2003, p.61).  
18. As a result, the industrial landscape has been ch anged fundamentally, as outlined in Table 4.  
Perhaps the most impressive outcome  has been the rapid growth in penetration rates of mobile phone 
services and broadband Internet access.  Before liber alization, there existed only about 1.49 million 
subscribers to mobile phone services, amounting to a pe netration rate of 6.86% as of the end of 1997.  
Thanks to fierce market competition and aggressive promotional activities, we have experienced an 
explosive growth in subscriptions for the services over the last six and half years, bringing the penetration rate in September 2003 to 111.97%, w ith a CAGR (Compounded Annual Growth Rate) of 
67.12%.  It follows that mobile phone services ha ve outgrown fixed network services and become the 
major sub-sector within the local telecommuni cations service sector, accounting for 56% of all 
revenues in this market.  In addition, due in part to the opening of Type II a nd fixed network services, 
the number of Internet users has soared, from 1.66 million in 1997, to 8.76 million as of September 
2003, reaching an unprecedented penetra tion rate of 39% for Internet services.  Within this figure, 
30.96% subscribe to broadband Internet services.  Consequently, the share of total market value 
accounted for by data business has grown in five ye ars from 4% to 18%. Moreover, the total telecom 
market size has almost doubled from NT $ 176.2 billion to NT$ 333.7 billion. 
19. Another result worth noting is that the incumb ent’s market share in the mobile phone services 
sector has now dropped to a level of around 30% and even its total number of subscribers has been 
surpassed by that of a single private operator.  In sharp contrast, the market for the fixed network 
service sector remains overwhelmingly dominated by the previous incumbent, with its market share 
for local call subscription being as high as 98.61% as of September 2003.  Having said that, market 
competition is now taking root in the internationa l call services segment, with three new entrants 
having captured a combined total of about 40% of market revenues during the first half of 2003. 
Table 4: Effects of Our Telecommunications Liberalization  
 
Item Category 1997 Sep. 2003 
Operators  Type I (FBO) 
Type II (SBO) 1 
80 95 
436 
Subscribers (Millions) Local Phone 
Mobile Phone 
Internet 
Broadband Internet 10.86 
1.49 
1.66 
… 13.29 
25.28 
8.77 
2.72  TN/S/W/18 
 Page 7 
 
 
Item Category 1997 Sep. 2003 
Penetration Local Phone (pop) 
Mobile Phone (pop) 
Internet (pop) 
Broadband/Internet 49.96% 
6.86% 
8.00% 
… 58.86% 
111.97% 
39.00% 
30.96% 
Total  Revenues NT$ Billions 
Fixed Network Telephony 
Mobile Phone 
Data 176.2 
74% 
22% 
4% 333.7 (2002) 
26% 
56% 
18% 
Total revenues to GDP (%)  2.11% 3.42%(2002) 
Average Price of IDD per minute (NT$) 29.94 6.22(Nov.2003) 
Source: DGT 
 
20. Additionally, the liberalization of mobile phone  services has borne fruit in other ways within 
the sector.  Viable market competition has led to phased decreases in mobile phone service tariffs, of 
50% at the outset of liberalization and 40% in the year 2000.  Consumers have benefited from 
significant cost savings in connection fees, monthly subscription charges, airtime prices and handset costs.  For example, during 1998 and 1999, cost savings for consumers of mobile phone services were 
estimated at NT$ 4.8 billion for connection fees, NT$ 16.3 billion for monthly rentals and NT$ 252.9 
billion for handset costs (CIER, 2000).  In fact, our  mobile phone service tariffs are relatively low.  
According to the ITU (International Telecommunica tions Union), out of 52 high-income economies, 
we have the 11
th cheapest tariff rates for mobile phone services.  Among OECD member economies, 
only South Korea, Australia and Canada outperform us in this respect.3  
21. It can therefore be argued that, out of all the service sectors liberalized, the mobile phone 
segment has been the most successful in triggeri ng market competition.  This success may be 
attributed to several underlying factors at the time of market liberalization.  Firstly, hundreds of 
thousands of residents had already been placed on a waiting list for mobile phone services due to the 
failure of the then state-monopoly operator to meet the mounting demand.  This huge backlog 
provided an immediate ready-made market for the new entrants.  Secondly, delays in equipment 
procurement caused by the bureaucratic red tape of  the previous incumbent operator allowed the new 
entrants to consolidate these early market penetrat ion gains.  And thirdly, we adopted the calling-
party-pay pricing system, which seems to have furthe r encouraged residents to take advantage of the 
services.  
22. The liberalization of fixed network services, wh ich took place in the year 2000, has produced 
less impressive results, though a few positives have emerged.  For example, telephone density per 100 
inhabitants climbed from 54.52% in 1999, to 58.86 % by September 2003.  More significant has been 
the impact on international call services.  Despite the economic downturn in recent years, the volume 
of outgoing international calls has increased si gnificantly, from 958.26 million minutes in 1999 to 
2.15 billion minutes in 2002.  This trend has undoubtedly been given an extra boost by the steady decline in average tariff rates for interna tional call services, as shown in Figure 1.  
                                                     
 
3 The average annual exchange rate for NT$s per US$ 1 over the period 1997-2002 ranged from 28.66 
to 34.58, as shown below: 
Per US$ 1 
 1997 1998 1999 2000 2001 2002 
Exchange rate NT$s 28.66 33.44 32.27 31.23 33.80 34.58 
 TN/S/W/18 
Page 8  
 
29.927.7
24
20.8
12.04
8.516.22
05101520253035
1997 1998 1999 2000 2001 2002 Nov. 2003average tariff rates per minute
NT$
 
Source: DGT 
 
Figure 1: Average Tariff Rates Per Mi nute on International Call Services 
23. The entry of private operators has resulted in a huge amount of realized or anticipated 
investment in the telecommunications services industr y.  In terms of physical capital investment, 
according to data gathered by the regulator, investme nt in facilities by all of the operators generated 
on average an annual capital formation of NT$ 103 billion during the period 1997-2000 rising to NT$ 
142.09 billion annually during the pe riod 2000-2002.  Consequently, the share of GDP accounted for 
by telecommunications investment increased from 0. 59% in 1997 to 1.2% in  2001 and to 1.25% in 
2002. 
24. Additionally, in terms of local industrial deve lopment, telecommunications liberalization has 
produced a vast array of spillover effects, such  as the unleashing of both price and non-price 
competition.  The telecommunications sector has beco me an important customer, for example, for the 
advertising industry, gene rating new revenue for the latter of mo re than NT$ 3 b illion annually over 
the last five years.  Furthermore, the fast expansion of telecommunications services has led to an impressive proliferation of distribution and service chain stores.  Indeed, a study commissioned by DGT (CIER, 2000) has revealed that an investment of NT$ 1 in the telecommunications service sector 
is estimated to have brought about a growth in GDP of NT$ 2.89; and an investment of NT$ 1 million 
in this sector is estimated to have generated 0. 65 employment opportunities.  In other words, the 
above-mentioned average annual investment of NT$ 103 billion during the period 1997-2000 would 
have generated a bout 67 000 jobs. 
25. Moreover, the latest assessment of the economic impact of our telecommunications 
liberalization (CIER, 2003) has shown that consumer s over the last three years have benefited from a 
surplus worth NT$ 222.49 billion and NT$ 23.69 billion from competition in the mobile  phone and 
international call services markets respectively. 
D. FOREI GN PARTICIPATION AND LOCAL INDUSTRIAL UPGRADING  
26. Despite the 49% limit on foreign direct owners hip of Type I telecommunications operators, a 
number of foreign firms have gained a market foothold here.  Prominent among these are AT&T 
Wireless, NTT DoCoMo, GTE, Japan Telecom, Southwest Bell Telecom, Singapore Telecom, and 
Bell Canada.  In fact, out of the 18 Type I operato rs with foreign investments, two have a foreign 
capital ratio of 60% (including indirect ownership), and some 10 operators have  a foreign capital ratio  TN/S/W/18 
 Page 9 
 
 
greater than 10%.  For Type I operators as a w hole, foreign capital stock amounted to NT$ 41.88 
billion in 2002, and this figure climbed further to NT$ 53.65 billion in 2003, registering an increase of 
28%, due in part to the liberalization of the th ird generation mobile telecommunication services.  
27. In fact, the liberalization of our telecommunications services has created considerable 
business opportunities for both foreign and domestic enterprises.  Mobile communications is the 
leading and perhaps most influential example.  Seven different kinds of  related major business 
opportunities, including mobile communications itsel f, can be identified as having grown out of 
liberalization, as illustrated in Figure 2.  
 
 
Source: Chen (2000). 
Figure 2: Business Opportunities Arising from the Liberalization of Our Mobile 
Communications Sector 
28. From the outset, due to the lack of indigenous supply, it was foreign firms that had the main 
chance to benefit from the above-mentioned business opportunities, capturing the lion’s share of such 
market segments as system equipment and wireless CPE, management systems and software systems.  Having said that, our local firms have not only gained plenty of business opportunities related to 
distribution services and advertising, but they have also been able to become important players in 
contract manufacturing work for the globally branded marketers of handsets, thanks mainly to the global trend in telecommunications liberalization.  Specifically, the volume of handsets manufactured 
by our local firms increased from 9.6 million in 2000 to 28.6 million in 2002, leading to a rise in the 
value of production from US$ 771 million to US$ 1.94 billion respectively.  It has been forecast that 
2003 will see a new peak of US$ 3.14 billion reached in terms of production value (CIER, 2003). 
29. On balance, there are strong grounds for arguing th at foreign participation in the local market 
arising from telecommunications liberalization helps to promote the overall efficiency of the 
telecommunications service sector.  The developmen t of the sector may also have further positive 
spill-over effects on other parts of the economy,  including the manufacturing sector, hence 
contributing to the growth of total GDP a nd generating additional consumer benefits.  
IV. CONCLUSIONS 
30. From our experience of liberalizing Trade in Services, including telecommunications 
services, several important lessons have been learnt.  
31. Firstly, the services sector has the potential to act as an important driver of growth in the 
medium to long term, if the proper sequencing of liberalization and deregulation is undertaken.  As Management 
Systems 
Software Systems Financial Consulting 
& Financin g Mobile Communications 
ServicesSystem Equipment 
& CPE 
Distribution serviceAdvertising TN/S/W/18 
Page 10  
 
the liberalization of services can involve a fairly pa inful, yet short, period of adjustment, it must be 
managed appropriately.  An important caveat sh ould be added here: services liberalization in 
particular requires that the institutional and regulat ory environment be strengthened both prior to and 
during the process of liberalization.  
32. Secondly, central to the telecommunications liberalization is the introduction of efficient and 
effective competition into the market under an appr opriate regulatory framework.  This requires much 
more than just the simple opening of the market .  In fact, it involves striking a balance between 
deregulation and re-regulation.  W ith this, our telecommunications liberalization has been bringing 
benefits to us in terms of more choice, great er innovation and higher quality of services at reduced 
prices.  Furthermore, as well as aiding the teleco mmunications sector specifically, it has positive spill-
over effects on other parts of the economy. 
33. Thirdly, a key factor in our telecommunications service sector liberalization was the 
separation of the regulator from the state-run services provider; the regulatory body had to be separate 
from and not accountable to any supplier of telecommunications services.  This is also the way to 
ensure that the decisions of regulators and the pr ocedures developed by them, are impartial as far as 
all market participants are concerned.  In add ition, efforts we are currently making include the 
establishment of a new converged independent regu lator outside the jurisdiction of the competent 
ministry, in order to eliminate potential conflicts of interests between indus trial promotion and open 
competition and to tackle the trend of converg ence between telecommunications and broadcasting 
sectors. 
34. Fourthly, the regulator has been advised to ta ke into consideration both public opinion and 
international benchmarks so as to develop more transparent practices that can better balance the 
different, and sometimes conflicting, interests of th e services sector.  A public consulting process has 
enabled regulators to identify conflicting views among the industries.  Although it is almost 
impossible to satisfy everyone fully, the consultin g process at least enables the regulator to make 
more equitable decisions. 
35. And lastly, we have found the need for mechan isms to safeguard effective competition to be 
established in the deregulation of our telecommuni cations market, and these  should be constantly 
reviewed and adjusted to market developments a nd technological innovations.  In the end, the ever-
changing state of technology in this market can easi ly render the regulatory regime outdated, and this 
characteristic feature alone demands continuous an d systematic fine-tuning of the deregulatory and 
regulatory framework.   TN/S/W/18 
 Page 11 
 
 
APPENDIX: MILESTONES IN THE PROCESS OF DEREGULATION  
AND REREGULATION  
 
 
1996 Feb.: Amendment to Telecommunications Act of 1958 
 July: Re-organization of DGT 
 1997 Jan.: Mobile Phone Services opened  Feb.: Paging Services opened  Mar.: Mobile Data Services opened 
 Apr.: Trunked Radio Services opened 
Oct.:  Stipulation of Administrative Regula tions of Network Interconnection for Mobile 
Communications 
 1998 May: Opening up of Satellite Up -Link / Down-Link Services market  
 Aug.: Opening up of VPN Services market 
 Sep.: Opening up of Mobile Sate llite Communications Services market 
 Dec.: Opening up of Fixed Satellite Communications Services market  1999 Nov.: Amendment to Telecommunications Act of 1996 
Nov.: Revision of “Administrative Regulati ons of Network Interconnection for Mobile 
Communications”, and renamed as “Adm inistrative Regulations for Network 
Interconnection between Type I Telecommunications Enterprises” 
 2000 Feb.: Liberalization of Domestic Leased-Circuit Services  Mar.: Liberalization of Fixed-line Communications Services 
Aug.: Stipulation of Accounting Standa rds and Regulations for the Type I 
Telecommunications Enterprises 
 Sep.:  Administrative Regulation Governi ng Tariffs of Type I Telecommunications 
Enterprises 
 Dec.: Liberalization of International Submarine Cable Leased-Circuit Services 
 
2001 June: Stipulation of Regulations on Telecommunications Universal Service 
 July: Licensing of Voice Simple Resale   2002 Jan.: Our Accession to WTO Membership 
 Feb.:  Five licences for 3G services issued 
 2003 May: Amendment to Telecom Act of 1999  July: Liberalization of MVNO Services  
Sep: Revision of “Administrative Regula tions for Network Interconnection between 
Type I Telecommunications Enterprises”, and renamed as “Regul ations Governing 
Network Interconnection among Telecommunications Enterprises” 
 TN/S/W/18 
Page 12  
 
 
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