The Technology, Media and Telecommunications Review: Taiwan
With the trend of convergence between telecommunications and media, Taiwan's existing regulatory regime is out of date and even hinders the sound development of the TMT sector. To achieve the policy goals of deregulation and fostering market competition, the competent authority, the National Communications Commission (NCC), has formulated a set of policies and proposed amendments of mainly applicable laws to encourage new entrants and eliminate the hurdles for conducting TMT businesses.
Nevertheless, in the wake of emerging OTT services, which are not regulated under the current TMT regulatory regime, the difference in regulation level between the traditional telecom and broadcasting operators and OTT service providers has been raised by the former operators, and they are striving to introduce a policy wherein 'the same legal requirements should apply to services with the same nature'. In this context, the NCC is now also considering how to reach a balance between deregulation and fairness of competition.
i The regulators
Prior to 22 February 2006, the telecom and broadcasting sectors in Taiwan were regulated by the Directorate General of Telecommunications, the Ministry of Transportation and Communications (MOTC) and the Government Information Office, the Executive Yuan, respectively. With the trend of digital convergence, in the spring of 2006, the two authorities were consolidated into a new independent regulatory agency, the NCC, which consists of seven full-time commissioners appointed by the Premier of the Executive Yuan (i.e., the highest administrative body in Taiwan) with the consent of the Legislative Yuan (i.e., Taiwan's congressional body). These seven commissioners serve a four-year term, and may be reappointed for a second consecutive term.
The NCC's principal duties include, inter alia:
- developing relevant regulations and policies;
- processing applications for licences;
- overseeing the telecom and broadcasting industries;
- assignment of radio frequency spectrum;
- setting information and communications security standards and technical specifications; and
- regulating the content of broadcasting.
In order to foster digital and technological transformation and coordinate digital infrastructure development, the Executive Yuan is preparing a new bill to establish a dedicated agency for such matters and will integrate the Executive Yuan's cybersecurity department, the Ministry of Science and Technology (MOST) and industrial development functions of the NCC into this agency.
ii Main sources of law
The Telecommunications Act (TA) was the main source of law for the telecom sector in Taiwan until the Telecommunications Management Act (TMA) was enacted. In order to respond to industrial development trends and remove out-of-date restrictions, the TMA was passed by the Legislative Yuan on 31 May 2019 and came into force on 1 July 2020, with a three-year transition period (i.e., from 1 July 2020 to 30 June 2023). During the three-year transition period, existing telecom operators that have not registered with the NCC pursuant to the TMA will continue to be regulated by the NCC in accordance with the TA.
For the broadcasting sector, the main source of law is the 'Three Broadcast Laws': the Radio and Television Act (RTA), the Cable Radio and Television Act (CRTA) and the Satellite Broadcasting Act (SBA).
iii Regulated activities
Before the TMA was enacted, anyone who wanted to operate a telecom business had to apply for a licence from the NCC in accordance with the applicable laws and regulations.
Under the TA, telecom businesses can be divided into two categories: Type I telecom businesses (Type I telecom operators) and Type II telecom businesses (Type II telecom operators). Pursuant to Article 11 of the TA, Type I telecom operators refer to enterprises that instal telecommunications line facilities and equipment to provide telecom services. The aforementioned 'telecommunications line facilities and equipment' refers to network transmission facilities connecting the sending and receiving terminals, the switching facilities installed to be integrated with the network transmission facilities and the auxiliary facilities of both. Type II telecom operators are telecom operators other than any Type I telecom operator. Type I telecom operators are generally perceived as 'facility-based' telecom operators, while Type II telecom operators are generally perceived as 'service-based' telecom operators.
According to the Administrative Rules on Type II Telecommunications Businesses (the Type II Regulations), Type II telecom businesses can be further divided into two categories: ordinary Type II services and special Type II services. Special Type II services include international simple resale (including domestic long-distance calls and international calls), VoIP services, international communications services provided to non-specific persons by using an international private leased circuit (IPLC) and other telecom services designated by the NCC. Ordinary Type II services are Type II services other than any special Type II service.
Under the TMA, the mechanism of market participation has changed to voluntary registration. Only those intending to provide telecom services by using certain resources (such as radio frequencies or telecom numbers allocated by the NCC) or rights (e.g., mandatorily requiring other registered telecom operators to negotiate an interconnection agreement) conferred by the TMA need to register with the NCC. As a result, existing Type I telecom operators still need to be registered as a telecom operator under the TMA. Nonetheless, for most types of Type II telecom services, it would be possible for the service providers to choose not to register with the NCC.
With regard to a broadcasting business, the NCC's prior approval is also required for conducting any of the following activities: providing radio and television broadcasting services; providing cable television (CATV) services; and providing satellite broadcasting services.
iv Ownership and market access restrictions
Under the TA, for a Type I telecom operator, the total direct shareholding by foreigners shall not exceed 49 per cent, and the sum of direct and indirect shareholding by foreigners shall not exceed 60 per cent. Nonetheless, there is no restriction on foreign investments in a Type II telecom operator. Therefore, foreigner investors may acquire a 100 per cent equity interest in a Type II telecom operator. Under the TMA, only a registered telecom operator establishing a public telecommunications network by using radio frequencies or telecom numbers allocated by the NCC would be subject to those foreign ownership restrictions imposed on existing Type I telecom operators.
Foreign investment in a radio or television broadcasting business operator is prohibited. A foreign natural person is not allowed to be a direct shareholder of a CATV operator, and the total direct shareholding thereof by foreign legal persons shall not exceed 20 per cent, and the sum of direct and indirect shareholding thereof by foreigners shall not exceed 60 per cent. Direct foreign investment in a domestic satellite broadcasting business operator shall be less than 50 per cent of the total issued shares. Nonetheless, an offshore satellite broadcasting business operator may offer programmes in Taiwan by setting up a branch office or appointing a distributor, provided that the NCC has granted broadcasting approval.
v Transfers of control and assignments
In principle, all licences issued by the NCC are non-transferrable. If a Type I telecom operator would like to assign all or a substantial part of its business or assets, make investments in or merge with other Type I telecom operators, prior approval from the NCC would be required. On the other hand, if a Type II telecom operator wishes to be merged into another Type II telecom operator or other non-telecom operators, the Type II telecom operator also needs to file a consolidated business plan with the NCC for approval in advance. Under the TMA, if a registered telecom operator being assigned spectrum or holding a 25 per cent market share or more in a certain relevant market would like to assign its business or assets, make investments in or merge with other registered telecom operators, prior approval from the NCC would be required.
The NCC's approval would be required as well for transferring shares of a radio or television broadcasting business operator. If a CATV operator intends to assign its business, merge with or make investments in other CATV operators, the CATV operator has to file a written re-application and an updated business plan with the NCC for approval. In addition, neither CATV operators nor satellite broadcasting business operators shall commission the operation of broadcasting business to a third party.
Telecommunications & internet access
i Internet and internet protocol regulation
Purely internet-based services are not regulated in Taiwan; hence, no licence would be required. However, some communications services using both IP networks and the PSTN are still regulated under the Type II Regulations. For instance, under the Type II Regulations, VoIP services are defined as voice services received and transmitted through the internet. Nonetheless, the NCC holds the view that, in principle, providing voice communications services via the internet should not be deemed as a telecom service and should thus not be subject to the Type II Regulations. Only when a VoIP service is provided with an E.164 number (i.e., E.164 internet telephony services) or allows calling parties on the Internet to make calls to receiving parties in the PSTN by connecting to a fixed network switch and using a phone number leased from a telecom operator (i.e., PC to Phone), said VoIP service would be deemed as a telecom service and be subject to the Type II Regulations. Under the TMA, except for voice services through interconnection with foreign telecom carriers, a registered telecom operator is only allowed to connect or switch calls from another registered telecom operator.
Another relevant issue regarding Internet regulation that raises industry concerns is whether OTT audio/video streaming services should be regulated as traditional broadcasting services. Currently, there is no law specifically regulating online video streaming services. Nonetheless, it is worth noting that the NCC announced a bill of the Internet Audiovisual Service Management Act (the ASMA Bill) in August 2020 to solicit public comments. The ASMA Bill aims to regulate OTT audio/video streaming services and encourages OTT operators to apply for registration with the NCC on a 'voluntary' basis. Nonetheless, the ASMA Bill stipulates that the NCC may, after considering the number of users, turnover, clicks, traffic volume, market impact or other material public interests, require certain OTT operators (mainly large OTT operators) to register with the NCC. Registered OTT operators have to make regular reports on its operations in Taiwan and comply with burdensome requirements with respect to information disclosure. According to the current proposal, user-generated content (UGC) platforms (such as Facebook, YouTube or Instagram) will not be subject to the ASMA Bill because aforesaid content is mainly edited and uploaded by users rather than platform providers.
ii Universal service
The NCC is active in promoting the universal service. Under the Regulations Governing Telecommunications Universal Service (the Universal Service Regulations), the scope of universal service includes voice service and access to data communications. The former refers to the provision of uneconomic public payphone services and telephone services in uneconomic areas. The latter refers to the provision of access to data communications in uneconomic areas and to elementary and secondary schools and public libraries at a preferential rate. Since mobile broadband has become a fundamental part of the information society, besides traditional voice services and internet access services, providing ubiquitous wireless broadband access has become a key issue of universal service. In light of the foregoing, in 2019, the NCC revised the Universal Service Regulations to extend the scope of universal service to offering mobile broadband services in uneconomic areas.
Under the TA, only Type I telecom operators providing integrated network services, local network services, local leased circuits or long-distance leased circuits would likely be designated by the NCC to provide the universal service. Besides Type I telecom operators, Type II telecom operators providing simple voice resale services or VoIP services also have to make contributions to the Universal Service Fund depending on their sales revenue in the previous fiscal year so as to share expenses from the universal service.
Similarly, the TMA authorises the NCC to require registered telecom operators whose annual turnover exceeds a certain amount (according to the current proposal, NT$100 million) to make contributions to the Universal Service Fund so as to share expenses from the universal service.
iii Restrictions on the provision of service
Due to their nature as common carriers, telecom operators are required to provide telecom services in a fair and non-discriminatory manner, unless otherwise stipulated by law. However, in the wake of OTT's development, the issue regarding net neutrality has also been brought to the NCC's attention. Accordingly, at the end of 2017, the NCC proposed a bill of the Digital Communications and Broadcasting Act (the DCBA Bill), which will require digital communications and broadcasting service providers not to impose any 'obviously unfair' restriction on communications protocols and internet traffic control. Such restriction, if any, should be imposed based on the purposes of facilitating the optimisation of network transfer and access. However, it is still unclear whether and when the DCBA Bill will be enacted.
With regard to price controls, under the TA, only a Type I telecom operator's primary tariff (such as fees for internet access or mobile communications service and wholesale price of the items designated by the NCC) is subject to a price cap. The currently effective price cap provides that the aggregate price increases of a Type I telecom operator during any given year shall not exceed 'ΔCPI-X',2 where X is a coefficient set by the NCC. Moreover, the Administrative Rules on Tariffs of Type I Telecommunications Operators requires a market-dominant Type I telecom operator not to commit any act of unfair competition against other telecom operators.
Under the TMA, the NCC may adopt 'special control measures' to require a business operator that has 'significant market power' in a certain telecom service market to take certain actions, which include:
- publicising necessary information concerning the interconnection, networking components or using relevant telecom infrastructure;
- not discriminating against other telecom operators (i.e., the commercial terms provided to their subsidiaries, affiliates or business partners shall not be more preferential than those provided to other telecom operators);
- not engaging in cross-subsidisation, price-squeezing or any other act of unfair competition;
- providing access to interconnection, networking components or relevant telecom infrastructure; and
- preparing and publicising their interconnection/access service agreement templates.
Even if such business operator does not register as a telecom operator under the TMA, the NCC is authorised to adopt those 'special control measures' and thereby regulate such business operator.
Similar to telecom operators, CATV operators are deemed by the NCC to be quasi-common carriers. Therefore, Article 49 of the CRTA provides that CATV operators shall not reject, without any legitimate reason, requests from the local populace to subscribe to a CATV service.
Under the current regulatory regime, a price cap of NT$600 per month per household for CATV services was set by the NCC, which has not been adjusted since the 1990s even though the CPI has risen substantially in the past 20 years. In addition, CATV operators are required to report the subscription tariff to local government agencies within a month after 1 August every year. Local government agencies will examine and decide the actual subscription tariffs within the price cap set by the NCC (i.e., NT$600) and then make an announcement of its decision on subscription tariffs accordingly. Currently, the subscription tariffs of CATV operators are between NT$495 and NT$590. To offer multiple options for subscribers, the NCC proposed a bill of multiple subscription tariff schemes for CATV services, which requires CATV operators to adopt a tiered scheme and provide subscribers with different packages which contain different combinations of channels. Under the bill, the price cap of NT$600 remains unchanged; however, CATV operators may be exempt therefrom under some circumstances. On the other hand, in order to increase TV channel operators' bargaining power, the bill stipulates that CATV operators shall not, without any legitimate reason, reject the price set by a TV channel operator to charge subscribers on an à-la-carte basis when negotiating a licensing agreement with the TV channel operator.
iv Privacy and data security
The Personal Data Protection Act (the PDPA) is the general law regulating the collection, processing and use of personal data in Taiwan. The PDPA requires data controllers to have in place appropriate measures to prevent personal data from being stolen, altered, damaged, destroyed, lost or disclosed. The Enforcement Rules of the PDPA further provide certain technical and organisational measures that data controllers may consider adopting based on the principle of proportionality (i.e., based on the quality and quantity of the personal data involved). Moreover, under the authorisation of the PDPA, the central competent authorities may impose restrictions on cross-border transfers of personal data if, inter alia, such transfer will prejudice any material national interest or the country to which the personal data is to be transferred does not afford sound legal protection of personal data, thereby affecting the rights and interests of the data subjects. On 25 September 2012, the NCC issued a blanket order prohibiting telecom operators and broadcasting operators from transferring their subscribers' personal data to China on the grounds that the personal data protection laws in China are still inadequate. Nonetheless, based on the public information available thus far, no other competent authority has issued any order prohibiting a data controller from transferring personal data outside of Taiwan.
Pursuant to the Communication Protection and Surveillance Act (CPSA), telecom operators must enable the law enforcement authority to conduct monitoring and interception of communications on their systems. Such an obligation is imposed on all Type I telecom operators and certain Type II telecom operators. The CPSA stipulates that if there is sufficient evidence showing that the accused or suspect is involved in certain material crimes explicitly listed under the CPSA, and there is reasonable belief that the content of his or her communications is relevant to the case being investigated, and it is difficult to or there are no other methods to collect or investigate the evidence, an interception warrant may be issued. The CPSA also provides that when it is necessary to conduct surveillance on certain communications in order to collect intelligence on foreign (hostile) forces to protect national security, the head of the competent authority overseeing national intelligence may issue an interception warrant. Under the TMA, only telecom operators establishing a public telecommunications network and designated by the competent authority in charge of communications surveillance need to comply with the aforesaid interception requirements.
A telecom operator is entitled to refuse to provide telecom services only when the content conveyed through telecommunications appears to endanger national security or public order. In addition, to protect network security, telecom operators are required to regularly conduct self-inspection in accordance with the NCC's guidelines. Among other measures, telecom operators should set up an information security task force for establishing an information security management mechanism. On the other hand, in order to mitigate national information security risks, the Executive Yuan promulgated the Guidelines for the Government Agencies to Limit the Use of the Information and Communications Products that Endanger National Security (the Guidelines) in April 2019. In addition to government agencies, public schools, state-owned businesses and administrative legal persons, the Guidelines also require the central competent authorities to urge critical infrastructure providers and government-sponsored foundations under their supervision to comply with the Guidelines. At present, the Executive Yuan is still coordinating internally to provide a list of brands of information and communications products to be banned. Moreover, the TMA also authorises the NCC to ban the purchase and use of certain telecom equipment for national security reasons. In March 2019, upon the request of the competent authority in charge of national security, the NCC issued a letter to the Taiwan Network Information Center (TWNIC) requiring the TWNIC to cancel the domain name of a website named '31t.tw' for the reason that such website had violated Article 34 of the Act Governing Relations between the People of the Taiwan Area and the Mainland Area. Such website aimed at promoting China's united front measures and was the first one that was blocked by the NCC due to national security concerns. Given that the Taiwan government is seeking an effective way to address the issue of fake news, it is worth observing whether the NCC will adopt similar measures to limit access to fake news websites located outside of Taiwan.
In Taiwan, spectrum is assigned by the NCC in accordance with the Table of Radio Frequency Allocation and the Spectrum Supply Plan promulgated by the MOTC. If a telecom operator would like to use a specific frequency band to provide telecom services, it must file an application with the NCC for assignment of spectrum.
Under the TA, the use of spectrum is highly regulated. When applying for assignment of spectrum, the applicant has to specify the intended use of spectrum in its business plan. If there is any change, an application for such change would be required. Furthermore, unless otherwise stipulated by law (e.g., the NCC allows the transfer of the right to use spectrum between 4G operators with the NCC's involvement), the right to use spectrum is not allowed to be leased, transferred, lent or split. As a result, the value of spectrum is underestimated.
Under the TMA, the NCC deregulates the use of spectrum so as to have the spectrum used efficiently. Article 59 of the TMA provides that a telecom operator is allowed to transfer all or part of the spectrum assigned to it to another telecom operator, provided that it first submits the application and the transfer agreement to the NCC for its approval. The TMA also authorises the NCC to further promulgate relevant regulations in terms of the scope of the spectrum that may be transferred, the usage of spectrum after transfer, the qualification of transferees, restrictions and other management matters. It is widely recognised that the above-mentioned development would help to establish a secondary market for spectrum.
ii Flexible spectrum use
With the promising development of IoT services, the NCC notes that IoT services combined with the 5G service may substantially change the telecom industry and everyday life in Taiwan. To facilitate the development of IoT services, the NCC, according to the frequency band used and the quality of service required, divides IoT services into telecommunications grade IoT services (using Narrowband IoT, LTE for machines, and massive machine-type communications for future 5G services) and non-telecommunications grade IoT services (using Bluetooth, LoRa, Sigfox, Wi-Fi, Zigbee, etc.).
With regard to non-telecommunications grade IoT services, the original spectrums used were the 922–928MHz, 2.4GHz and 5GHz frequency bands, and no licence is required. On 22 February 2017, the NCC announced that the 920MHz–925MHz frequency band became available for low-power IoT services. On 2 July 2018, the NCC further announced that 839MHz–847MHz frequency band became available for advanced metering infrastructure. The spectrums used by telecommunications grade IoT services belong to the licence-required band and are similar to those obtained via auctions. The spectrums used in this regard are expected to be the frequency bands below 1GHz.
iii Broadband and next-generation services spectrum use
Under the TA, spectrum must be assigned along with a telecom licence and used within certain business scopes. For the purposes of increasing spectrum use efficiency, the TMA allows the NCC to set a spectrum sharing mechanism or reserve licence-exempt spectrums in advance while it releases spectrums so as to respond to the needs of innovative technologies and services. A telecom operator that has obtained spectrum may file an application with the NCC to provide all or part of its spectrum to other telecom operators for their use by splitting different sub-bands, time slots or sub-regions. Telecom operators may even combine and use their spectrums together. In addition, a telecom operator that has obtained spectrum may also file an application with the NCC to return the spectrum after the Executive Yuan makes a public announcement. The NCC will reauction and reassign such spectrum to another telecom operator, and the winning bidder would not be subject to the original usage restrictions.
iv Spectrum auctions and fees
The NCC held the spectrum auctions for 4G services in November 2013 (700MHz, 900MHz and 1,800MHz frequency bands), December 2015 (2,500MHz and 2,600MHz frequency bands) and November 2017 (1,800MHz and 2,100MHz frequency bands), respectively. A total of 610MHz bandwidth has been taken by five 4G operators in Taiwan. To avoid the spectrum being held by a small number of operators, and thus affecting the development of the telecom industry, the bandwidth that each 4G operator can hold is capped at one-third of the total 4G bandwidth and one-third of the total 2,100MHz bandwidth. As of 30 June 2020, there are more than 29 million 4G subscribers in Taiwan.
With regard to the spectrum usage fees, currently, the annual fee payable is NT$7.63 million per MHz. To encourage 4G operators to construct mobile broadband networks in remote areas, the NCC has amended the Charging Standards for the Radio Frequency Usage Fees by providing a 5 to 15 per cent discount if the coverage rate in remote areas reaches 85 to 95 per cent.
In August 2019, the NCC announced the spectrum that it plans to release for 5G services, including 270MHz in the 3.5GHz frequency band, 2,500MHz in the 28GHz frequency band, and 20MHz in the 1,800MHz frequency band (2,790MHz of bandwidth in total). The NCC held the auction of spectrums for 5G services since December 2019 and completed the spectrum auctions in February 2020. Total bids reached NT$138.08 billion. As of 29 July 2020, all five mobile operators had received their 5G licences from the NCC. The three leading mobile operators took the lead in launching their 5G services from the beginning of July 2020.
i Regulation on media distribution generally
The RTA and the SBA require a radio or television broadcasting business operator or a satellite broadcasting business operator to classify the programmes that it broadcasts in accordance with the Regulations Governing TV Programme Rating promulgated by the NCC, and that the programmes be easily identifiable and distinguishable from advertisements.
Radio and television broadcasting business operators and satellite broadcasting business operators are prohibited from broadcasting any programmes or advertisements invested in or produced by the government and related to a certain candidate in elections. If radio and television broadcasting business operators and satellite broadcasting business operators accept sponsorship, they shall clearly disclose the information concerning the sponsors before and after broadcasting programmes.
To develop local cultural industries, the RTA stipulates that locally produced programmes shall not be less than 70 per cent of the total programmes, and locally produced drama programmes broadcast in the time slots from 8pm to 10pm shall not be less than 50 per cent of the total drama programmes. If a satellite broadcasting programme supplier broadcasts dramas, films (including documentaries), variety shows or children's programmes in specific time slots designated by the NCC, the ratio of locally produced programmes to the total broadcasted programmes shall not be less than 25 per cent and the ratio of premier programmes thereto shall not be less than 40 per cent (decreased to 20 per cent in the case of broadcasting films).
The SBA also requires satellite broadcasting business operators not to broadcast any programmes containing embedded marketing placed by the government, or any programmes invested, produced, sponsored or subsidised by the government without disclosure of relevant information. Furthermore, placing embedded marketing in news-related or children's programmes is not allowed. When placing embedded marketing in other programmes, satellite broadcasting business operators shall not deliberately affect the content of such programmes, or directly encourage viewers to purchase specific products or services, or exaggerate the effect of such products; and shall disclose the information about the business operator who placed the embedded marketing before and after the programmes.
ii Internet-delivered video content
With the development of technology and communications, OTT services have not only gradually impacted the existing industries but have also brought various challenges for regulatory bodies. At present, the NCC does not regulate OTT services but has drafted the DCBA Bill, which introduces the spirit of internet governance and can be considered as a positive response to the needs of the times. As for OTT audio and video streaming services, the NCC announced the ASMA Bill in August 2020 to solicit public comments. The ASMA Bill aims to regulate OTT audio and video streaming services and encourages OTT operators to apply for registration with the NCC on a 'voluntary' basis. Registered OTT operators have to make regular reports on its operations in Taiwan and comply with burdensome requirements with respect to information disclosure. Moreover, the ASMA Bill will prohibit telecom operators, IDC service providers, CDN service providers, cloud service providers, etc. from providing services to Chinese OTT operators without obtaining permission from the Taiwan government and require them to cooperate with the relevant competent authority to block or adopt other necessary measures to limit access to those OTT services. Some TV programme content delivered through OTT video streaming services may raise piracy concerns, content owners are also urging the NCC to amend relevant laws and regulations, requiring telecom operators to block illegal websites where piracy content came from. Nevertheless, the NCC has yet to decide on adopting such an approach due to freedom of speech concerns.
The year in review
The TMA took effect on 1 July 2020 with a three-year transition period and is expected to result in a structural change to the telecom industry. Under the TA, the telecom industry was divided into various types of businesses based on whether business operators own relevant telecom facilities, thereby adopting a vertical regulatory regime, and a telecom service provider that does not have prior approval from the NCC would be subject to criminal sanctions and severe administrative penalties. However, the TMA adopts a horizontal regime, which separates the telecom industry into three levels: the infrastructure level (telecommunications networks), the operation level (telecom services), and the content/application services level. To encourage new entrants to enter the market and to give them the flexibility to conduct business, the TMA has changed the mechanism of market participation to a voluntary registration system. Telecom service providers that choose not to register with the NCC may still provide telecom services to consumers. Nonetheless, if a telecom service provider intends to obtain certain resources (such as radio frequencies or telecom numbers allocated by the NCC) or rights (e.g., mandatorily requiring other registered telecom operators to negotiate an interconnection agreement) conferred by the TMA, it would still need to register as a telecom operator under the TMA.
In furtherance of establishing telecom infrastructure, the TMA removes the punishment of unauthorised telecommunications networks under the TA, which means that entities may establish their own telecommunications networks according to their needs without obtaining prior approval from the NCC. Furthermore, entities may organise telecommunications networks by means of leasing others' telecommunications networks or using network slicing technologies instead of establishing their own telecommunications network. For the purposes of increasing spectrum utilisation efficiency, the TMA allows the NCC to set a spectrum sharing mechanism or reserve licence-exempt spectrums in advance when it releases spectrums so as to respond to the needs of innovative technologies and services.
Conclusions and outlook
i Telecoms sector
The TA was promulgated 60 years ago. Although it has been revised several times, its regulatory regime has become out of date and cannot respond to market changes caused by evolving IT technologies and the trend of digital convergence. In order to respond to emerging OTT services and formulate a more fair market competition environment, the NCC has taken the lead by drawing up the TMA and the DCBA Bill. The DCBA Bill is in essence a guide or code of practice that has no mandatory effect on market players. The DCBA Bill stresses service providers' and users' self-discipline, collaboration between the private sector and the public sector, as well as minimal use of government regulation, which introduces the spirit of internet governance and can be considered as a positive response to the needs of the times.
ii Media sector
Owing to the restriction whereby the government cannot invest in the broadcasting sector (including CATV business), any entity, so long as any of its shares are held by the government or a government-owned fund, would not be allowed to acquire a broadcasting business. Such restriction has prevented a number of proposed buyouts by listed companies in Taiwan because almost all of Taiwan's major listed companies have some portion of their shares purchased by government-owned funds. The NCC has been aware of that unreasonable restriction and has proposed amendments to rectify this hurdle for the acquisition of broadcasting businesses. Nevertheless, as this issue is quite politically sensitive, the political parties so far have not yet reached a consensus. As a result, recently several acquisition cases have been rejected by the NCC merely because of such unreasonable restriction, even where the NCC itself is of the opinion that the market would benefit from such acquisition.
It is worth noting that the NCC announced the ASMA Bill in August 2020 to solicit public comments. The ASMA Bill aims to regulate OTT audio and video streaming services and encourages OTT operators to apply for registration with the NCC on a 'voluntary' basis. Nonetheless, the ASMA Bill stipulates that the NCC may, after considering the number of users, turnover, clicks, traffic volume, market impact or other material public interests, require certain OTT operators (mainly large OTT operators) to register with the NCC. Registered OTT operators have to make regular reports on its operations in Taiwan and comply with burdensome requirements with respect to information disclosure. However, it is still unclear whether and when the ASMA Bill will be enacted.
1 Patrick Marros Chu is a partner, Vick Chien is a senior attorney and Sam Huang is an attorney at Lee and Li, Attorneys-at-Law.
2 '?CPI' refers to the most current annual rate of increase of the consumer price index (CPI) in Taiwan, as announced by the competent authority prior to each year of implementation.