Taiwan’s Telecom Industry Enters the 5G Era

Following a knockout spectrum auction that ended earlier this year, Taiwan’s telecom operators have moved quickly to develop nationwide 5G networks, roll out 5G-specific applications and content for consumers, and begin partnering with other industries on a wide range of vertical applications.

2020 is the Year of 5G in Taiwan. While it may seem like old news to some, 5G’s potential is still gradually being unlocked across the island and among its various industries. The transition to this new generation of mobile technology is being led for the most part by Taiwan’s three biggest telecom operators – Chunghwa Telecom, Far EasTone, and Taiwan Mobile.

Yet today’s telecommunications are no longer just about mobile technology or merely connecting people to one another. Telecom companies and their partners are now focusing a greater amount of attention to consumer applications, such as a wide range of video, audio, and other entertainment services. They are also exploring 5G-enabled solutions for enterprise and government clients in areas such as self-driving vehicle technology, smart healthcare, and smart manufacturing.

Taiwan’s “big three” telecom operators, as well as two other major firms, took part this year in one of the world’s most expensive spectrum auctions, bidding a combined US$4.7 billion on spectrum in the 3.5 GHz, 28GHz, and 1,800MHz frequency bands. Adding to those enormous costs, these companies must now source and deploy thousands of 5G base stations around the island. According to Kelly Hsieh, vice president of research at the market research firm TrendForce, construction of these base stations can cost around NT$2.5-3 million (US$87,000-100,000) each, three times as much as building a 4G base station.

And while some in the industry initially felt some pressure from the Taiwan government’s zealous push to develop an island-wide 5G ecosystem fast and early, the major players were off to the races as soon as the spectrum auction was complete. Chunghwa Telecom has announced plans to construct 3,000 5G base stations by the end of 2020, while Far EasTone and Taiwan Mobile are each aiming for 2,000 – with thousands more planned for the next two to three years.

Speaking to Taiwan Business TOPICS last September, Taiwan Mobile President Jamie Lin said that the government’s expedited timeline for 5G seemed rushed and might raise issues for service providers scrambling to lock down resources and begin laying plans to deploy their networks. But he noted this October that even though there was still some concern right after the auction concluded, the process had turned out to be relatively well-timed.

“In the first month after we launched our 5G service, there were only two or three 5G-compatible phones on the market, so I’m sure many in the industry were feeling it was a bit too early,” says Lin. “But by August, more than 10 handsets had been introduced, and our 5G signup grew more than 20% from the first month.”

Lin says that because Taiwan was not part of the initial batch of countries that adopted 5G technology, equipment costs were about half that incurred by, for example, South Korean telecom operators. “We could have waited a while longer to get an even lower rate, but then you risk being too late to the market,” Lin says.

While the timing has worked out in some respects for Taiwan’s telcos, they have also been forced to cope with complicating factors arising from another earthshaking event. The early stages of Taiwan’s roadmap for auctioning off spectrum and building out 5G networks happened to coincide with the outbreak and rapid spread of COVID-19 this year.

In a written statement to TOPICS last month, the National Communications Commission (NCC), the government agency responsible for regulating the island’s telecom industry, said that telecom companies around the world have suffered from the delayed launch of new mobile phone products due to disruptions in the supply chain.

In addition, the introduction of new 5G standards and regulations has been delayed as technical exchanges have been canceled and meetings of international standards-setting organizations forced to go online. And the substantial drop in international travel has resulted in a loss of revenue from international roaming services and short-term prepaid SIM cards.

Nevertheless, the NCC points out, changes to the nature of work and lifestyle brought on by the pandemic – such as remote working, education, and teleconferencing – have slightly increased demand for broadband network services.

Taiwan’s effective handling of the COVID-19 pandemic and the gradual decoupling of ICT supply chains from China have also presented some advantages for the island economy in moving ahead with its goals of building a comprehensive 5G ecosystem. Su Wei-gan, an industry analyst at the Market Intelligence & Consulting Institute, a government-supported Taiwan think tank and IT research organization, notes that due to Taiwan’s insulation from the pandemic’s most disruptive effects, its ICT industry has been able to continue operating normally.

“5G infrastructure construction in Taiwan has managed to proceed smoothly without much disruption,” Su says. Also, while testing of 5G applications in many parts of the world has been hindered or stalled due to the virus’ spread, “Taiwan is one of the few countries that is still able to carry out large-scale trials and verify the effectiveness of 5G.”

Reaching consumers

As 5G becomes more universally available in Taiwan, numerous consumer trends are starting to develop. Of most immediate relevance to Taiwan’s mobile users are the 4K quality streaming video, XR content, super high-quality music and audio, and cloud-based gaming now available on their 5G mobile devices via their chosen service provider.

All these applications were unthinkable until now, says T.Y. Yin, executive vice president of Far EasTone’s Consumer Business Unit. 4G’s limited bandwidth would not allow it. But the lightning speed and low latency (the time lag before data is transferred) afforded by a 5G connection provides for a seamless user experience with no frustrating delays or pauses.

Far EasTone’s new 5G entertainment services for consumers include the multi-view function, accessible through its friDay streaming video platform. Photo: Far Eastone

To demonstrate this point, Yin demonstrates the company’s multi-view video streaming service offered through its popular friDay Video platform. Much of the content featured on this app is from South Korea, part of a memorandum of understanding signed between FET and Korean telecom service provider KT Corp. With the multi-view function, users can watch a full-frame video of their favorite K-Pop group and choose focused views of their favorite member of that group.

To allow for this kind of viewing, Yin says, production of the video needs to incorporate several different cameras that follow each performer. More importantly, though, it requires 5G connectivity to transition between different points of view because “the magnitude of data traffic is five times or six times larger than that needed for just one viewpoint,” he explains.

XR, or extended reality, is another area that is being driven in part by the introduction of 5G in Taiwan. FET’s friDay platform now includes a virtual reality service that also relies heavily on content from its Korean partner. Users can watch the content directly on their mobile device, moving the phone around to explore the VR world, or they can slip it into a separately sold headset to get a more immersive effect. (More on Taiwan’s XR industry in the accompanying article in this section).

5G entertainment options aren’t just limited to video. For music lovers who have dealt for years with the reduced quality of digitalized music, which must undergo compression to minimize file size and thus data traffic, 5G connectivity can now allow mobile users to enjoy lossless streaming music on their phones.

To explore this emerging area, Chunghwa Telecom has teamed up with local music streaming company KKBOX to offer KKBOX Hi-Fi, a lossless streaming service featuring over 10 million original-quality songs in 16bit/44.1Khz or 16bit/48Khz FLAC formats.

Chunghwa Telecom President Kuo Shui-yi (center) poses with popular Taiwanese band Mayday, the official spokesperson for the company’s 5G-enabled entertainment package. Photo: Chunghwa Telecom

“Lossless music offers a much different experience for the listener; the sound is exactly the same as what you would hear if you were listening to it in person,” says Chunghwa’s President Kuo Shui-yi. “This kind of listening experience will become increasingly more universal as more 5G phones become available.”

The other major consumer trend made possible with 5G is cloud-based gaming. Until recently, playing high-quality, state-of-the-art games required a console and game cartridges – or, later, digital files downloaded to a computer or gaming device. However, cloud gaming allows mobile users to play such games immediately on their phones without needing to purchase extra hardware or having to wait for long download times.

Working with the American graphics processing unit (GPU) designer NVIDIA, Taiwan Mobile has brought the company’s GeForce Now cloud gaming service to the Taiwan market, offering its subscribers plans starting from NT$299 (US$10) per month. According to NVIDIA’s website, GeForce Now boasts over 70 titles, works across a wide range of mobile devices, laptops, and desktop computers, and can be paired with a collection of controllers, gamepads, keypads, mice, and routers provided by the company’s partners.

Using this system without interruption “definitely requires a 5G connection,” says Lin of Taiwan Mobile. “Whereas before, if you wanted to play cutting-edge games, you needed to have a high GPU in your end device – either your mobile phone or PC – but now with GeForce the GPU is a service on the cloud.” He adds that “Since this service is offloading all the computing to the cloud, it doesn’t drain your battery or make your phone hot, and you get to play all these great games for around US$10 a month.”

Branching out

As a mobile network technology, 5G goes well beyond traditional telecommunications services and consumer uses. The applications are increasingly far reaching, and more and more industries are becoming involved.

“It’s no longer just about phones,” says Taiwan Mobile’s Lin. “It’s also about designing a network for the IoT industry.” He notes that Taiwan’s place as one of the frontrunners of 5G buildout and penetration will open opportunities for a variety of new IoT-powered smart industries.

“Hopefully, Taiwan can be one of the leading economies and end up creating opportunities to export some of these industries that we end up building on top of the 5G network,” he says.

For example, Taiwan Mobile recently teamed up with self-driving transport startup iAuto to produce 5G and Cellular V2X-powered autonomous vehicle technology for commercial and government clients. The technology will be deployed at the Chang Gung Health and Culture Village, a retirement community operated by the Chang Gung Memorial Hospital, an affiliate of the Formosa Plastics Group, iAuto’s other major partner.

Taiwan Mobile President Jamie Lin and Formosa Plastics Transport Chairman Chen Sheng-kuang stand in front of 5G-powered autonomous vehicles, a collaboration between the two companies and self-driving transport startup iAuto. Photo: Taiwan Mobile

Safety has been one of the major concerns when it comes to self-driving vehicle technology. In the U.S., some fatal crashes have resulted from latency issues that tech firms experienced with the communication systems in automated vehicles. Although 5G boasts very low latency, its shorter signal poses some logistical issues for widespread use.

For iAuto’s founder, Kang Li, ensuring that his company’s solutions can be safely implemented means being realistic about the limitations of 5G.

“5G is still in the early stages, and we haven’t found a complete solution that can be adopted at a reasonable cost and that can also enable a sustainable business model,” says Li, who serves concurrently as a full-time board member of the Taiwan Transportation Safety Board. For one thing, to make safe nationwide self-driving transportation a reality, Taiwan will need to wait for the debut of a technology known as multi-access edge computing (MEC) to reduce latency and thereby bolster C-V2X’s practicality.

“This is why, for now, we are focusing our business model on closed or semi-closed environments,” says Li. In addition to its project in the Health and Culture Village, iAuto has also been contracted to install its self-driving vehicle modules on trucks that transport hazardous substances inside Formosa Plastics’ Mailiao petrochemical complex. It is also currently participating with Taiwan Mobile in a bid to develop the island’s first “smart harbor,” part of a land reclamation project in Kaohsiung initiated by Evergreen Marine Corp., the giant Taiwanese shipping line.

Chunghwa Telecom is also exploring the potential of 5G to enhance its corporate partnerships. The company is currently cooperating with local universities and international companies to develop smart healthcare solutions, as well as with fintech companies to apply 5G toward strengthening Taiwan’s financial services industry.

Kelly Hsieh of TrendForce says development of the 5G ecosystem should make this kind of cooperation more common. “Incidentally, one of the more important added-value aspects of 5G communications is that it allows industries to streamline their vertical integration efforts, in turn facilitating a closer partnership between related industries,” she says.

Still, Chunghwa’s Kuo says that one of the major challenges his company has faced is persuading companies in each industry of the benefits that 5G can bring them and explaining how the new mobile technology can align with their business and growth models.

“The trick is convincing these companies that adopting 5G and the various applications it enables will make them more competitive,” he says. “For example, they can more quickly launch their goods and services on the market, reduce their costs, and become more effective and more efficient.”

Both Chunghwa and Far EasTone are seeking to switch half of their current subscribers to 5G within the next three years, enticing them with both their new services and competitive rate plans.

Kuo expresses optimism about this ambitious goal. “With 4G, it took us around four to five years to reach 100% adoption and coverage,” he says. “But with 5G, I think it will be even shorter because 5G applications are more attractive and far-reaching than 4G.”

Getting more people on board is mainly a matter of word-of-mouth, says Kuo. As more mobile users adopt 5G, they’ll persuade others to join as well. “The same goes for governments and enterprises.”