We appreciate the Taiwan government’s efforts to support the island’s digital transformation, including its development of a 5G policy and its push to modernize Taiwan’s Copyright Act for the digital era. We also look forward to the establishment of the proposed Ministry of Digital Affairs (MODA), which we believe will become a driving force for digital transformation in Taiwan.
We also note the increasing demand for smart policies in the digital era. Given the fast-changing environment brought about by digitalization and technological innovation, strict regulations or top-down approaches is not the best way for the government to support Taiwan’s digital transformation. Rather, providing incentives to industries, creating a level playing field, encouraging self-regulation and cooperation between government and industries, and establishing effective and efficient legal remedies for copyright and other issues will be the key to Taiwan’s success.
We offer the following suggestions as ways to ensure that industries can continue partnering with government to create a competitive, sustainable, resilient, and safe environment for telecommunications and media, attract foreign investment, foster innovation, and accelerate digital transformation, eventually benefiting Taiwan society as a whole.
Suggestion 1: Improve the environment for 5G application and development in Taiwan.
In recent years, emerging technologies such as low Earth orbit satellites, private networks, and digital platforms provide telecommunications and data services that are highly competitive in the telecom market. However, this industry not only continues to be highly regulated but also shoulders high construction costs that adversely affect the competitiveness of telecom operators.
According to the Communications and Broadcasting Market Research Report 2021 published by the National Communications Commission (NCC), although the revenues of telecom companies in the U.S. and Hong Kong continue to grow, those of telecom companies in Taiwan, the UK, Japan, South Korea, and Singapore have been decreasing. Moreover, Taiwan’s telecom industry faces growing competition from emerging service providers, technology providers, and digital platforms.
The Taiwan government, which has set the goal of becoming an innovative, inclusive, and sustainable “smart nation,” recently released its roadmap for achieving net-zero carbon emissions by 2050. It plans to create a competitive, sustainable, resilient, and safe environment to promote the growth of Taiwan’s economy, increase private investment, improve social welfare, and accelerate digital transformation. The key to reaching that objective is a robust, comprehensive communications environment.
We raised this issue in last year’s White Paper as well, but have seen little to no progress on our suggestions. We therefore recommend that the authorities loosen unnecessary restrictions, formulate relevant guidance for industry, and introduce incentives to promote the sustained development of the telecom sector. By doing so, government will enable telecom networks to become the driving force behind the digital transformation of Taiwan’s industries and accelerate Taiwan’s digitalization.
1.1 Establish a system of rewards and incentives: While driving digital transformation, industries face risks that may reduce their appetite for investment. Thus, we suggest that the proposed MODA establish a system of rewards and incentives to encourage the development of the telecom industry. To ensure that sufficient resources are available for that system to succeed, we recommend that it be given at least as large a budget as the Executive Yuan’s National Science and Technology Development Fund.
1.2 Create a level playing field: Taiwan’s telecom operators face growing competition from Beyond 5G, 6G, and low Earth orbit satellite operators that provide communication services, and private network operators offering 5G vertical services. However, imposing different regulations on similar services is not conducive to fair competition. We suggest that the Taiwanese government adjust regulations to reflect current circumstances. For example, emerging services similar to telecom services should comply with the Telecommunications Management Act and related regulations.
1.3 Enhance telecom industry competitiveness: International companies that are much larger than local ICT firms continue to enter the Taiwan market. To promote innovative 5G services, the government should dedicate more resources to encouraging the ICT industry to invest more in 5G and to cooperate with foreign companies. In order to achieve this goal, we reiterate our request from last year’s White Paper that the government amend the Statute for Industrial Innovation and its related regulations to double the allowable period for applying for tax deductions on investments to 10 years, as well as to increase the tax credit to NT$10 billion to reflect current needs in the Taiwan market.
1.4 Reduce network construction and operating costs for telecom operators: To attract foreign investment, an advanced network environment with reasonable prices is essential. However, Taiwan’s exorbitantly high spectrum and construction costs currently discourage investment in this sector. To enhance the competitiveness and attractiveness of Taiwan’s telecom environment, we suggest that the government decrease 4G frequency usage fees and waive such fees altogether for 5G.
Furthermore, we recommend broadening the provisions regarding tax relief and concessional financing benefits in the “Act for Promotion of Private Participation in Infrastructure Projects,” the “Statute for Encouragement of Private Participation in Transportation Infrastructure Projects,” and other related regulations to include telecom operators. We also urge the government to amend the Electricity Act to enable telecom operators engaging in projects related to public infrastructure or aiding underprivileged groups to receive subsidies for electricity usage. Lastly, the Taiwan government should consider international standards and industry needs in its promotion of domestically manufactured telecommunications equipment, so as not to hobble the development of the industry.
1.5 Reduce barriers to building infrastructure: Compared to low Earth orbit satellite and digital platform operators, telecom operators in Taiwan must work much harder to build their network infrastructure. We recommend that the government formulate rules for the use of public buildings and other facilities such as streetlights, traffic lights, electricity poles, and other equipment for building out 5G networks. We also urge the government to establish an agency tasked with ensuring coordination on 5G policy across the central and local levels and serving as a single point of contact for industry. This agency, together with a set of clear and consistent application procedures and fee-charging standards, would help ensure that obstacles to 5G network construction are quickly and effectively resolved. It would also increase telecom operators’ attractiveness to foreign investments and companies.
1.6 Ensure that spectrum policy is based on real market demand: Since 5G was introduced to the Taiwan market around two years ago, telecom operators have continued to build and optimize their 5G networks. The speed of cost recovery from construction of these networks and the amount of 5G frequency usage fees will depend on 5G’s market penetration rate. We therefore urge the government not to hold the next round of 5G spectrum licensing too early. Rather, the authorities should first solicit the views and opinions of industry in order to meet the development needs of the market. In addition, if international low Earth orbit satellite operators wish to use spectrum purchased by telecom operators in Taiwan, the government should implement measures to promote cooperation between these two industry players.
1.7 Loosen data restrictions to promote Taiwan’s digital economy: In order to reach the goal of a “Smart Taiwan,” we suggest that the government relax current personal data rules, for example by establishing sandboxes or setting national de-identification standards in the short term. In the longer term, it should revise relevant laws and regulations and formulate supporting measures.
Suggestion 2: Amend the Cable TV Act and the Satellite Broadcasting Act to maintain Taiwan’s competitiveness.
According to an NCC survey, Taiwan had 4.868 million cable TV subscribers in 2020 but by Q3 2021 the number had fallen to 4.768 million. In the face of challenges from digital multimedia platforms, the number of cable subscribers is continuing to decline. More cooperation is needed between industry and government to improve the pay television environment and provide better services to consumers. We urge the NCC to consider the following recommendations:2.1 Create a healthy and well-functioning operating environment: Taiwan’s cable TV ecosystem is complex and over the long term the industry has created a well- run, fixed market operation model, in which a proportion of subscription fees are used to cover the licensing fees for existing basic-tier channels, while some of the remaining funds go to licenses for newcomers. In order to ensure that the industry is able to maintain stable operations and produce high-quality programs to create healthy competition, we urge the NCC to consider industry engagement and consultation instead of regulatory options. Increasing regulatory measures not only is not conducive to the development of the cable TV market but may also accelerate the loss of cable users. It also affects the quality of programming and the amount of investment in local content, ultimately limiting the variety of content available to Taiwanese consumers. We thus make the following recommendations to the NCC:
2.1.1 Reconsider the channel renumbering and categorization proposal: According to a preliminary NCC plan, channel numbers will be changed from the current two digits to three-digit designations and be divided into eight categories/ blocks – statutorily mandated, variety, news, films, sports, drama/religion, shopping, and “other.” We believe that this plan would disrupt consumers’ viewing habits and eventually lead to the loss of more cable users, negatively impacting channel operators and disproportionately benefiting digital platform operators.
2.1.2 Improve communication and cooperation with channel operators: Channel operation involves many costs, and programs face severe market challenges. During the pandemic, film and television productions have fallen sharply. Instead of asking channel operators to provide details regarding program timetables (e.g., premiere, rebroadcast, etc.) or preparing to establish a new system for supervising premiere broadcasts as per a recent NCC plan, we recommend increased communication with the industry on how to meet the challenges of the post-COVID era and improve the industry’s capacity for high-quality broadcasting.
2.2 Relax regulatory requirements for satellite and cable TV: The NCC has long tended to control the cable TV industry with regulations and consistently encouraged cost reduction, which has led the industry to compete on cost and reduced its international competitiveness. In addition, channel operators face increasingly cumbersome evaluation and license renewal regulations. We recommend that the NCC refer to the practices of other countries in loosening and removing unnecessary controls, for example by ceasing requests that channels commit to increasing the ratio of premiere shows in their programming in order to be approved for renewal. We also recommend simplifying the license renewal process as much as possible. Doing so would improve transparency and reduce operating and administrative costs.
Suggestion 3: Maintain the current positive regulatory environment for OTT TV services.
Taiwan supports the development of a vibrant video-on- demand (VOD) and over-the-top (OTT) TV sector, which can provide consumers with a diverse array of services. The government’s current light-touch approach to regulating this sector has allowed VOD/OTT TV service providers to effectively invest, innovate, and compete. We encourage the government to maintain this approach, while partnering closely with local creative industries so that Taiwan can continue to be well positioned for success.
The government should place greater trust in industry to self-regulate, enabling the industry to demonstrate that a top-down approach is unnecessary. We encourage policymakers to work together with industry stakeholders to allow the creative sector in Taiwan to flourish, carefully calibrate conditions to support investment, and be mindful of the potential unintended consequences of protectionist policies. Heavy-handed measures such as requiring the disclosure of private business information or mandating certain proportions of locally produced content hamper innovation and growth opportunities, as do penalties for non-compliance with such measures.
For the past few years, Taiwan has sought to draft its own laws regulating OTT TV operators. However, industry is uncertain as to the goal the government hopes to achieve with such legislation and what policy gaps it seeks to fill that cannot be addressed through public-private partnerships and self-regulation. In the Committee’s view, no convincing reason has been given. Potential issues involving consumer protection and public-private partnerships can be effectively resolved with existing laws and other available means. In fact, most global companies already have safeguards and protocols in place to address potential harms and are working closely with local businesses with which they have creative synergy.
Win-win situations are still achievable with the current light- touch approach.
Taiwan’s film and VOD/OTT TV industry is brimming with potential. These companies make a significant economic contribution to Taiwan and have already played an important role in introducing Taiwanese content to the international market. To realize this potential, it is critical for Taiwan to have a business-friendly mindset and positive regulatory environment for OTT TV.
Suggestion 4: Modernize Taiwan’s Copyright Act for the digital era.
AmCham Taiwan members welcome the efforts by the Taiwan Intellectual Property Office (TIPO) to modernize Taiwan’s Copyright Act to account for the rapid development of digital technology while protecting the rights of creators and fostering continued investment in works that the public may legally enjoy. We are also encouraged by the government’s recently proposed amendments to the Copyright Act, which would help align it with the provisions of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, we are concerned that certain aspects of the draft amendments may potentially be out of step with international agreements and best practices.
First, the introduction of overly broad exceptions for use of copyrighted works leaves room for interpretation and creates uncertainty about how such works would be used. This in turn undermines the ability of creators and copyright owners to protect their rights and might increase the risk of piracy.
Second, the apparent relaxation of penalties for infringement sends a signal to potential violators that content protection is not a priority in Taiwan. We recommend maintaining the penalties to avoid such a perception and demonstrate Taiwan’s commitment to content protection.
Finally, we are concerned about the absence of important mechanisms such as no-fault injunctions to stem online infringement. We urge the inclusion of such mechanisms in the amended Copyright Act to encourage internet service providers (ISPs) to take steps to prevent access to infringing websites.
We additionally recommend that the Taiwan government consider prohibiting the sale of illicit streaming devices (ISDs) and associated software applications that offer access to pirated content. Such devices and APPs adversely impact the creative industry, taking away revenue that would have been reinvested into producing more quality content – including local content. Furthermore, they hinder the expansion and growth of legitimate digital transmission networks and detract from the contribution that the creative industry makes to government policy programs, including the tax revenues paid by legal enterprises. Illicit streaming also impacts consumers, whose access to pirate websites exposes them to the risk of malicious malware, including spyware and ransomware.