Telecommunications Law passed after three reading and the ceiling on the foreign investment rises to 60% - Gist of the amendment includes: (1) easing the ceiling on foreigners’ share proportion; (2) developing an accounting separation system to calculate profit and loss separately, prohibiting the cross subsidies which impede fair competition

Source: Commercial Time10/23/99

Translated by Corrina Wu

 

The Bill of Amendment to the Telecommunications Law (“Bill”) passed the Legislative Yuan yesterday after three reading.  Article 12 thereof which is concerned with the foreign investment proportion was amended to be that the direct investment proportion of the foreigner shall not exceed 20% and the indirect investment proportion thereof shall not exceed 60%.  Nevertheless, the enforcement date for this amendment will be promulgated by the Legislative Yuan.

 

In order to carry out the policy of liberalizing the telecommunications and to increase the Government’s bargaining chips in the negotiation for joining the WTO, the most significant difference between the amended Telecommunications Law  and the current Telecommunications Law is rising the ceiling on the foreigner’s direct and indirect investment proportions in the domestic telecommunications business to 60%, prohibiting the first class telecommunications business from performing the cross subsidies which violate the fair competition, setting forth guidelines governing the administrative inspection on telecommunications supervision and the procedure of acquiring permits, fulfilling the official duty of the Directorate General of Telecommunications to enable it to be similar to the Federal Communication Commission (FCC) in U.S.A.   The new version Telecommunications Law is a basis for Taiwan to enter the stage of telecommunications liberalization and the digital era.

 

The gist of the Bill includes:

Article 12 – easing the ceiling on the foreigner’s share proportions in the first class telecommunications business and fixing the ceiling on the foreigner’s direct/indirect investment to be 60%; any alterations in directors/supervisors or in the stock rights of shareholders of foreign investment/shareholders who hold stock accounting for over 5% shall be reported to the Directorate General of Telecommunications. The open telecommunications business items, scope, time and the number of providers thereof will be promulgated by the Executive Yuan.  The Ministry of Transportation and Communication may adopt the examining system, public bidding or other feasible measures to deal with the license business by taking the objects of open policies, the telecommunications market situation, consumers’ interest and right, and other public interests into consideration.

 

Article 16 – regulating the management system governing the Internet linking in the first class telecommunications business, i.e. in case one party requests for linking the Internet with the other party, the other party shall not refuse the request, unless otherwise provided in the laws.  The Internet linking shall comply with principles of transparency, rationalization, non-discrimination, Internet stratification and costing.  The applicable counterparts shall be nominated by the Directorate General of Telecommunications.

 

Article 19 – developing an accounting separation system to calculate profit and loss separately and prohibiting the cross subsidies which impede the fair competition; the accounting system and governing guidelines thereof shall be set forth by the Ministry of Transportation and Communication.

 

Article 26 – changing the law governing the investment in the first class telecommunications business from the current Rate-of-Return Act into the Act Governing Ceiling on Price Adjustment; the ceiling on the price adjustment means that the adjustment percentage of the governed telecommunications enterprises’ investment in the governed business items shall not exceed the yearly increasing rate of consumers’ price index within the territory of Taiwan promulgated by the Directorate General of Budget, Accounting & Statistics, Executive Yuan after such increasing rate reduces the adjustment coefficient.

 

　In order to regulate the management system governing the leaders in the first class telecommunications business, Article 26 bis was set forth, which specifies that they shall not impede directly or indirectly by means of their know-how the request for linking Internet put forward by the other providers in the first class telecommunications business; meanwhile, when engaging in the fundamental construction of Internet pipelines, they shall not refuse the request for sharing the pipeline fundamental construction with refund without appropriate reasons, in case the telecommunications Internet has a bottleneck, nor shall they prohibit the other providers in the first class telecommunications business from revealing the calculating method and relevant information regarding their Internet connection.