Taiwan companies turn to extreme deals for 3G

Chunghwa Telecom Co, Ltd., the state-controlled company that leads Taiwan in mobile phone subscribers, is offering NT$1 (US$0.03) handsets to anyone willing to sign up for 3G (third generation) services, an example of the extreme deals companies are employing to attract users.

The three main mobile phone companies in Taiwan, Chunghwa, Taiwan Mobile Co. Ltd. and Far Eastone Telecommunications Co. Ltd, are all launching their 3G networks this month to comply with government rules. But the timing has some of them worried about how users will respond to services, since there's not much new beyond the ringtones, wallpaper and games already being offered on GPRS (General Packet Radio Service). The good news is nervous companies mean bargains for users.

Taiwan Mobile's tack is opposite Chunghwa's. Instead of giving away handsets, it's 3G services are free from now through the end of October. In the few days since its network started, the company has signed up 2,000 users, but it's worried many people may shy away from 3G despite the sales pitch.

"People are very cautious about the new technology," said Jeff Ku, a vice president at Taiwan Mobile, during an interview at the Taipei Telecom trade show Saturday. He said curiosity has brought some users out to the show and phone companies are trying to capitalize on the attention by showing off what to expect from 3G, including streaming television and video, music, fortune telling and a number of games, like V-Girl, or virtual-girlfriend.

Similar to the Tamagotchi pet fad of a few years ago -- where people hatched electronic eggs and took care of the virtual chicks -- V-Girl invites users to woo a virtual girl, capture her heart with presents and creative dates, and eventually marry. It's an intriguing game, which includes a Victoria's Secret-like catalogue of gifts. Unfortunately for people who prefer, there's no V-Boy game.

Although news broadcasts gave V-Girl accolades for fun and possible educational value, the response to 3G in general has been damp at best. One newspaper in Taiwan, the local-language Economic Daily News even grumbled that 3G appears to stand for Girls, Gambling and Games, pointing out that porn, punting and playing may generate the most excitement for users, considering limited available services.

There's good reason for the skepticism. Most Taiwanese use their handsets for phone calls only, over 76 percent, while only 18 percent tapped into GPRS for any kind of mobile Internet-like service, according to government figures. In addition, the only company to already launch 3G in Taiwan, Asia Pacific Broadband Wireless Communications Inc., posted a sizable loss last year.

Asia Pacific, which opened its 3G service in 2003, hopes the Taipei Telecom show and July service launches by its larger rivals will attract more attention to 3G in Taiwan.

"We're glad they're starting their networks. Up to now, it's been up to us to build services and content," said Frank Wang, a spokesman for Asia Pacific.

The company has 600,000 users on its 3G networks, a mix of corporate and regular users. It has offered free phone calls as a way to attract users, but charges a minimum monthly fee to ensure people use its network for non-voice services. So far, what people in Taiwan like most from 3G are things like stock information and trading, games, sending pictures and downloading ring tones, Wang said.

The great thing about the July launch for users is that even those who don't want 3G are benefitting from it, since some new companies are slashing prices for mobile phone calls amid the 3G hype. Hicall Telecom Co. Ltd., a relatively young company, is offering prepaid calling cards for per-minute prices almost half of what its rivals charge. Considering most Taiwanese use their mobiles for phone calls alone, Hicall could win some new users.

That's why the early winners in this battle for 3G customers in Taiwan are users.

Chunghwa plans to launch its 3G network on July 27, while Taiwan Mobile and Far Eastone have already opened theirs for business. The fifth 3G provider in Taiwan, VIBO Telecom Inc., said its network is set for an October start.

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