TAIWAN TIFA: SESSION 7: TELECOMMUNICATIONS

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001872

SIPDIS

SIPDIS

STATE FOR EAP/RSP/TC, STATE PASS USTR FOR DEPUTY USTR
BHATIA FROM DIRECTOR YOUNG

E.O. 12958: DECL: 05/26/2031
TAGS: ECON TW
SUBJECT: TAIWAN TIFA: SESSION 7: TELECOMMUNICATIONS

REF: TAIPEI 1727

Classified By: AIT Deputy Director David J. Keegan, Reason 1.4 b


1. (C) Summary. During the Taiwan TIFA talks session 7, the
U.S. and Taiwan focused on discussing the recently
established National Communications Commission (NCC) and
pricing issues. Both sides agreed to work together to
strengthen the NCC. End Summary


2. (C) AUSTR Stratford led the U.S. delegation to the
meeting while Vivien Wang spoke for Taiwan's NCC. Stratford
opened the session by observing the overall positive feeling
of cooperation, shared interests, and commitment to
strengthening bilateral trade relations between the U.S. and
Taiwan.

Market Access: Taiwan's NCC Working on the Issue
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3. (C) DOC Brenda Carter-Nixon inquired whether or not any
progress has been made on the "last-mile" infrastructure
issue for end users. Taiwan NCC's Vivien Wang acknowledged
that the ChungHwa Telecom's (CHT) control of the last-mile
infrastructure is ONE of the NCC's "priority issues." Wang
indicated that the NCC's 2006 Annual Plan has a specific work
plan to promote competition. She also mentioned that the NCC
plans to announce that CHT needs to make changes to their
last-mile infrastructure. Wang said that by the end of this
year, CHT needs to open up their "exchange room to
competitors" and also open "one cable-ending station to
competitors." Wang also indicated that CHT needs to "offer a
wholesale price to competitors on their network element," and
confirmed that CHT continues to delay on revisions of the
last-mile infrastructure.


4. (C) Carter-Nixon then asked what the NCC's views are on
fixed-line licensing. Wang responded by indicating that the
NCC will accept applications twice per year, once in March
and once in September.

Taiwan's NCC: Working to Improve Their Own Capabilities
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5. (C) Finally, Carter-Nixon asked if the NCC would be
willing to establish a relationship with the U.S. Federal
Communications Commission (FCC). Wang said that although the
NCC is still in the "infant stage", they would like to
consult with their counterparts in the U.S. and the UK. Wang
said that in 2004, during the NCC's preparatory phase, the
FCC's Legal Advisor was invited to Taiwan for two days of
talks. In October or November 2005, Wang said that the NCC
attempted to invite the FCC Commissioners to Taiwan. Wang
expressed her hopes that the USTR can help the NCC finalize
this arrangement. Carter-Nixon responded by agreeing that an
opportunity for training would be beneficial for the NCC.
Wang of the NCC suggested that it would be helpful if the FCC
Chairman could extend an invitation to the NCC Chairman for a
visit to the U.S. and that subsequent training or roundtable
discussions would be very helpful. Francis Liang from TECRO
seconded her suggestion and said that the NCC needs to be
"educated" and "better understand the telecommunications
industry."


Cable Television Issues: NCC and AIT can work together
-------------- --------------


6. (C) Nixon-Carter opened the discussion by indicating the
NCC should change the regulation that prohibits pay-per-view
channels. The NCC asserts that they have already addressed
this issue in their 2006 Annual Report. However, they asked
their U.S. counterparts for time to clarify this issue and
follow up with them at a later date.


7. (C) The U.S. side requested that the NCC talk directly
with AIT about the tiered pricing issue within a month. NCC
Vivien Wang also asked that AIT follow up with the NCC on
this issue. The U.S. side repeated issues regarding cable
television which include 1) tiered pricing 2)
micro-management 3) interest in having more foreign direct
investment and possibly 100% foreign ownership.


8. (C) The NCC stated the cable television issue involves
"many dimensions", including the issue of "viewer's rights".
Wang stated that since March of 2006, the NCC has worked on a
plan to deal with the cable television issue. Wang asserts
that this plan addresses and balances four aspects: 1)
maintaining consumer rights; 2) providing for sound, healthy

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markets; 3) diversification; and 4) protecting the rights of
disadvantaged groups. Wang indicated that the NCC will use
these four indicators to assess changes to the packaging of
programming.


9. (C) The U.S. side responded by requesting additional
discussion on the specific time-line regarding the NCC's
plans. Wang indicated that the NCC's Annual Report will be
released next month and that the NCC plans on holding a press
conference on May 30 to announce the release of this report.
The U.S. side indicated that they are very interested to see
the details of the NCC report and will forward any follow up
questions to the NCC.


10. (C) Francis Liang of TECRO and moderator of the Taiwan
side closed the session by acknowledging that many of the
U.S. questions may not have been adequately answered by the
NCC. However, he highlighted the importance of continued
dialogue after the TIFA talks are completed.


11. (C) Comment: Taiwan and the U.S. agreed on the
complexity of services issues. The fact that all of the U.S.
questions were directed at the NCC panel member highlighted
the importance of the NCC and the critical need for the NCC
to strengthen its own capabilities in order to be able to
solve the complex issues of market access and cable
television. End comment.


12. (U) This cable was reviewed by USTR prior to
transmission.
YOUNG