This record is a partial extract of the original cable. The full text of the original cable is not available.

300637Z Dec 05

UNCLAS TAIPEI 005046 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS EAP/RSP/TC AND EB/CIP 
USDOC FOR 4431/ITA/MAC/AP/OPB/TAIWAN/MORGAN 
 
E.O. 12958: N/A 
TAGS: ECPS ETRD TW
SUBJECT: CHT NETWORK MIGRATION PLANS 
 
REF: SECSTATE 229580 
 
¶1.  (U) This message is Sensitive but Unclassified.  It 
contains business confidential information and is not for 
internet publication. 
 
¶2.  (U) Summary: Chunghwa Telecom (CHT) continues to make 
plans for implementing its Next Generation Network (NGN) 
project, but has postponed the timeline and is concerned that 
the newly-established National Communications Commission 
(NCC) could enact policy changes that would make the project 
unfeasible.  CHT leadership says the newly privatized company 
is no longer bound by government procurement regulations but 
will do what is best for the shareholders, the largest of 
which remains the government.  End Summary. 
 
¶3.  (SBU) In response to reftel AIT Econ and Commercial staff 
met December 28 with CHT Planning Department, Senior Managing 
Director Mark Lee to discuss CHT plans for migration to its 
Next Generation Network.  This is expected to be a 
multi-billion U.S. dollar infrastructure development project 
spread over at least eight years.  U.S. telecommunications 
equipment company Lucent has expressed interest in the 
project and have already met with CHT leadership.  AIT/T met 
with CHT in May 2005 to discuss the NGN project, but since 
that time CHT has been officially privatized and Taiwan has 
passed legislation to create a National Communications 
Commission (NCC) responsible for telecommunications and 
broadcast policy. 
 
¶4.  (SBU) Lee declined to predict when or whether CHT might 
open a tender for the NGN system.  He told AIT that the 
unexpected passage of legislation in November establishing 
the NCC made the immediate future of the telecom industry 
sufficiently unclear that CHT leadership had decided to take 
a cautious approach to implementing any major projects. 
While Lee had previously expected the project would be opened 
for bids sometime in 2006, he now thought it would be 
postponed until 2007.  Lee was particularly concerned that 
the NCC might endorse a policy that would require CHT to turn 
over access to its "last mile" infrastructure to competitors. 
 Since CHT was now a private company, he said, it needed to 
responsibly safeguard the assets of its investors.  It made 
no sense to begin a multi-billion dollar project that would 
not yield a significant return.  However, CHT is continuing 
to make plans and will be able to move quickly when the time 
is right, he added. 
 
¶5.  (SBU) Following "privatization" in August 2005, CHT is no 
longer  bound by the requirements of Taiwan's Government 
Procurement Law, one of which mandates at least three bidders 
for any large project.  CHT has not decided about whether to 
structure the tender as a new project or an upgrade of 
existing technology.  In any case, Lee suggested CHT would be 
reluctant to rely on one provider and would likely choose at 
least two companies to provide NGN equipment.  Lee noted that 
Lucent, Siemens and Alcatel had all expressed interest in the 
NGN project and had made efforts to promote the merits of 
their individual technologies.  All three are currently 
providing switching equipment to different regions of Taiwan. 
 Lee added that he was aware that Lucent's solution was 
technologically superior to its competitors and he emphasized 
that Lucent had a very solid position, despite being more 
expensive.  He suggested that any final decision on suppliers 
would be based on many factors. 
 
¶6.  (SBU) Lee also noted that Lucent's pilot Internet 
Protocol Multimedia Sub-system (IMS) was currently undergoing 
testing in southern Taiwan and suggested this would be a good 
trial run for Lucent's technology.  If it performed well, it 
would boost Lucent's chances of successfully winning a share 
of the NGN project in the future.  AIT staff noted that other 
companies had been actively pressing their solutions and 
reminded Lee that Lucent was restricted by the FCPA in ways 
that European companies were not.  Lee appreciated Lucent's 
adherence to the requirements of the FCPA and insisted that 
any decisions on procurement would be based on the merits of 
the equipment. 
PAAL