Compared to Taiwan's impressive 25 million cellular-service lines out of a total population of 23 million, the island's registered 2.2 million subscribers for mobile Internet-connection service appear insignificant. This situation, however, is set to change--and soon.

Currently, most of the island's cellular-service subscribers access the Internet to download still Web pages, pictures, and data rather than real-time video or interactive games; this is because of the insufficient bandwidth of 2.5-generation cellular general packet radio service (GPRS) technology. It is generally believed that long-touted third-generation cellular technologies including WCDMA and CDMA2000 can solve the dataload-capacity problem, but 3G services are still proving unpopular because of comparatively higher user charges and a lack of appropriate content.

Recognizing the problems and people's desire for convenient Internet connection using mobile broadband communication devices, world-leading chipmakers including Intel, Motorola, and Texas Instruments (TI) are seeking to develop a platform combining cellular services with the broadband wireless local-area network (WLAN) function.

Here in Taiwan, Chunghwa Telecom Co. and Taiwan Cellular Corp., the island's two leading suppliers of cellular services, have recently begun offering a service that allows subscribers to surf the Internet in a GPRS and WLAN environment by simply entering an identification number to gain access, and with payment for all related usage consolidated in a single monthly bill.



Although service providers such as Chunghwa have opened WLAN hotspots at public sites to provide broadband service, the service is not as convenient as desirable for travelers because they have to carry portable devices such as notebook computers and personal digital assistants (PDAs) to access the service. Notebook-computer and PDA makers have built WLAN and GPRS specifications into some of their models, but cellular phones have not been equipped with the WLAN function. Thus, users are obliged to pay two bills for the two services.

With a cross-network card a new combined service can be enjoyed. Subscribers can connect to the Internet at WLAN hotspots with WLAN-enabled machines, and via cellular phone when they leave the WLAN environment. The cards can detect what wireless environment the device is in and then lock in.

Chunghwa expects the new service to boost the use of its WLAN hotspots, which have suffered losses to date. The company has opened barely 100 spots, far short of its goal of 1,500 spots by the end of 2003. It has signed up only some 10,000 WLAN subscribers, far below the original projection of 30,000 subscribers by the end of this year. The ultimate target is 100,000. Currently, 80% of its WLAN subscribers are household users, in contrast to the 80% use via public-site Internet access experienced in other countries. "Consumers in Taiwan feel more comfortable using WLAN on their desktop computers at home," says M.P. Shih, a general engineer with Chunghwa's Mobile Business Group.

An emerging force that will likely give a boost to WLAN/GPRS services, Shih states, are the WLAN/GPRS handsets that some local manufacturers have begun developing. This is being done in tandem with a dual-network National Information and Communication Initiatives (NICI) plan being promoted by the Executive Yuan. The first such phones are scheduled to be rolled out in mid-2004. Among the suppliers will be BenQ Corp. According to Shih, Taiwan will be the world's first supplier of WLAN/GPRS cellphones.

David Lin, a senior official at Mobitai Comm Co., Ltd. In charge of the company's WLAN/GPRS operations, believes the device best suited to the service is not the cellphone but ones sized between notebook computers and personal digital assistants (PDAs). His company is the first Taiwanese telecom supplier to provide the dual-network service.

"We've never thought that cellular phones could perform well in delivering the two services simultaneously. Experience clearly proves that 3G phones are a failure in broadband services. The small screens on the phones is the primary disadvantage--consumers prefer bigger-screen devices to extant small-screen gadgets," he states.

Lin confesses that his company's WLAN/GPRS service has not flourished as expected, although it offers terminal equipment at its hotspots. Falling short of its goal of opening 600 to 800 sites, the company has so far opened around 400 spots throughout the island. He attributes the low acceptance of the service mostly to the lack of a proper device that the end-user does not tire of carrying around. "We know some hardware manufacturers are developing devices with sizes bigger than PDAs but smaller than notebook computers. These, I've always said, should prove the 'killer devices' in this area," Lin says.

Lin does not think the dual-network service will take off until at least 2005, when the new devices will likely become less expensive after heavy promotion and resulting economies of scale.

Another disadvantage hindering the market, Lin states, is that consumers still prefer to make broadband connections at fixed access points rather than while moving.

The island's penetration for mobile broadband connections may get a boost from the government's NT$37 billion (US$1.08 billion) "Mobile Plan," one of the ten initiatives in the government's "Ten Infrastructure Projects" plan. The multibillion NT dollar plan is aimed at improving Taiwan's mobile broadband-connection environment by integrating the cellular network with WLAN.

The co-convener of the Science and Technology Advisory Group of the Executive Yuan, Tsai Ching-yan, points out that the plan will allow citizens on the island to easily log on to the Internet anytime and anywhere, using a cellular/WLAN handset, by removing all obstacles to connections. The idea is to reinforce Taiwan's mobile-commerce competitiveness and drive the island's position from the current 20th to within the global top five. His group expects the dual-network phones to become a standard tool for mobile communications within five years.

Dual-network service, Tsai says, will allow subscribers to play games, listen to music, watch TV and movies, and confer on-line. Taiwan has many advantages in building up the necessary environment for the service. "Our cellphone penetration rate has reached 111% and our WLAN-equipment output is 80% of total world volume," he notes.