Under the existing Taiwan regime, telecommunications companies are regulated by the Directorate General of Telecommunications, an arm of the Ministry of Transportation and Communications, and broadcasting companies by the Government Information Office (GIO). As technologies converge, there is an increasing overlap between these two industries, as exemplified by the emergence of internet radio and television services. In order to streamline regulation of these industries (and end years of squabbling between the directorate general and the GIO), the Executive Yuan has established the Preparatory Office of the new telecommunications and broadcasting authority, the National Communications Commission. Prior to this, the Executive Yuan finalized a draft unified telecommunications and broadcasting law, as well as a draft law governing the establishment, governance and scope of authority of the commission. Both draft laws are expected to be submitted as bills to the Legislative Yuan for vote in its next session.

Pursuant to the draft law, the commission shall be established within six months of the law's promulgation. It will be an independent regulator whose scope of authority will encompass the regulation of telecommunications, electronic information and broadcasting businesses. The commission will therefore supplant the directorate general and the Electronic Mail Office of the Ministry of Transportation and Communications, as well as the Broadcasting Division of the GIO, and its initial administrative staff will be composed of those government employees presently serving in those agencies. The commission will be led by seven independent commissioners, no more than half of whom may be from any one political party. The commissioners will be nominated by the Executive Yuan and appointed by the president. Each commissioner will serve a term of five years (although three or four of the first term commissioners will only serve for three years).

The establishment of the National Communications Commission is eagerly awaited by a broad-based group of supporters, comprising industries and even foreign governments. In this respect, Taiwan cable television and other broadcasters generally regard the GIO as the bane of their existence, as it tends to regulate companies under its purview as utilities rather than enterprises. The United States has pressured Taiwan for years to establish an independent unified regulator, as it regards the present authorities as overly susceptible to political and domestic industry lobbying, and this issue proved a source of tension in recent Taiwan-US foreign investment negotiations. In particular, the United States has repeatedly expressed concern regarding the ability of the Ministry of Transportation and Communications to regulate fairly and impartially the activities of Chunghwa Telecom, the nation’s leading telecommunications operator, in light of the fact that the ministry remains the majority shareholder in the company. It is expected that the NCC, as an authority independent of the ministry and otherwise of the industries it will regulate, should be more effective in ensuring a level playing field for telecommunications and broadcasting companies. However, in light of the upcoming Taiwan presidential election in March 2004, it is expected that passage of the necessary implementing laws by the opposition-dominated Legislative Yuan may be delayed until after completion of the election.

For further information on this topic please contact Arthur Shay or William Edwards at Shay & Partners by telephone (+886 2 8773 3600) or by fax (+886 2 8773 3611) or by email ([email protected] or [email protected]).