Advances in modern technology have led high-end automobile manufactures to offer digitally-connected in-car functions in the newest generation of smart cars. A car being "connected" or "smart" in this context, means that the car has an embedded SIM card and is therefore a connected mobile telecommunications platform capable of internet-based services. This does not necessarily entail autonomous driving. These connected car services usually come in forms of navigation and infotainment, real time traffic information (RTTI) displays, safety services such as dialing for emergency response, and other telematics functions. However, just as mobile network operators (MNOs) have long been under the supervision of the National Communications Commission (NCC), manufacturers selling cars with digitally-connected services may trigger compliance requirements under Taiwan's Telecommunications Act (TA). Only by being able to lawfully navigate the legal minefield of telecommunications regulations, is this promising and lucrative market accessible.

The issue at hand is whether foreign manufacturers selling high-end vehicles with embedded mobile connectivity SIM cards in Taiwan would be regulated as a Type II telecommunication enterprise. Under Article 11(4) of the TA, a Type II telecommunications enterprise, is in essence, an enterprise that installs telecommunications line facilities and equipment in order to provide telecommunications services, and whose operation relies on successful business registration and a specific license. In addition, related hardware and its manufacture, importation, sales or public display are closely inspected and monitored by the NCC.

If such manufacturers are a Type II telecommunications enterprise they will have to fulfill licensing, authorization, and capital requirements laid down by the NCC. By the TA's definition, the sale of connected cars would likely be categorized as a mobile telecommunications resale service, where the manufacturer of the car contracts the connectivity services from a MNO in Taiwan and then provides the local SIM card and its subscription to the purchaser. Therefore, in order to lawfully manufacture and sell smart cars without being bound by these burdensome regulations, alternatives must be sought.

One alternative is that a foreign manufacturer enters into a global roaming agreement with a foreign mobile service provider, and use these global roaming enabled SIM cards to provide the connected services in their vehicles. Whilst this approach would not trigger TA provisions, data transmission fees occurring under the global roaming agreement will increase overall costs (compared to a local MNO) and consequently the end consumer prices for such in-car functions, making the manufacturer's service significantly less attractive in the highly competitive local smart car market.

Although it is uncommon in Taiwan's telecommunication industry to utilize permanent roaming, automobile manufacturers in Taiwan have adopted one of the following approaches when supplying in-car 'smart' functions: 1) having customers use personal SIM cards; 2) engaging a local MNO with the customer when selling connectivity service packages. In both cases, the service contract is made between the customer and the MNO. These alternatives entail that local automobile manufacturers are not subject to TA regulation whilst legally providing 'smart' services in cars. Concurrently, contracting with MNOs may provide customers with lower service fees, further incentivizing the purchase of such services. Therefore this popular business model may be viewed as benefiting all, from the car manufacturer (which will continue to offer its mapping/RTTI etc, for a service fee) to the local MNO to the customer.