The National Communications Commission (hereinafter referred to as NCC) reviewed and passed the“The coefficient of price cap control for Type I telecommunications enterprises” at the 898th Committee Meeting on February 26, 2020. It is hoped that by taking wholesale price control as the core and supplementing with the means of retail price control, both consumer rights and industrial investment incentives can be taken into account to provide the public with a variety of digital emerging services with high quality, reasonable prices and diverse choices, accelerating our nation's digital economic transformation and diversified innovative development.
The NCC explained that the adjustment coefficient plan passed this time will be applicable for four years (2020 -2024) from April 1, 2020. It is mainly aimed to reduce the monthly rents for the xDSL and FTTx retail circuits provided by local and long-distance network businesses of dominant Type I Telecommunications Enterprises, and the reduction percentage is "2.15% minus the annual rate of increase of the consumer price index;” For other five wholesale services, including the local, long-distance data circuits, IP Peering fees, etc., the reduction is "7.48% minus the annual rate of increase of the consumer price index." The annual rate of increase of the consumer price index is determined by the price index published annually by the Directorate General of Budget, Accounting and Statistics.
The NCC added that, as for the adjustment coefficient for the "monthly rents of retail circuits with downlink rates below 12Mbps (inclusive) and above 300Mbps (inclusive)," "monthly rents of wholesale circuits with downlink rates below 2Mbps (inclusive)," and "other major tariff items (including monthly rents of ADSL circuits) '' is the annual rate of increase of the consumer price index (that is, it cannot be adjusted upwards).
The NCC emphasized that considering the development trend of digital economy, 5G and various Internet innovative application services, leased-circuit services and IP Peering fees are very important factors to promote digital development. Therefore, the adjustment of the price cap of telecommunications tariffs (commonly known as the X value) implemented in the next stage adopts differentiated control of wholesale and retail services, focusing on the reduction of wholesale prices. In addition to hoping to guide the decline in retail prices by lowering wholesale prices, it is also expected to lower the entry barrier so that telecommunications or information operators may pay less for circuits and peering to provide various combinations of innovative digital economy services, achieving the goal of the digital nation’s innovative economy. At the same time, with economic incentives, it is expected to encourage existing users with low-speed broadband Internet access service to upgrade to high-speed broadband Internet access services, in order to meet the public’s needs of various emerging digital application services.
Finally, the NCC stated that the adjustment coefficient plan approved this time was previously approved by the 886th Committee Meeting on December 11, last year. On December 20 last year, the draft to the regulations was pre-announced to solicit public comments, receiving positive support from the majority of the participants. Subsequently, the regulation promulgation will be conducted in accordance with the legislative procedure.
