Administrative Regulation Governing Tariffs of Type I Telecommunications Enterprises（Jan. 11,2006）

(Unofficial Translation)

Sep. 8, 2000, Ref. Chiao-Yu-fai-Tze No. 8951

The amendment of Articles 9, 9.1, 11, 12 and 13 were hereby promulgated on the date of May 29, 2002, Ref. Chiao-Yu-fai-Tze No. 091B000032.

The amendment of Articles 8 and 17 were hereby promulgated by the MOTC's Order on the date of Dec 24, 2003, Ref. Chiao-Yu-fai-Tze No. 092B000122.

The amendment of Articles 12, 13 and 17, and the addition of Article 9.2 were hereby promulgated by the MOTC's Order on the date of Jan. 11, 2006, Ref. Chiao-Yu-fai-Tze No. 09500850071.

Article 1

This Regulation is enacted in accordance with Article 26, Paragraph 3, of the Telecommunications Law.

Article 2

Any adjustment to the tariffs for each service of Type I Telecommunications Enterprises shall be subject to the following formula:

[(Pt － Pt-1) ÷Pt-1] ×100% (ΔCPI － X)

Article 3

The parameters of the formula set forth in the preceding Article shall have the following meanings:

1. "Pt" refers to the rates or amounts of tariffs (hereinafter, the "Tariff Rates") following adjustment by Type I Telecommunications Enterprises during each implementing year.
2. "Pt-1" refers to the Tariff Rates implemented by Type I Telecommunications Enterprises for the year immediately preceding each implementing year.
3. "ΔCPI" refers to the most current annual rate of increase in the consumer price index in Taiwan, as announced by the Directorate General of Budget, Accounting and Statistics prior to each implementing year.
4. "X" refers to the adjustment coefficient.
5.  [(Pt － Pt-1) ÷Pt-1] ×100% refers to the percentage adjustment to the tariffs.

The "implementing year" set forth in the preceding paragraph shall refer to the period between April 1 of each year and March 31 of the following year, provided that the first implementing year following the promulgation of the Regulation shall be the period between the effective date and March 31st of the following year.

Article 4

The Pt-1 value shall be determined in the following manner:

1. For the tariffs set by Type I Telecommunications Enterprises prior to the promulgation of the Regulations, the last Tariff Rates approved by the Ministry of Transportation and Communications ("MOTC") or the Directorate General of Telecommunications ("DGT") prior to the promulgation of the Regulation shall be the Pt-1 value for the first implementing year.
2. For the tariffs set by Type I Telecommunications Enterprises for the first time following the promulgation of the Regulations, such first-time Tariff Rates shall be the Pt-1 value for the first implementing year.
3. Following the promulgation of the Regulations, the Pt-1 value for the second implementing year and thereafter shall be the tariffs effective as of March 31st in the year immediately preceding each implementing year.

Article 5

The adjustment coefficient shall be determined and regularly announced by the DGT.

Article 6

Adjustment to tariffs for each service of Type I Telecommunications Enterprises for each implementing year under the formula set forth in Article 2 shall be subject to the following requirements:

1. Where the (ΔCPI-X) value is greater than "0," the percentage by which the tariffs of Type I Telecommunications Enterprises are raised during the implementing year shall not exceed the (ΔCPI-X) value.
2. Where the (ΔCPI-X) value is smaller than "0," the percentage by which the tariffs of Type I Telecommunications Enterprises for the first day of the implementing year is reduced shall not be lower than the absolute value of (ΔCPI-X); and the Tariff Rates during any given implementing year shall not be greater than the Tariff Rates adjusted by the reduction percentage based on (ΔCPI-X).
3. Where (ΔCPI-X) is equal to "0," the tariffs of Type I Telecommunications Enterprises during the implementing year shall not be raised.

Article 7

Where the tariffs for each service of Type I Telecommunications Enterprises may be raised in accordance with the provisions of the preceding article, the Tariff Rates following each adjustment during any given implementing year shall not exceed the Tariff Rates calculated by the percentage of increase as determined under subparagraph 1 of the preceding article.

Where the percentage by which the Tariff Rates are raised during any given implementing year does not reach the ceiling percentage determined under subparagraph 1 of the preceding article, the remaining percentage may not be used to raise Tariff Rates for subsequent implementing years.

Article 8

Where the fixing or adjustment of the tariffs of Type I Telecommunications Enterprises involves network interconnections among Type I Telecommunications Enterprises, the negotiations for the interconnection fees and the handling of communications charges shall be governed by the provisions of Regulations Governing Network Interconnection among Telecommunications Enterprises.

The fixing or adjustment of the tariffs for each service of Type I Telecommunications Enterprises may not violate the Telecommunications Law, the Fair Trade Law, or any relevant laws and regulations.

Article 9

The adjustment and promotional scheme of tariffs of Type I Telecommunications Enterprises shall be announced in the media, on websites, and at all business premises, and it should be reported to the DGT for record at least 7 days prior to the effective date of such adjustment. But the adjustment and promotional scheme of primary tariffs of dominant Type I Telecommunications Enterprises shall be submitted to the DGT for MOTC's approval 14 days prior to the scheduled effective date of such adjustment, and the DGT will refer such scheme to the MOTC for approval. Following the approval, the adjustment and promotional scheme shall be announced in the locations mentioned in the preceding paragraph, and shall go into effect after 7 days of the annunciation.

The promotional scheme of dominant Type I Telecommunications Enterprises, including primary tariffs and non-primary tariffs, shall be floated in accordance with the proviso mentioned in the preceding paragraph.

The "primary tariffs" set forth in the preceding paragraph shall include the following items:

1. Local network services:

(1)Monthly rents for local networks.

(2)Communications charges for local networks.

(3)Monthly rents for leased local network circuits.

(4)Communications charges for pay phones.

2. Long-distance network services:

(1)Communications charges for long-distance networks.

(2)Monthly rents for leased long-distance network circuits.

3. International network services:

(1)Communications charges for international networks.

(2)Monthly rents for leased international network circuits.

4. Mobile services:

(1)Monthly rents for mobile networks.

(2)Communications charges for mobile networks.

5. Any tariff items announced by the DGT.

If the tariffs reported by a dominant Type I Telecommunications Carrier in accordance with the provisions of paragraph 2 violate the provisions of the preceding three articles, the MOTC or the DGT may demand rectification first.

If the tariffs and promotional scheme reported or implemented by Type I Telecommunications Enterprises damnify consumer interest or cause unfair competition, the DGT may order the enterprises to end or correct its behavior within a certain period.

Article 9.1

The provision, adjustment or promotional scheme of Type I Telecommunications Enterprises tariffs have got approval or notification but no operation, shall be submitted to the DGT approval or notification prior to the scheduled effective date of such adjustment. If announced, shall be announced in the media, on websites and at all business premises.

The tariffs of Type I Telecommunications Enterprises mentioned in the preceding paragraph shall not go into effect. Except legal case, the tariffs shall not effectuate in three months after submitted to the DGT approval or notification.

Article 9.2

Dominant Type I Telecommunications Enterprises shall set a wholesale price for the telecommunications services they provide for other telecommunications enterprises.

The services items and eligible telecommunications enterprises of the telecommunications services mentioned in the preceding paragraph are specified in the attached table below, which is reviewed annually by the DGT.

To set the wholesale price, the avoidable costs and fees should first be deducted from the retail price, and shall not exceed its promotional price.

The dominant Type I Telecommunications Enterprises shall not have unfair competition against other telecommunications enterprises.

The filing deadline and effective date of wholesale price for dominant Type I Telecommunications Enterprises will be announced by the DGT.

Article 10

"Dominant Type I Telecommunications Enterprises" refers to any Type I Telecommunications Enterprises which is declared by the MOTC to be such a carrier and which meets any of the following criteria:

1. Control of critical and key telecommunications infrastructure.
2. Dominance over market prices.
3. A market share of over 25 percent for any given service, as measured by the number of subscribers or business volume.

Any dominant Type I Telecommunications Enterprises which does not meet any of the criteria set forth in the preceding paragraph may submit relevant information to the MOTC and request removal of its designation as a dominant carrier.

Article 11

The following information shall be included in any submission by Type I Telecommunications Enterprises for approval or record in accordance with Article 9:

1. Detailed descriptions about adjusted tariffs and old-new tariffs' checklist.
2. Effective date or scheduled effective date.
3. Applicable period, if any.
4. Applicable area, if any.

In addition to the items described in the preceding paragraph, forecasts regarding operating income and expenditures and expected return on investment, along with calculations in satisfaction of the formula set forth in Article 2, shall be submitted by Type I Telecommunications Enterprises, as well for adjustment of primary tariffs.

Article 12

For the tariffs for each service set for the first time by Type I Telecommunications Enterprises, the approval, recordation or announcement thereof shall be governed by the provisions of Articles 8 to 11.

Article 13

Where the tariff components of any package tariffs, tie-in sales tariffs or volume discount tariffs are implemented by Type I Telecommunications Enterprises, it shall be governed by relevant provisions of Articles 6 to 11.

The "package tariffs" referred to in the preceding paragraph means combinations of different tariff components for the same telecommunications service as arranged by Type I Telecommunications Enterprises, where subscribers may select from different combinations of tariffs. "Tie-in sales tariffs" shall refer to combinations of the tariffs for different telecommunications services as arranged by Type I Telecommunications Enterprises, where subscribers may select from different combinations of tariffs. "Volume discount tariffs" shall refer to the different discounted rates offered by Type I Telecommunications Enterprises to subscribers for the same telecommunications service based on the different levels of traffic volume used by the subscribers.

When filing tariffs for approval or record in accordance with the provisions of Article 9, Type I Telecommunications Enterprises shall additionally submit analyses and supporting explanations for each tariff combination.

The wholesale price and relevant cost analysis information shall be included in any submission by dominant Type I Telecommunications Enterprises telecommunications services under Paragraph 2 of Article 9.2 for approval or notification of retail price in accordance with Articles 9, 12 and 13.

Article 14

If tariff adjustment during any implementing year by Type I Telecommunications Enterprises involves price discrimination by area, the percentage of such tariff adjustment shall be determined through calculations considering the adjustment percentage of each tariff bracket and the traffic volume thereof and shall weighted by the Laspeyres Price Index (see Attachment). Such adjustment may not exceed the percentage of tariff adjustment for a given implementing year as set forth in Article 2.

The different "tariff brackets" referred to in the preceding paragraph shall mean tariffs set for different time slots or communications locations with respect to the same service.

Article 15

Before granting approval or allowing recordation of tariffs, the DGT may request necessary information from Type I Telecommunications Enterprises, or notify the same to appear before the DGT, and the Type I Telecommunications Enterprises may not object.

Article 16

Any subscriber or other telecommunications operator who finds that the fixing or adjustment of tariffs by any Type I Telecommunications Enterprises violates the provisions of the Regulations may file a complaint with the DGT.

A complaint set forth in the preceding paragraph shall be filed in writing and specify the following:

1. Name and address of complainant.
2. Name of the operator against whom the complaint is filed and the services involved.
3. Reasons for filing.

The DGT shall handle such complaint within two months and notify the complainant of the results thereof.

Article 17

If any of the following irregularities is found in connection with any tariff submitted or implemented by Type I Telecommunications Enterprises, such tariff shall be changed by order of the DGT:

1. The fixing or adjustment of tariffs violates the Guidelines for Type I Telecommunications Enterprises Accounting System and Accounting Procedures, Regulations Governing Network Interconnection among Telecommunications Enterprises, and other related regulations.
2. The formula set forth in Article 2 is violated.
3. Any provision of Paragraphs 1 and 2 of Article 9, Paragraphs 3 and 4 of Article 9.2, or Article 12 is violated.
4. A complaint has been filed in accordance with the provisions of Article 16 and is verified.

Where any tariff is changed by Type I Telecommunications Enterprises pursuant to the preceding paragraph, if the tariff prior to the change is higher than the tariff so changed, the excess shall be returned to the subscribers within three months.

Article 18

Each dominant Type I Telecommunications Enterprises shall submit detailed information regarding the fixing or adjustment of tariffs for a given implementing year to the DGT within three months following the end of each implementing year.

Article 19

The Regulation shall become effective on the day of its promulgation.

Attachment

Table