- Dr. Hann-Bin Chuang, Vice President of FITEL -

This presentation covers the following four items Our Plan, Our Accomplishments, What We Have Learned, and Future Plans based on our past experiences.

Our Plan: Service areas have been deployed in the Greater Taipei area as Phase I. The Hsinchu and Taoyuan areas are Phase II of further planned deployments and Kaoshiung City/Taichung City, Phase III/IV respectively, will be deployed in parallel with the existing systems' optimization. Our target of 8,000 CSs (Cell Stations) and 500,000 subscribers will be accomplished by the end of 2002 (currently there are approximately 320,000 subscribers). International roaming service with the Japanese PHS operator DDI POCKET was successfully started in May 2002 and has been well accepted by users. As for our handset line-up (Personal Stations = PSs), starting February 2002 SANYO's J95 was added to the existing J88. The J95 has full-color (65,536 colors) display function and is now seen as the most advanced model among all models in the Taiwan market including GSM phones.

In order to establish our perception and brand image, we've been using three slogans "Safe," "Value" and "Advanced" since the beginning of our campaign.

Safe: Due to the PHS's low power radio emission, it is the only cellular technology allowed to be used in hospitals. Further, many have been interested to learn that it can be used in high-tech environments such as semiconductor plants as well.

Value: Low tariffs, high voice quality (compared with the GSM) and long battery life are the main values of PHS.

Advanced: 64kbps high speed data transmission, usability even while driving at 100 Km/h, and accurate location tracking have been emphasized as advanced features of PHS.

We have been targeting the following markets based on the above: high-end users, hospitals, business users in high-tech plants (as a VPN (Virtual Private Network) phone which can share public and private network on the narrow PHS frequency band), Internet users who need high data transmission speeds, vertical applications such as a vending machine, telemetering etc.

3G vendors are proposing the next generation mobile communications world. However, we believe that PHS is the only solution for the present.

The following requirements are essential for our service:

- High output power CS necessary for high quality and wide coverage system.
- Seamless hand-over capability and high-end PS acceptable to the GSM subscribers as well.
- Wireless Internet access and "i-mode" like data service.
- Lower tariff than GSM service.
- Flexible billing and good customer service. (FITEL now allocates more than 100 staff members to customer service for 320,000 subscribers.)

- For voice services, we are offering value added services beyond basic service items such as call waiting, caller ID, conference calling, etc. offered by GSM
- International roaming service to Japan, starting May 2002.
- For data services, we are offering SMS (Short Messaging Service) enabling worldwide roaming with GSM, MiMi (Mobile Information Mobile Internet) service enabling Internet mail and information, WiWi (Wireless Information Wireless Internet) service enabling PC/PDA high-speed wireless Internet access, and location information services.
- VPN service for companies and hospitals. Approximately 3,000 PHS PSs are currently being used in hospitals.

Our Accomplishments:
(Presentation was made on "RF coverage," "Marketing Campaigns," "Customer Growth," "Customer Profile," "Outbound Traffic & Revenue Analysis" and "Revenue Projection." PHS TV commercials were introduced in "Marketing Campaigns" and further, actual contents were also on the PC screen during Q&A time.)

Summary of the "Customer Profile" is sampled as follows:

- Most subscribers have selected "By Seconds" rather than "By Minutes" billing.
- Subscribers under 30 years old represented 57% of the total. However, it is believed that subscribers under 20 are actually the biggest subscriber group, since subscribers under 18 years of age are not allowed to sign by themselves and ask their parents to sign on their behalf. Considering this, the total subscribers under 30 may be as high as 60-70%.

- A handset (PS) is required to have high-functions, but cost-performance is more important.
- Discontinuance of the monthly basic charge resulted in a subscriber increase.
- Tight cooperation between the carrier and system vendor is essential, especially at the product/service planning stage.
- High quality and wide coverage voice service is at present more important than data service because 80-90% of the total revenue is from voice service.
- RF coverage and network quality are also vital and it is also necessary to recognize that those aspects are one part of the brand image of the service.
- At least now, we should not overestimate the market size for data. However, data capability does differentiate our service from others.
- Through cooperation with content providers and DDI POCKET, we've come to know users' actual demand for mobile data services.
- In order to compete with GSM, which dominates mobile markets, a PHS/GSM dual-mode PS might push PHS to the next level.
- Real content are those created through interaction among users.
- The top three of approximately 200 MiMi contents are interactive and represent 45% of the total MiMi traffic.
- GSM services have already realized "i-mode" like service in Taiwan. As such, packet mode should be quite important for PHS from now on.