Telecommunications enterprises are classified into Type I telecommunications enterprises and Type II telecommunications enterprises.
A Type I telecommunications enterprise means an enterprise that installs telecommunications line facilities and equipment in order to provide telecommunications services.
The aforementioned telecommunications line facilities and equipment refer to network transmission facilities connecting the sending and receiving terminals, the switching facilities installed to be integrated with the network transmission facilities, and the auxiliary facilities of both.
A Type II telecommunications enterprise means a telecommunications enterprise other than Type I telecommunications enterprises.

A Type I telecommunications enterprise may not operate without franchise and license issued by the MOTC.
A Type I telecommunications enterprise shall be a company limited by shares incorporated pursuant to the Company Law.
The chairman of the Board, of a Type I telecommunications enterprise shall be a nationals of the Republic of China. The total direct shareholding by foreigners may not exceed forty-nine percent, and the sum of direct and indirect shareholding by foreigners may not exceed sixty percent.
The percentage of indirect shareholding by foreigners mentioned in the preceding paragraph shall be calculated by multiplying the percentage of shareholding by domestic juristic persons in the Type I telecommunication enterprise by the percentage of shareholding or capital paid by foreigners in the said domestic juristic persons.
The percentage of shareholding by foreigners in Chunghwa Telecom Co., Ltd. shall be separately prescribed by the MOTC, and the provision in paragraph three shall not be applied hereto.
The operating items and scope, the timetable for deregulation, and the number of operators to be allowed for Type I telecommunications enterprises shall be announced by the Executive Yuan.
With respect to granting franchise to Type I telecommunications enterprises' service provisions, the MOTC may adopt a system of evaluation and examination, open tender or any other appropriate method, in consideration of the objectives of liberalization policy, conditions of the telecommunications market, consumers' rights, and other needs of public interests.

An applicant for operation of Type I telecommunications enterprise shall apply with the MOTC for establishment of its operation by submission of an application, business proposal and other specified documents.
The aforementioned business proposal shall specify the following:
1. operating items.
2. service areas.
3. mode of communication.
4. general description of telecommunications facilities.
5. financial structure.
6. technical capability and development plan.
7. tariff schedule and formula.
8. personnel structure.
9. scheduled date of operation.
If the mode of communication under subparagraph 3 of the preceding paragraph is wireless communication, a detailed plan of radio spectrum allocation shall be included.
If the documentation submitted by the applicant under paragraph 1 of this Article is incomplete, or if the information contained therein is inadequate, the MOTC shall notify the applicant to make up the documentation or information as required at a prescribed time frame. If the required documentation is not provided within the prescribed time frame, or the documentation remains incomplete after the required documentation is made up, the application shall be rejected.

Once an application for the operation of a Type I telecommunications enterprise has been reviewed and approved or awarded the bid, the MOTC shall issue an establishment permit for the establishment to such an enterprise.
The MOTC may order the applicant to pay a performance bond as required before issuing the establishment permit. For those applicants who fail to establish operations as required by regulations or fail to complete the operation establishments in accordance with the approved plan, the MOTC will not refund the performance bond or part thereof, and may annul the establishment permit as well.
An applicant who has obtained a establishment permit in accordance with paragraph 1 of this Article shall complete the establishment of its operation in the designated region within the prescribed time frame, and proceed with company registration as required by law. If the applicant is unable to complete incorporation and company registration within the prescribed time frame, it may file with the MOTC a petition for extension of the said time frame, together with reasons, before the expiry thereof.
An applicant, who has completed the aforementioned establishment in accordance with the provisions of preceding paragraph, may file with the MOTC an application for technical inspection of the said establishment. After passing the inspection, the applicant will be granted a franchise license for Type I telecommunications enterprise.
A Type I telecommunications enterprise shall start its operations within 6 months from the date the license is issued; otherwise, the license shall be annulled.
The MOTC shall prescribe, for the Type I telecommunications enterprise, the rules governing the operating items, service areas, technical specifications and inspection items, terms and conditions for granting a franchise, requirements and procedures, the term of validity of a franchise, establishment of the enterprise, method of payment and conditions of refund of a performance bond, and the matters in relation to the supervising and managing the said enterprise, and other compulsory rules.
The enactment of rules within the permitted scope of business referred to in the preceding paragraph shall comply with International Telecommunications Union standards and adhere to the principle of technological neutrality, not compel Type I telecommunication enterprises to use a particular technology, and maintain the same degree of regulation on the provision of the same services.

Without prior approval from the MOTC, a Type I telecommunications enterprise may not:
1. suspend or terminate operations in whole or in part;
2. transfer the whole or substantial parts of the enterprise or its assets; or
3. engage in interlocking investment or merger with any other Type I telecommunications enterprise.

Request for network interconnection between or among Type I telecommunications enterprises shall not be rejected, unless the law specifies otherwise.
The arrangement of network interconnection mentioned in the preceding paragraph shall follow the principles of transparency, reasonableness, non-discrimination, network unbundling and cost-based pricing. The DGT shall designate the telecommunications enterprises to which the said principles shall apply.
Among Type I telecommunications enterprises, an agreement shall be reached within three months from the date one party requested for network interconnection. If the agreement can not be reached within three months, the DGT shall arbitrate the matter upon receipt of request therefor or by its official authority.
Among Type I telecommunications enterprises, if the agreement cannot be reached within three months from the date of one party's request for amendment or renewal of a network interconnection agreement, the DGT may arbitrate the matter upon receipt of request therefor.
In the event Type I telecommunication enterprises do not carry out network interconnection as agreed which failure is within the scope of those mandatory terms required by law to be included in interconnection agreements, the DGT may arbitrate the matter upon the receipt of request therefor.
One who does not agree with DGT's arbitration described in the preceding three paragraph may request for relief in accordance with the administrative procedure.
Type I telecommunications enterprises shall not reject the request for network interconnection by Type II telecommunication enterprises without due cause, unless the law specifies otherwise. The preceding paragraph 3 and 6 shall apply, mutatis mutandis, to the agreement of network interconnection.
The Type II enterprises to which the preceding paragraph shall apply shall be announced by the DGT.
The DGT shall enact governing rules with respect to network interconnection, tariff calculation, negotiation, mandatory terms within interconnection agreements, arbitration procedures , and matters requiring compliance related thereto, between or among Type I telecommunications enterprises and other telecommunications enterprises.
The DGT may disclose a part or the whole of the interconnection agreement between or among Type I telecommunications enterprises which are Dominant Market Players and other telecommunications enterprises. Upon request, the DGT may elect not to disclose such portions of the agreement related to patent or other intellectual property rights.
This Article shall apply to applicants who have obtained an Establishment Approval in accordance with paragraph 1 of Article 14.

A Type II telecommunications enterprise shall apply to the DGT for an operation license, and may only commence its operation when the enterprise completes its company or business registration in accordance with the laws and receives the operation license.
The MOTC shall enact governing rules on business items, technical specifications and inspection items of Type II telecommunications enterprise; the licensing method, conditions and procedures; the term of validity of a franchise license, supervision and administration of business operation, and other compulsory matters.

A Type II telecommunications enterprise shall apply to DGT for an operation license by submitting an application, a business proposal and other specified documentation.
The application under the preceding paragraph shall specify the following:
1. applicant's name and domicile; or, in case of a juristic person, name of the representative and the principal place of business.
2. operating items.
3. service areas .
4. mode of communications.
5. general description of telecommunications facilities.
If the documentation required in the application as specified under the preceding paragraph is incomplete, or the contents thereof are inadequate, DGT shall notify the applicant to make up the documentation or contents within a prescribed time period. Either if the required documentation is not submitted within the prescribed time frame, or if the information furnished remains inadequate after the required documentation is made up, the application shall not be accepted.

Type I telecommunications enterprise shall, in accordance with their operating items, establish separate accounting systems to calculate profits and losses and may not employ cross-subsidy to hinder fair competition. The same applies to Type I telecommunications enterprises that also operates a Type II telecommunication enterprise or any other non-telecommunication business.
The MOTC shall establish for Type I Telecommunication enterprises the accounting separation system, accounting method, procedures, and principles, guidelines for accounting supervision and administration and other compulsory accounting criteria.

To protect the basic telecommunications rights and interests of R.O.C. nationals, The MOTC may designate, based on different areas and service items, a Type I telecommunications enterprise to provide universal telecommunications services.
The term "universal telecommunications services" (hereinafter as "universal service(s)", stipulated in the preceding paragraph, means the necessary telecommunications services of certain quality that may be fairly enjoyed by all nationals at a reasonable price. A fund dedicated to the universal services shall be established for achieving the goal of universal services.
The losses and necessary management expenses arising from the universal services shall be shared and paid out to the said fund by the telecommunications enterprises publicly designated by the MOTC.
The MOTC shall enact regulations governing the identification of scope and service areas and selection of providers of the universal services, and the matters with respect to the accounting and allocation of losses incurred therefor.
The telecommunications universal services fund shall not be construed as a "fund" described in the Budget Act.

Telecommunication numbers including numbering codes, subscriber numbers and identification codes used by telecommunication networks shall be planned and administered by the DGT. The telecommunication network numbering plan shall be announced by the DGT.
The telecommunication numbers referred to in the preceding paragraph shall not be used or altered without the approval of the DGT or of an institution authorized by the DGT.
The DGT may adjust or retrieve the assigned telecommunication numbers for the purpose of maintaining the reasonable and effective use thereof, and may collect telecommunication number usage fees. The criteria of telecommunication numbers usage fees shall be enacted by the DGT.
For the purpose of protecting consumer rights and promoting effective competition in the telecommunications market, Type I telecommunication enterprises shall provide number portability service and equal access service. The applicable regulatory rules for such services related to scope, manner of provision, implementation timetable, and other compulsory rules shall be enacted by the DGT.
The number portability service referred to in the preceding paragraph means the service which enables subscribers to retain their existing telephone numbers when switching from their original Type I enterprise to another Type I enterprise engaging in the same business; equal access service means the service provided by a Type I enterprise which allows its subscribers to select the long distance and international network service of other telecommunication enterprises.
The DGT shall enact the administrative rules relating to the matters referred to in paragraphs 1 to 3 regarding allocation, adjustment and retrieval of telecommunication numbers, the qualifications of a delegatee institution and conditions for such delegation of authority and the authority which may be delegated to it, and other compulsory matters.
The DGT shall supervise and provide guidance for matters related to the administration of registration of Internet Addresses and Internet Domain Names and shall promulgate rules related thereto.
The administrative work referred to in the preceding paragraph shall only be performed by non-profit legal entity.

A telecommunications enterprise shall provide services in a fair and non-discriminatory manner unless otherwise provided for herein.

A telecommunications enterprise shall not refuse reception and transmission of telecommunication signals unless otherwise stipulated by law. However, it may refuse or discontinue the transmission of telecommunication signals whose contents appear to endanger national security or public order.

The telecommunications enterprise shall not be held liable to its user for damages arising out of error, delays, interruption, suspension or failure in transmissions due to a failure or breakdown of telecommunication line facilities and equipment. However, the service fees shall be deducted accordingly.

In the event of any breakdown of telecommunications line facilities and equipment as a result of any disaster or other major incidents, a telecommunications enterprise may, after making a public announcement, suspend its communications services either in whole or in part.

A telecommunications enterprise shall give priority to the handling of the following:
1. communications to prevent disasters, provide relief or maintain order in the event , or the likely occurrence of a natural disaster, accident or any other emergency;
2. emergency communications for traffic safety, as it relates to distress signals from land, sea, or air transportation vehicles and aerial weather reports; or
3. other emergency communications necessary for the protection of national security or public interests.

The tariff regulation of Type I telecommunications enterprises shall adopt the price cap method.
The aforementioned method means the percentage of adjustment of controlled tariffs of the regulated telecommunications enterprises shall not exceed the annual increase rate of consumers' price index of Taiwan area announced by the Directorate General of Budget, Accounting and Statistics of the Executive Yuan, minus index.
The MOTC shall enact administrative rules governing the tariffs of Type I telecommunications enterprise including administration and examination of tariffs, initial offer of each tariff, the entities to which the price adjustment cap shall be applied, the services to which the tariffs shall be applied, tariff items, the adjustment coefficient and other compulsory rules.
The determination of tariffs of Type I telecommunications enterprise shall not involve cross subsidy to hinder fair competition. The same is applicable to a Type I telecommunications enterprises that also operates a Type II telecommunications enterprises or other non-telecommunications business.
The tariffs for a Type II telecommunications enterprise shall be determined by the enterprise itself.

A Dominant Market Player (DMP) of Type I telecommunications enterprises shall not engage in the following conducts:
1. to obstruct, directly or indirectly, the request of interconnection of networks proposed by other Type I telecommunications enterprises with its proprietary techniques;
2. to refuse to release to other Type I telecommunications enterprises the calculation methods of its interconnection fees and other relevant materials;
3. to improperly determine, maintain, or change its tariffs or methods of offering telecommunications services;
4. to reject the request of leasing network component by other Type I telecommunications enterprises without due cause;
5. to reject the request of leasing circuits by other telecommunications enterprises or users without due cause;
6. to reject the request of negotiation or testing by other telecommunications enterprises or users without due cause;
7. to reject the request of co-location negotiation by other telecommunications enterprises without due cause;
8. to discriminate against other telecommunications enterprises or users without due cause; or
9. to abuse its DMP status, or to engage in other unfair competition acts.
The aforementioned DMP shall be identified by the DGT.

A Type I telecommunications enterprise shall establish its business rules in connection with the terms for provision of services and submit the same to the MOTC through the DGT for approval prior to announcement and implementation. The same shall apply for amendments to the rules.
A Type II telecommunications enterprise shall establish its business rules in connection with the terms for provision of services and submit the same to the DGT for record prior to implementation. The same shall apply for amendments to the regulations.

The business rules stipulated in the preceding article shall establish fair and reasonable service conditions, and be placed at every operation places and websites of the telecommunications enterprise. The DGT shall order changes of the business rules within a prescribed time frame if it encroaches upon consumers' rights and benefits, and appears patently unfair.
If the operation of a telecommunications enterprise fails to ensure the secrecy of communications, or violate the provision of Article 21, DGT may order the enterprise to make improvements within a prescribed time frame.

Except for indoor relocation, the function, purpose or installation site of telecommunications lines facilities and equipment leased to users by a telecommunications enterprise shall not be altered by users or others without authorization.

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