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Joseph Fan (Int'l Edition)


International -- The Stars of Asia -- Managers

Joseph Fan (int'l edition)

President -- Taiwan Cellular Corp. -- Taiwan

Cracking Taiwan's cell-phone market takes some doing. "This is not a level playing field," says Joseph Fan, president of upstart Taiwan Cellular Corp. He faces competition from companies backed by AT&T, as well as state-owned monopoly Chunghwa Telecommunications Co. Chunghwa has a lock on fixed-line phones, which makes it impossible for Taiwan Cellular to bundle fixed and mobile services. Yet in three years, Fan, 39, has made Taiwan Cellular the leading mobile-phone operator on the island, with 3.9 million subscribers and $845 million in revenues last year.

Fan, who learned the phone business in Hong Kong, decided to distinguish his company by focusing on connection quality. While cost may be key in Europe or the U.S., Fan believes that in Taiwan, clear connections to enable over-the-phone business transactions are most important. "We are bringing Hong Kong quality to Taiwan," he says. As a result, Taiwan Cellular regularly scores high marks for service in government surveys.

Fan studied electrical and biomedical engineering at the University of Southern California and earned a master's in management from the California Institute of Technology. Then he started out with billionaire Li Ka-shing's Hong Kong-based Hutchison Telecom. In 1993, he jumped to Pacific Electric Wire & Cable Co., Taiwan Cellular's major shareholder. Using his experience bidding for mobile licenses everywhere from India to the Philippines, Fan helped put together the winning bid in Taiwan, working with executives from Pacific Electric and minority partners, such as giant Acer Inc. and U.S. telecom operator GTE Corp.

Taiwan Cellular still is privately held, but investors have given Fan a thumbs-up by boosting the share price of Pacific Electric 34% this year, compared with a measly 4% rise on the overall index. Taiwan Cellular may get spun off; Fan is also plotting the company's Internet strategy, unveiling 1,000 wireless access protocol services for subscribers.

Despite a hectic schedule, Fan finds time for calm: As a student, he covered half his expenses teaching Tai Chi, and now he teaches the ancient art at his daughter's elementary school every other morning. Then he races to the office. "It's 9.7 kilometers," he says, "and I drive fast." Taiwan Cellular's users are glad he does.Return to top

ONLINE ORIGINAL

A Chat with Joseph Fan

Joseph Fan is president of Taiwan Cellular Corp., which has jumped ahead of longtime state-owned monopoly Chunghwa Telecom in just three years to become the leader in Taiwan's mobile-phone business. He recently spoke with Bruce Einhorn, Business Week Asia correspondent. Here are edited excerpts of their conversation:Q. What was the strategy when you started with TCC?

A. You need the right kind of shareholders, the right kind of money. We got together with Acer, Fubon, and Evergreen. And we have been very careful selecting vendors and equipment suppliers, because we need a huge build-out for Taiwan.Q. That's something that others would do, too. What made TCC different?

A. All the other companies were looking at 200,000 or 300,000 [subscriber] capacity. But we decided early that we were building a system for 1 million. We started a massive build-up effort.Q. And you quickly became No. 1 in the market. What was the key to that success?

A. We were just doing what a telephone company is supposed to do, nothing fancy. At that time, a lot of people were waiting for new phones, they were out of capacity: There were 1.3 million users and 800,000 people waiting for mobile phones. And Chunghwa Telecom couldn't handle the capacity.

In the first three months, we had 300,000 subscribers. In our business plan, that had been our target for the first year. We then hit a million in a little bit over a year, hit the second million within seven months after that, and hit the third million five months after that.Q. How did you manage that?

A. We are not the cheapest operator here. We don't deliver based on the lowest price. I don't think the lowest price is what consumers are looking for. Superior network quality is the most critical issue. We have the best network here. In the U.S., price is definitely the issue: the price for handsets, the price you pay per month [for service]. Those things are not a consideration here in Taiwan. Here, the most important thing is quality, a phone that they can always receive a call and make a call.Q. What's next?

A. Third generation. The trend in our industry is to provide Internet access and mobile portals. We are largest WAP [wireless application protocol] provider here already, with over 1,000 types of services, from stock quotes to banking to restaurant reservations to pizza orders to theater reservations.Q. But WAP hasn't taken off as it has in Japan. What's wrong?

A. There is a shortage of WAP handsets here. There are less than 12,000 handsets. NTT DoCoMo can dictate the specifications of handsets in Japan because of their scale. But in Taiwan, we still don't have color handsets, and we won't have them till early next year. And WAP phones here are quite slow.Return to top


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