Taiwan's 5G Network Construction and Digital Transformation

30-Second Overview

Taiwan launched commercial 5G services on June 30, 2020. Base station deployment was rapid: by the first quarter of 2022, there were 29,087 5G base stations across Taiwan, covering 94.36% of the radio population¹, and this number exceeded 35,000 by December of that year². The government promoted overall digital transformation through the "Digital Nation / Innovation Economy Development Plan (DIGI+)," establishing the Ministry of Digital Affairs in 2022 to coordinate related policies.

However, by the end of 2022, 5G user penetration had only surpassed 25%³, and application services still needed breakthroughs, indicating challenges from basic infrastructure to commercial adoption. This gap is the core issue in Taiwan's current 5G policy.

Taiwan's 5G development model offers a unique case study: how does policy compensate when government-led rapid construction and market-driven application adoption rates are unsynchronized?

Keywords: 5G Network, Digital Transformation, DIGI+ Plan, Ministry of Digital Affairs, Smart City, IoT

Why It Is Important

The construction of 5G networks and digital transformation is a critical strategy for Taiwan to maintain its technological competitiveness.

5G provides the high-speed, low-latency network foundation necessary for Artificial Intelligence (AI), the Internet of Things (IoT), and smart manufacturing. On the international competitive level, digital infrastructure helps maintain Taiwan's key position in the global technology supply chain.

At the societal level, digital transformation involves two aspects: national security (building self-controlled infrastructure) and digital inclusion (allowing rural and elderly populations to participate). A deficiency in either aspect weakens the overall strategic effect.

Taiwan's 5G Development History

Spectrum Allocation and Commercial Launch

Taiwan's 5G development began with spectrum planning, using rapid allocation and construction subsidies as primary tools:

Key Milestones:

The 5G spectrum auction started in December 2019 and concluded in February 2020. The total bid amount for the 3.5GHz and 28GHz bands was NT$142.191 billion⁴. Licenses were sequentially issued to five operators from June to July of that year, with Taiwan Star and Asia Telecommunication securing the last two on July 29⁵.

June 30, 2020: Chunghwa Telecom was the first to launch in Taiwan, ushering in the 5G era.
July–August 2020: Far EasTone, Taiwan Mobile, and Taiwan Star sequentially launched.
October 22, 2020: Asia Telecommunication launched through spectrum sharing with Far EasTone, completing the launch for all five operators⁶.

Spectrum Allocation Results:

Telecom Operator	3.5GHz Bandwidth	Bid Amount (NT$ Billion, Both Bands Total)
Chunghwa Telecom	90MHz	483.73
Far EasTone	80MHz	430.42
Taiwan Mobile	60MHz	306.56
Taiwan Star	40MHz	197.08
Asia Telecommunication	Not acquired (only bid for 28GHz 400MHz)	Approx. 4.12

The bid amounts for the first four operators are compiled from the Industrial and Commercial Times⁴; Asia Telecommunication's amount was calculated by subtracting the others from the total bid. In December 2023, Taiwan Star merged with Taiwan Mobile (Dec 1), and Asia Telecommunication merged with Far EasTone (Dec 15), consolidating the five operators into three⁷.

Rapid Infrastructure Deployment

Government subsidies accelerated the construction timeline:

Construction Progress Statistics:

August 2021: 20,369 5G base stations across Taiwan; 85% population coverage by end of September⁸.
First Quarter 2022: 29,087 units; 94.36% radio population coverage¹.
December 2022: Over 35,000 units; over 94% radio population coverage².

Government Policy Support

The government accelerated 5G deployment through multiple policy tools:

Key Policy Measures:

In March 2021, the National Communications Commission (NCC) approved guidelines for 5G network construction subsidies, allocating nearly NT$15.5 billion over two years (approximately NT$9.9 billion and NT$5.5 billion respectively) according to the third phase budget of the Executive Yuan's Forward Infrastructure Plan⁹.

Domestic Equipment: Encouraging operators to use domestically produced brands in new equipment, with a target ratio of 40%⁹.
Regulatory Streamlining: Simplifying base station installation permit procedures.

DIGI+ Plan: The Digital Nation Blueprint

Background and Goals of the Plan

The "Digital Nation / Innovation Economy Development Plan (2017–2025)," abbreviated as the DIGI+ Plan, is Taiwan's overarching strategy for digital transformation.

The Four Letters of DIGI+:

According to the Executive Yuan's plan page, D stands for Development (building a solid foundation), I stands for Innovation (innovating the digital economy), G stands for Governance (governing a smart nation), and the final I stands for Inclusion (including civil society)¹⁰.

Development Vision: The overall policy framework is "Digital Nation, Smart Island," with the vision of "developing an active network society, promoting a high-value innovation economy, and cultivating a prosperous digital homeland"¹⁰.

Six Major Action Plans

The DIGI+ Plan is driven by six major action plans[^7]:

Digital Innovation Foundation Environment Action Plan
Digital Economy Leap Action Plan
Network Society Digital Government Action Plan
Smart Urban/Rural Regional Innovation Action Plan
Cross-Domain Digital Talent Cultivation Action Plan
Advanced Digital Technology R&D Action Plan

Establishment of the Ministry of Digital Affairs

Organizational Integration and Mission

The Ministry of Digital Affairs was officially established on August 27, 2022, marking a significant milestone in Taiwan's digital governance¹¹.

Background of Ministerial Consolidation:
The Ministry of Digital Affairs integrated digital-related functions that were previously scattered across various ministries:

The Ministry was formed by integrating telecommunications industry and guidance tasks from the National Communications Commission, postal and telecommunication affairs from the Ministry of Transportation, industrial bureau functions from the Ministry of Economic Affairs, information management office functions from the National Development Council, and cyber security affairs from the Executive Yuan¹¹.

Three Core Missions:

Digital Government: Assisting public sector digital transformation.
Digital Economy: Promoting the development of the digital industry.
Digital Infrastructure: Advancing national information infrastructure.

Organizational Structure:

The Ministry has six functional divisions under it: Digital Strategy, Resilience Construction, Resource Management, Digital Government, Digital International, and Data Innovation, along with two subordinate agencies: the Cyber Security Agency and the Digital Industry Agency¹².

Key Policies and Plans

After its establishment, the Ministry of Digital Affairs promoted several important policies:

Digital Government Transformation:

gov.tw unified government portal
integration of government cloud services
cross-ministerial data sharing platform

Digital Industry Development:

promotion of 5G private network applications
nurturing of digital content industries
development of esports industry
digital finance sandbox mechanism

Information Security Protection:

refinement of the National Cybersecurity Law
cybersecurity industry development plan
government cyber defense mechanism
cybersecurity assistance for private enterprises

Development of 5G Application Fields

Vertical Domain Applications

Taiwan promotes 5G applications across various vertical domains, validating business models through field experiments:

Smart manufacturing is the most frequently mentioned application area for 5G private networks.

Smart Manufacturing

Factories use 5G private networks to connect applications such as AI image quality inspection, automated guided vehicles (AGVs), and remote maintenance—these are the main scenarios enterprises evaluate for 5G private networks.

Smart Healthcare

5G telemedicine connects rural medical resources, while live surgical teaching achieves cross-hospital real-time instruction through 4K/8K ultra-high-definition transmission.

AI-assisted diagnosis: Real-time image analysis and recommendations
Emergency medicine: Instant connection between ambulances and hospitals

Smart Transportation

The Shaluon area in Tainan is currently the largest autonomous driving test site, while smart traffic signal systems optimize intersection management using real-time traffic data.

V2X applications: Development of Vehicle-to-Everything communication technology
Drone delivery: Last-mile logistics for rural areas

Smart Agriculture

Precision agriculture combines IoT sensors with 5G data transmission; drones can monitor large agricultural fields in real time, reducing labor costs.

Smart fishery: Monitoring marine farming environments
Agricultural product traceability: Tracking using blockchain combined with 5G

Private Network Construction and Business Models

A 5G private network allows enterprises to establish self-managed network environments, which is a critical foundation for digital transformation in high-reliability fields such as factory automation, hospital networking, and smart ports.

Private Network Construction Models:

Enterprise Self-Build: Large enterprises invest autonomously in construction.
Telecom Outsourcing: Entrusting telecommunications operators to build and operate.
Equipment Vendor Cooperation: Collaborating with network equipment vendors.
Government Subsidies: Applying for digital transformation subsidies.

Business Model Innovation:

MaaS (Mobility as a Service) integrates various travel options, while HealthTech platforms commercialize remote medical services.

AgriTech: Agricultural data services
EdTech: Educational technology applications

Challenges and Difficulties

Low User Penetration Rate

Although Taiwan built 5G base stations quickly, user penetration only surpassed 25% by the end of 2022³, showing a clear gap between basic infrastructure and application popularization.

Reasons for Low Penetration:

Insufficient Applications: Killer applications have not yet emerged.
High Service Costs: 5G service fees are higher than 4G.
Limited Usage Experience Difference: Daily usage is not significantly different from 4G.
Terminal Equipment Costs: 5G phone prices remain relatively high.

Slow Commercial Application Development

B2B enterprise applications face multiple challenges: high costs for 5G private network construction, complex integration with existing systems, and unclear return on investment (ROI), leading enterprises to wait rather than act.

Technical Challenges:

High cost of 5G private network construction
Complex integration with legacy systems
Lack of technical talent
Unclear ROI

Commercial Challenges:

Immature business models
Difficulty in cross-industry cooperation
Regulatory adaptability issues
Cybersecurity concerns

International Competitive Pressure

Taiwan's 5G development faces intense international competition, primarily from two directions: technological dependence and geopolitics.

Technological Dependence:

Core technologies still rely on foreign suppliers.
Limited capability in 5G chip design.
Insufficient influence in standard setting.

Geopolitical Impact:

US-China technology war affects the supply chain.
Limitations in equipment vendor selection.
Increased national security concerns.

Achievements and Impacts of Digital Transformation

Economic Benefits

According to indicators compiled by the Legislative Yuan, Taiwan's digital economy scale was NT$3.8 trillion at the end of 2017 and NT$5.7 trillion at the end of 2021, with a total target indicator set for 2025 at NT$6.5 trillion¹³.

Digital transformation has changed Taiwan's social operations on a daily basis: cross-agency data sharing reduces citizens' travel burdens, and electronic invoices, mobile payments, remote work, and online education platforms have become widespread in recent years.

Enhanced International Status

In the 2023 IMD World Digital Competitiveness Ranking, Taiwan ranked 9th, improving by 2 places from 2022¹⁴.

Future Development Directions

Forward Deployment of 6G

Taiwan has initiated forward research into 6G, focusing on the following technological directions.

Technological Focus:

Terahertz band communication
Satellite-ground integrated networks
AI-native networks
Holographic communication technology

Strengthening Digital Resilience

Faced with global uncertainty, Taiwan strengthens overall digital resilience through supply chain diversification and key technology self-reliance.

Key Measures:

Supply chain diversification
Key technology self-reliance
Improvement of cybersecurity capabilities
Deepening international cooperation

Key Areas:

Semiconductor industry chain security
Cloud service sovereignty
Cross-border data flow governance
Digital human rights protection

Net-Zero Digital Transformation

The net-zero emission goal and digital transformation are converging: energy saving in data centers, solar power supply for base stations, and smart grids all require the synchronized advancement of digital infrastructure and green transition.

Green Digital Plans:

Data center energy-saving technology
Solar power supply for 5G base stations
Smart grid construction
Digital carbon footprint tracking

Circular Economy Applications:

Digitization of electronic waste recycling
Development of sharing economy platforms
Energy management in smart cities
Sustainable supply chain management

Global Status and Influence

Role in the Asia-Pacific Region

Taiwan's role in Asia-Pacific digital development is built on two mutually reinforcing foundations: technological export from the manufacturing side (semiconductor chips, networking equipment) and standard participation from the standards side (3GPP, IEEE 802.11). This dual layout of "manufacturing + standards" makes Taiwan's position in the global digital supply chain difficult to replace.

Technological Export:

Semiconductor chip technology
Networking equipment manufacturing
Software solutions
System integration services

Standard Setting Participation:

Contributions to 3GPP 5G standards
IEEE 802.11 standard development
Participation in ITU-T recommendations
Promotion of open network architectures

International Cooperative Partnerships

Taiwan has established multi-level international digital cooperation relationships, such as the Science and Technology Cooperation Agreement between Taiwan and the United States signed in December 2020, and the Taiwan-EU Digital Economy Dialogue held since 2019 by the National Development Council and the European Commission.

Important Cooperative Frameworks:

Taiwan-US Science and Technology Cooperation Agreement
Taiwan-EU Digital Economy Dialogue

Technical Exchange:

Talent cultivation cooperation plans
Joint R&D projects
Sharing of innovation experimental fields
Standard setting coordination mechanisms

Conclusion

Taiwan demonstrates the wisdom of a small nation with a grand strategy in 5G network construction and digital transformation. From rapid deployment of basic infrastructure to forward-looking policy planning, it reflects Taiwan's advantages and determination in technological development. However, transforming infrastructural advantages into widespread application services, and translating policy planning into commercial success, still requires continuous effort from the government, industry, and society.

Facing intensifying global digital competition and geopolitical complexity, Taiwan must find a balance among technological self-reliance, international cooperation, and social inclusion to truly realize the vision of a digital nation, allowing every citizen to enjoy the results of digital transformation.

The impact brought by 5G and digital transformation extends beyond mere technological upgrading; it touches upon the simultaneous reorganization of business models, public services, and methods of social participation. Taiwan's experience shows that government policy, industrial investment, and social participation are all indispensable—this combination itself is exportable knowledge.

References

Computer King Ada re-transmitting NCC press release (2022-05) — "As of Q1 of Year 111, the number of 5G base stations reached 29,087, and the 5G radio population coverage reached 94.36%."↩²
Central News Agency (2022-12-13): 5G Base Stations and Coverage — "Currently, the number of base stations exceeds 35,000, and the radio population coverage has exceeded 94%."↩²
Economic Daily (2023-02-16): Overall Review of Taiwan's 5G Launch Three Years Later — "After two years since the launch of 5G in 2022, user penetration only surpassed 25%."↩²
Industrial and Commercial Times (2020): 5G Auction Results for Each Operator — Chunghwa Telecom NT$48.373 billion, Far EasTone NT$43.042 billion, Taiwan Mobile NT$30.656 billion, Taiwan Star NT$19.708 billion; total of the two stages was NT$142.191 billion.↩²
Central News Agency (2020-07-29): NCC Issues 5G Licenses for Taiwan Star and Asia Telecommunication — All five operators secured licenses; Chunghwa Telecom, Far EasTone, and Taiwan Mobile had already obtained licenses and launched sequentially in July.↩
TechNews (2020-10-22): Asia Telecommunication Launches 5G — Asia Telecommunication acquired the 3.5GHz network through spectrum sharing with Far EasTone and launched 28GHz millimeter wave services.↩
Liberty Times Finance (2023): Merger Dates of Taiwan Mobile and Taiwan Star on December 1 — The merger date of Taiwan Mobile and Taiwan Star was December 1; the merger date of Far EasTone and Asia Telecommunication was December 15.↩
Central News Agency (2021-10-14): Statistics on 5G Base Stations Across Taiwan — As of August 2021, 20,369 5G base stations were built across Taiwan, with 85% population coverage by the end of September.↩
Central News Agency (2021-03-03): NCC Subsidizes 5G Network Construction — Allocating nearly NT$15.5 billion over two years according to the third phase budget of the Forward Infrastructure Plan; encouraging operators to use domestic brands with a target of 40%.↩²
Executive Yuan: Digital Nation / Innovation Economy Development Plan (DIGI+) — Official plan page: The four-letter meaning of D-I-G-I, development vision, and six major action plans.↩²
Wikipedia: Ministry of Digital Affairs, ROC — Established on August 27, 2022, by integrating related tasks from the NCC, Ministry of Transportation's Postal and Telecommunication Department, Ministry of Economic Affairs' Industrial Bureau, National Development Council's Information Management Office, and the Executive Yuan's Cyber Security Agency.↩²
Ministry of Digital Affairs: Organizational Structure — Six functional divisions (Digital Strategy, Resilience Construction, Resource Management, Digital Government, Digital International, Data Innovation), and two subordinate agencies, the Cyber Security Agency and the Digital Industry Agency.↩
Legislative Yuan: DIGI+ Plan Indicators — Digital economy scale was NT$3.8 trillion at the end of 2017, NT$5.7 trillion at the end of 2021, and the total target for 2025 is NT$6.5 trillion.↩
IMD World Digital Competitiveness Ranking 2023 — IMD 2023 Digital Competitiveness Ranking, Taiwan ranked 9th (improved by 2 places from 2022); confirmed by the Ministry of Digital Affairs press release.↩