PART I 62 Under the current Telecommunications Act, the Chairman of a Type I service provider is required to be a  citizen of the Republic of China.  The laws of the Republic of China limit foreign ownership of our common shares. Prior to March 1, 2006,  the Ministry of Transportation and Communications, as the competent authority under the Telecommunications  Act, had the power to prescribe the limits on foreign ownership of our common shares. After the formation of the  National Communications Commission on March 1, 2006, the National Communications Commission replaced  the Ministry of Transportation and Communications as the competent authority under the Telecommunications  Act pursuant to the Organization Law. On July 18, 2006, the Ministry of Transportation and Communications  and the National Communications Commission reached an agreement where the Ministry of Transportation  and Communications will have the authority to adjust foreign ownership limits only after negotiations with the  National Communications Commission. On June 14, 2007, we applied to both the National Communications  Commission and the Ministry of Transportation and Communications, asking for an increase in the limitation  of direct and indirect foreign ownership of our common shares. After consultation with the National  Communications Commission, the Ministry of Transportation and Communications increased our foreign  ownership limitation of and total direct and indirect shareholdings from 49% to 55%. Our foreign ownership  limitation of total direct shareholdings remained at 49%.  We have been declared by the former competent authority Ministry of Transportation and Communications  as a dominant Type I service provider for fixed line and mobile services. According to the Telecommunication  Act, the Regulations Governing Fixed Network Telecommunications Businesses and the Administrative Rules for  Network Interconnection Between Telecommunication Service Providers, if any other service provider requests  for co-location, we must negotiate with them, unless otherwise provided by laws or regulations. As of the end  of 2010, we are currently co-locating 29 POI sites and two cable stations with other Type I fixed line service  providers and 13 POI sites with other Type I mobile service providers.  In December 2006, the National Communications Commission defined the local loop as facilities “at the  bottleneck of telecommunications networks” in accordance with the Regulations Governing Fixed Network  Telecommunications Businesses. The National Communications Commission requires us to unbundle the  local loops and allow other telecommunications operators to use these connections. The local loop or last mile  connections are the physical wire connections between the telephone exchange’s central office to the customer’s  premises usually owned by the incumbent telephone company. The National Communications Commission  further amended the “Administrative Rules for Network Interconnection between Telecommunication Service  Providers” in April 2007 which provides that we can only charge other local telephone service providers at cost  for local loop services instead of on the basis of commercial negotiations.  Under the regulation, we are required to provide number portability service for fixed line customers  in Taipei City, New Taipei City, Keelung City, Taichung City, Kaohsiung City and other areas where there  are two or above fixed line service providers. We have also provided number portability service for mobile  communication customers since October 15, 2005. Pursuant to the regulation, we shall compile and submit  related information of number portability for the previous six months to NCC by January 10 and July 10 of each  year.  Local Loop Unbundling  Co-location  Ownership Limitations 