PART I Our paging network uses, among other technologies, the open paging protocol developed by Motorola.  This technology provides higher data rate, larger content capacity, longer battery life and better error correction  capabilities than other existing paging technologies. We plan to discontinue our paging service after migrating  paging service subscribers to our 3G network by using incentives. After negotiations between us and the NCC,  the NCC has agreed to hold a public hearing if we want to close the system earlier than the license expiration day  May 5, 2013. This process is still in progress.  Internet Network  HiNet, our internet service provider, has the largest internet access network in Taiwan, with 33 points of  presence, approximately 1,808 dial-up ports, approximately 5,462,000 broadband remote access server ports  and a backbone bandwidth of approximately 1,348 Gbps as of December 31, 2010. We plan to increase HiNet’s  points of presence and backbone bandwidth to approximately 1,740 Gbps by the end of 2011.  HiNet’s total international connection bandwidth is 260.6 Gbps as of December 31, 2010. As we expect that  internet traffic flows to and from the United States will continue to increase, we plan to expand our bandwidth  to the United States. We also plan to increase our links to other countries, including Japan, Korea, Hong Kong,  Singapore, Mainland China, Malaysia and Thailand.  We operate leased line networks on both a managed and unmanaged basis. In addition, we operate a number  of switched digital networks used principally for the provision of packet-switched, frame relay, asynchronous  transfer mode technology and a multi protocol label switching internet protocol VPN. We have completed  the construction of a digital cross connect system for provisioning and managing voice-grade data services  throughout Taiwan with a total of 50 nodes. As of December 31, 2010, we had 695 frame relay ports, 3,118 X.25  ports, 8,095 asynchronous transfer mode ports and approximately 63,835 multi protocol label switching internet  protocol VPN virtual ports.  Leased Line and Data Switching Networks  Our data networks support a variety of transmission technologies, including X.25 protocol, frame relay and  asynchronous transfer mode technology. We have also built up our HiLink VPN that combines internet protocol  and asynchronous transfer mode technologies. The advantage of a HiLink VPN based on multi protocol label  switching technology is that it can carry different classes of services, such as video, voice and data together to  provide services with various qualities of service, high performance transmission and fast forward solution in an  enhanced security network. A HiLink VPN can be accessed by an ADSL and can include built-in mechanisms  that can deal with overlapping internet protocol addresses. Therefore, the network potentially is less costly and  requires less management for business applications.  We face competition in virtually all aspects of our business.  We are the largest domestic fixed communications service provider in Taiwan, with a market share of  approximately 96.9% in terms of customers for local telephone services, approximately 76.1% in terms of traffic  for domestic long distance telephone services in 2010, and approximately 80.5% share of the broadband internet  access market in terms of customers. Three new providers, namely, Taiwan Fixed Network, New Century  Infocomm Tech. Co., Ltd. and Asia Pacific Telecom Co. Ltd., have provided fixed communication services  since June 2001. Our domestic long distance services compete with mobile services as people increasingly use  mobile handsets. We believe that the fixed line competition in Taiwan will be primarily based on price, quality of  service, network coverage and customer services, such as call centers and unified billing.  We are required by Republic of China regulations to provide number portability and unbundled local loop  access.  Competition  Domestic Fixed Communications  45