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## HiNet Internet Service 

We are the largest internet service provider, or ISP, in Taiwan, with a market share of 69.6% as of December 31, 2010. As of December 31, 2009 and 2010, HiNet had approximately 4.1 million subscribers. The increase of our HiNet broadband subscribers was offset by the decrease of HiNet dial-up subscribers. Our HiNet internet service generated revenues of NT$17.7 billion, NT$17.3 billion and NT$18.2 billion (US$0.6 billion) in 2008, 2009 and 2010, respectively. 

The following table sets forth HiNet’s subscribers as of each of the dates indicated. 

<img src='content_image/266653.jpg'>

(1) Based on data provided by the National Communications Commission. 

We have maintained our leading market position despite a highly competitive market with over 181 internet service providers in Taiwan. We expect the competitive conditions currently prevailing in the internet service provider market to continue to intensify. 

## Internet Value-added Services 

Our HiNet portal at www.hinet.net provides value-added services to our customers, such as network security, Blog, travel, games, e-learning, financial information, music, video, anti-virus and links to other portals. We charge fees for some of these services. We also receive commissions for transactions completed on some of these other portals. Our internet video portal at www.hichannel.hinet.net offers online entertainment services through the internet. In particular, our HiNet broadband (ADSL and FTTx) subscribers can access music, television programs, movies and other multi-media content on demand. We charge access fees for some of this content. We expect the revenues generated from these value-added services to grow as a percentage of our total internet services revenues. 

## Data Communication Services and Internet Data Center Services 

We provide a wide range of managed data services, including frame relay services, asynchronous transfer mode services, and VPN services. Frame relay services provide high-speed data communications linking remote sites. Asynchronous transfer mode services are used to handle high-bandwidth, integrated voice, video, data and internet traffic between sites. 

Internet data centers are facilities providing the physical environment necessary to keep computer network servers running at all times. These facilities are custom-designed with high-volume air conditioning temperature control systems, secure access, reliable electricity supply and connections to high-bandwidth internet networks. Data centers house, protect and maintain network server computers that store and deliver internet and other network content, such as web pages, applications and data. We currently have the greatest number of internet data centers in Taiwan compared to our competitors in Taiwan. We offer co-location, web hosting and application service provider services. To expand our internet data center services and strengthen our cooperation with international telecommunications operators, we acquired a 70% equity interest of Chief Telecom in September 2006, which increased our internet data center market share to over 45% as of the end of 2010. We offered customers hicloud CaaS (Compute as a Service) and StaaS (Storage as a Service) in 2010 to enhance working efficiency and optimize the utilization of resources. We also continue to construct our cloud computing center. 

