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(1) Data from the Department of Population, Ministry of the Interior, Republic of China. 

Demand for local customer lines has historically been driven by population growth. However, with the development of mobile technologies, this trend has been declining. The number of fixed line customers decreased by 1.1% in 2010 compared to 2009 due to customers replacing fixed lines with mobile services and also as a result of the adverse economic conditions. The number of fixed line customers decreased by 1.8% in 2011 compared to 2010. We attribute the decrease in fixed line customers to a general industry-wide trend of migrating from fixed line services to mobile and internet telephony services. In adherence to a ruling by Supreme Administrative Court, starting from September 2011, we no longer require our ADSL service subscribers to apply for our fixed line services. We also allow our existing ADSL subscribers to unsubscribe their fixed line service. The foregoing factors also caused the decrease in our fixed line customers. 

The following table sets forth information with respect to local telephone usage for the periods indicated. 

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(1) Includes minutes from local calls made on pay telephones. It also includes minutes from fixed line-to-mobile calls due to the change in policy starting from 2011. 

(2) Calls to our HiNet internet service, which are recorded as part of our internet services, are not included in our local call minutes or revenues. 

Minutes from local calls increased in 2011 due to the inclusion of minutes from fixed line-to-mobile calls in this category starting from 2011 as a result of the NCC’s change in policy for collecting the tariffs of fixed-to-mobile phone calls by our fixed communications business. 

We charge our local telephone service customers a monthly fee and a usage fee. We also charge separate fees for some value- added services. The monthly fees for our primary tariff plans are NT$70 with a deductible on usage fees of NT$25 for residential customers and NT$295 for business customers. Our primary peak time usage fee is NT$1.6 for three minutes or NT$2.7 for ten minutes, depending on the tariff plan selected by the customer, and our off-peak usage fee is NT$1.0 for ten minutes. Our usage fees are the same for residential and business customers. 

The following table sets forth information with respect to the average local telephone usage charge per minute for the periods indicated. 

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