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Each of our operating segments is managed separately because each represents a strategic business unit that serves a different market. We measure our segment performances mainly based on revenues and income before tax. 

## The year ended December 31, 2010 compared with the year ended December 31, 2009 

## Revenues 

Our revenues increased by 2.1% from NT$198.4 billion in 2009 to NT$202.4 billion (US$6.9 billion) in 2010. This increase was primarily due to increase in revenues generated from mobile communications, internet, international fixed communications and other business sectors. 

## Domestic fixed communications 

Domestic fixed communications revenues comprised 36.0% and 34.9% of our revenues in 2009 and 2010, respectively. Our domestic fixed line revenues decreased by 1.1% from NT$71.5 billion in 2009 to NT$70.7 billion (US$2.4 billion) in 2010. 

Local telephone services. Our local telephone revenues decreased from NT$33.2 billion in 2009 to NT$32.3 billion (US$1.1 billion) in 2010. This reflects a 6.4% decline in traffic volume from 14.6 billion minutes in 2009 to 13.7 billion minutes in 2010, offset by a 0.5% increase in average local usage fees. The decline in traffic volume was primarily due to the traffic migration from fixed line services to mobile and Internet telephone services. We expect this trend to continue as broadband and mobile services become more widely adopted in Taiwan. However, we believe the rate of such migration is slowing down. Our local interconnection revenues decreased by NT$77 million (US$2.6 million) from 2009 to 2010 because of the decrease in fixed line to mobile voice traffic volume of calls terminating on mobile networks of alternative operators. 

Domestic long distance telephone services. Our domestic long distance telephone revenues decreased by 10.2% from NT$7.4 billion in 2009 to NT$6.6 billion (US$0.2 billion) in 2010. This decrease was mainly due to a decrease in traffic volume from 3.6 billion minutes in 2009 to 3.4 billion minutes in 2010 and domestic long distance interconnection tariff decreases mandated by the National Communications Commission. The decrease in traffic volume was primarily due to the continued traffic migration from fixed line services to mobile services and VoIP. Our interconnection revenues also decreased primarily because the telecommunications operators construct their own interconnection circuit. 

Broadband access . The number of our ADSL customers decreased from 2.7 million in 2009 to 2.3 million in 2010 due to customer migration to our FTTx services. There was an increase in the number of FTTx customers from approximately 1.6 million in 2009 to approximately 2.0 million in 2010. Broadband access revenue increased from NT19.9 billion for 2009 to NT$20.3 billion (US$0.7 billion) for 2010. 

Domestic leased line . While demand for higher speed leased lines continues to increase, our overall leased line tariffs have continued to be adversely affected by competition from other fixed line operators, as well as the continued migration of domestic leased line customers to broadband services. Domestic leased line revenue decreased from NT$6.7 billion for 2009 to NT$6.1 billion (US$0.2 billion) for 2010. 

