China Mobile, the world’s largest mobile phone carrier in terms of the number of users, earlier this year received a license to deploy its 3G network based on TD-SCDMA, a homegrown 3G standard. Its smaller rivals got licenses based on two other widely adopted standards — China Unicom received one for the WCDMA, while China Telecom was issued one based on the CDMA2000 standard.
The rollout of 3G services and the telecom industry restructuring last year under which all three telecom companies are set to become full service operators, are part of the government’s efforts to redraw the telecom industry landscape, which is currently dominated by China Mobile.
The 3G licenses issued earlier this year were also part of the government’s efforts to stimulate domestic demand, since 3G is expected to attract massive investment. This money will be used mainly for network deployment and related projects.
‘The 3G rollout is expected to usher in RMB1 trillion worth of investment and consumption in three years. This includes RMB400 billion by telecom carriers to deploy their networks, some RMB400 billion consumers are likely to spend on handsets, netbooks and other terminals, and RMB200 billion on video and other 3G services.
A trillion renminbi is a lot of money no matter how you put it. RMB1,000 billion is another way of looking at it.
Big money. China Mobile, for example, has earmarked RMB375.4 billion, chiefly to expand its 3G infrastructure from 2009 to 2011.
China Telecom, a fixed-line operator before last year’s industry restructuring, will spend RMB47 billion this year to deploy or upgrade its mobile phone network.
Analysts said it would take several years for 3G services to become popular and reach a critical mass of customers. Only then can it start generating profits for the telecom carriers.
China Daily reports that analysts said China Mobile has the advantage of a much larger customer base and deeper pockets to subsidize handset purchases if it choses to do so.
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