[photopress:choseaphone.jpg,full,alignright]3G is going to happen in China sooner rather than later. And, probably propelled by the 2008 Olympics for which it will definitely be available, it might be a major success. Best bet is that the start date will be in April or May next year. Lu Qijun, vice director of the SASAC’s New Industry Research Department, said, ‘Although it is still possible for 3G licenses to arrive before the Chinese New Year, February 18, April or May will be a more appropriate time for the release.’
At the recent ITU (International Telecom Union) Telecom World 2006 in Hong Kong, everyone walked around making confident remarks as to how this would positively influence their particular business. Perhaps.
Yi Minyu, director of telecom consulting section under the China Center for Information Industry Development, made the somewhat depressing remarks that although 3G network has obvious advantages compared with traditional 2G networks of GSM and CDMA, not all the companies in the 3G industrial chain would gain lucrative profits. Sadly, what he says is right. 3G is complex and not everyone is going to make a new fortune.
Yi Minyu said, ‘The first direct beneficiaries of 3G are mobile equipment and system providers.’ True. Provided you are the maker of the right mobile equipment and you are a chosen system provider.
Yi Minyu estimated that the total investment of the first phase of 3G network construction in China will be more than RMB100 billion (US$12.78 billion) which is revenue for equipment and system providers. The sellers, not the buyers.
Wisely, for the last few years telecom operators in China have not been buying big on network expansion projects as they waited to see which way the 3G horse jumped.
Yi Minyu said, ‘They have been lobbying hard for 3G and kept saying that China has lagged behind in mobile communications.’
In fact, this has happened in many other countries as well. It is only in the last few months that there have been signs that 3G will make a serious profit, that it will be accepted by the public, that it will become mainstream.
Each network faces different problems, different potentials. Two examples:
China Unicom operates a CDMA network so it can, with relative simplicity, upgrade the present network to CDMA2000, which is an international 3G standard and honors China’s commitments to the World Trade Organization. This is the one much desired by the United States.
China Mobile may adopt the home-grown TD-SCDMA and this requires a serious investment and all reports say that it does not work as fluently and as easily as it might. If the government had come down and said TD-SCDMA or nothing the situation would be quite clear. But the government has most certainly not said that because that would be against its World Trade Organization commitments.
Lu Qijun, a senior researcher with the State-owned Asset Supervision and Administration Commission, said, ‘I have tried TD-SCDMA data service this month. It is already pretty good but certainly not as mature as WCDMA or CDMA 2000. In my opinion, the government should have provided stronger support to TD-SCDMA.’
China Mobile has built a large number of ‘trial’ WCDMA base stations and China Unicom has also started trial CDMA 2000 services.
Lu Qijun said, ‘Once China Mobile and China Unicom receive such licenses (WCDMA and CDMA 2000), their networks will be able to cover the whole country within half a year. China Mobile is the best operator to run TD-SCDMA, and if it does not, TD-SCDMA will be in a dangerous situation.’
Thus the 3G picture is a little clearer if not yet transparent. Where you have to take exception with most analysts is their view that voices business will remain the major source of revenue for network operators in the age of 3G ‘which has been proved by experiences of other nations’. No it hasn’t. It has not been proved.
All that one can say is that a compelling event — the Ashes in Australia, Olympics 2008 in China — brings in an immense number of 3G visual users. And once there, if the price is right, they seem to stay as 3G customers.
There are, as yet, no clear cut answers. Analysts are guessing from a relatively small base of experience. A guess would be that about half of current phone users will switch to 3G in the first year where it is available. But that is purely a guess based on Australian experience.
Source: China Daily and Interfax
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