China’s telecom industry regulator, the Ministry of Industry and Information Technology (MIIT), issued licenses for third generation (3G) mobile technology on January 7. It was a long-awaited move preceded by a restructuring of China’s telecom industry that created three state-run carriers capable of offering both mobile and fixed-line services.
The details of the licensing were much as expected. Industry leader China Mobile received a license for China’s locally developed 3G standard TD-SCDMA, widely seen as the least commercially viable technology. The two foreign standards, CDMA2000 and WCDMA, went to China Telecom and China Unicom, respectively.
Analysts speculated that the licensing was timed to spur China’s flagging economy by setting off billions of dollars of investments in new telecom networks. To this end, the head of the MIIT, Li Yizhong, announced that China would spend US$40 billion on new 3G networks over the next two years.
The telecom operators soon followed suit, unveiling 3G spending plans of their own. China Mobile said it would spend US$8.6 billion quadrupling its current number of 3G base stations to 80,000. The company also called on foreign handset suppliers – who as of December had a combined seven TD-SCDMA handset models available – to provide China with more TD-SCDMA models.
China Unicom said it would launch 3G services in 55 cities in the first half of the year and expand to 280 cities by the end of the year, all at an estimated cost of US$8.78 billion.
The firm’s chairman, Chang Xiaobing, said he expected 3G services to turn a profit in 2010.