About four years ago, one of my first assignments at a financial newswire in Beijing was to write about the imminent arrival of 3G in China. Since then, I have written any number of stories in which analysts prognosticated that 3G licenses would be handed out “early next year” or “as early as the third quarter” or some variation thereof. There were false alarms and tea leaf readings. There was a restructuring of the telecom industry and a renaming of the regulator. Heady days of yore. And yesterday, we came full circle when the MIIT finally issued 3G licenses.
The licensing has been delayed for years in order to let the much-maligned homegrown 3G standard TD-SCDMA find its feet. TD-SCDMA has long been a touchy subject. Some anecdotal evidence: When writing a story about China’s telecom sector for a local magazine a few years back, I was castigated by the publication’s censor for quoting analysts with negative views about the technology.
So yesterday’s issuance of 3G licenses might lead some to believe that TD-SCDMA has matured to the level at which it can now compete with international rivals, WCDMA and CDMA2000. Not so much. At least not if you listen to Francis Cheung, head of telecom research at CLSA, who told Bloomberg, that the slowing economy was the real reason behind yesterday’s news. “If not for the economy, licensing could have dragged on for years,” Cheung said.
Most believe that TD-SCDMA will be a qualified success in China given its strong government backing and the fact that industry leader China Mobile has been tasked with running the network. I’ll leave the opining on the fate of TD-SCDMA to real experts. What I will say is that the 3G rollout may serve as an important case study of China’s hybrid economic model. Over the next few years, we will see first hand what happens when an authoritarian government saddles one of its flagship companies with an inferior technology and pawns that off on the public with handset subsidies, “experience centers” and kind-of-lame marketing.
Will consumers be patient with TD-SCDMA’s growing pains? Will they race en masse to one of China Mobile’s competitors? Or… will they even care? That’s got to be the question keeping people up at night.