Norson Telecom Consulting is now plugging China Mobile to receive the first 3G license in mid-2007. However, in a departure from typical analyst thinking, Norson is picking the company to receive a license to deploy the unproven homegrown TD-SCDMA.
Most pundits, including Norson in earlier reports, have speculated the dominant fixed-line provider, China Telecom, would receive the license to deploy the homegrown standard, with China Mobile picking up a license for the proven international standard WCDMA.
Perhaps Norson analysts have been reading China Economic Review’s April cover story on 3G, which predicted such a scenario. The article argued that China Mobile was in a better position to ensure a smooth transition to TD-SCDMA than China Telecom.
China Mobile has an existing 2 to 2.5G GSM network and the world’s largest subscriber base. It would be a simple matter of maintaining and growing users on the existing network, and switching them at such time as its TD-SCDMA network was ready. Given that most existing 3G services can be run on 2G and 2.5 networks, it is unlikely to see a mass exodus of subscribers in the meantime.
If China Telecom received the homegrown license, it would be forced to build a network from scratch, and would be unlikely to ever close on China Mobile’s dominant mobile market share, effectively derailing the homegrown standard before it was launched:
“If China Telecom fails to establish a market for TD-SCDMA, as expected, the government’s 3G aspirations would take a major hit," the cover story said.
"But even then, there is still a possibility that the homegrown standard will emerge with its reputation intact – China Telecom could get the WCDMA license and leave China Mobile stuck with TD-SCDMA. . . . . . For Beijing, handicapping its strongest mobile operator could be the only way to ensure the success of TD-SCDMA.”
But given that the government has set out its stall on having 3G available by the 2008 Beijing Olympics, a mid-2007 release is cutting things mighty fine. As the April cover story concluded:
“Reading newspaper and analyst reports from 2002 and 2004 gives an uncanny feeling of deja-vu. Analysts seem to make a living out of proclamations that 3G licenses are on the verge of being issued while the government is not slow to proclaim the commercial viability of TD-SCDMA. But as the rest of the world slowly turns its attention from 3G to fourth-generation mobile networks, China is in danger of getting left well and truly behind.
If the government is to honor its promise of 3G in time for the Olympics, it is time it stopped hedging its bets and announced some concrete plans. Failure to do so will be the surest sign yet that all is not well with Beijing’s 3G ambitions.”
Keep an eye on the analysts’ predictions or, better yet, watch this space.