China: 3G technology hot bed

SHENZEN, China – The Chinese government awarded 3G licenses to China’s three state-run carriers in January and now they have launched their own 3G brands. These licenses have changed the competitive landscape of China’s mobile market allowing consumers to choose from “e-surfing” from China Telecom, “G3” from China Mobile and “Wo” brand from China Unicom.
China is adopting 3G network as it enables faster data transmission allowing cellphone users to make video calls and watch TV programs. But the authorities took their time to award 3G licenses to these carriers. The Chinese government supports home developed TD-SCDMA technology, which is less mature, but provides competition to Europe-developed W-CDMA and the United States-developed CDMA2000.
The government supported TD-SCDMA research and decided to wait in order to compete with foreign-developed 3G technology. Developing TD-SCDMA in China has built local expertise and also lowered the royalty payments to foreign mobile technology patent holders. According to Sun Xiaohua from China Daily, China could have launched 3G networks using W-CDMA and CDMA2000 three years ago but the Chinese government delayed the launch allowing researchers to perfect TD-SCDMA.
TD-SCDMA license for China Mobile
China Mobile is licensed to use TD-SCDMA, which is new for Chinese consumers and has threatened its position in the market. The group has a leading position in the mobile services market in China, has a huge mobile network and boasts the world’s largest mobile subscriber base. Because the licenses for China Unicom and China Telecom are based on internationally developed standards, the operator thought TD-SCDMA may put them in a competitively disadvantageous position.
Many analysts echoed this fear because W-CDMA and CDMA2000 were already deployed on the global telecom markets and were supported by established equipment and handset makers. After the licenses were awarded, Wang Yuquan, president of Frost & Sullivan China, told China Daily that China’s TD-SCDMA is not ready for commercial launch and expected TD-SCDMA to take at least one year to mature.
Some users told the news paper that they prefer mature technology and greater choice of compatible handsets to a service that is still being piloted. China Mobile tested this technology in eight cities including Beijing, Shanghai, Tianjin, Shenyang, Guangzhou, Shenzhen, Xiamen and Qinhuangdao. Later, China Mobile expanded its existing TD-SCDMA 3G trials to 28 additional cities. With strong government support, China Mobile expects their new networks will cover all Chinese cities by 2011 and that it intends to deploy 160,000 base stations to support the network.
Published reports indicate that China Mobile is supported by ZTE Corp. and Datang Telecom Technology Co. Liu Jun, an analyst with Ping An Securities in Shenzhen, told Reuters in an interview that investing in a new network will speed up business for manufacturers like ZTE.
W-CDMA license for China Unicom
China Unicom is licensed to offer services using Wideband Code Division Multiple Access technology. W-CDMA is a widely deployed technology and a large number of 3G users prefer W-CDMA carriers supporting popular phones such as Apple Inc.’s iPhone 3G. The Chinese telecommunications operator began network construction in February and formally opened this much awaited network in May. The carrier launched trial operations in the initial 55 cities that have established 3G networks and intends to finish building its 3G network in 282 more cities by the end of the year. Many people think the popularity of W-CDMA technology will give a competitive edge to China Unicom, but industry analysts believe the operator may have a tough time competing with government supported China Mobile.
CDMA2000 license for China Telecom
China Telecom was awarded a CDMA2000 license enabling the operator to offer
CDMA2000-based EV-DO mobile broadband data services. The company announced its plans to unveil 3G CDMA mobile broadband services in 324 cities during the first half of this year. They also aim to deliver advanced EV-DO Revision A services by 2010.
China Telecom is supported by the CDMA Development Group, a trade association formed to foster the worldwide development, implementation and use of CDMA2000 technologies. There are more than a billion people in China without access to mobile broadband services, according to CDG Executive Director Perry LaForge.
China Telecom aims to get a 15% share of China’s mobile market in three years, and plans to spend $11.7 billion on CDMA network expansion and optimization this year. The carrier will also procure around 55 million CDMA2000 handsets to support this plan.
Situation now – fierce competition
All three carriers are now competing with each other to attract 3G customers in China and customers are excited about new mobile devices like Apple’s iPhone. Customers will also get to buy products from the newly launched mobile app store from China Mobile.
Reports indicate that China Unicom has attracted 530,000 3G users on its network and around 430,000 of those 3G customers are using data cards. China Telecom launched its CDMA2000 network in April and had 1.3 million 3G customers in June.
According to a report by Chinese investment bank China International Capital Corp. Ltd., China Mobile has put aside $3.7 billion for TD-SCDMA in 2009. China Telecom and China Unicom decided to invest $7.3 billion and $8.8 billion into CDMA2000 and W-CDMA respectively this year.
Anuradha Shukla is a China-based writer covering a range of topics from enterprise IT to mobile technology. Shukla is a contributing editor for TMCnet and writes for the Korean IT magazine Asia-Pacific Business and Technology Report. Shukla’s articles are also published by Fairfax Media and The Strategic Path.