China's long-delayed licenses for third-generation mobile phones were issued yesterday, promising a boost for the country's flagging economy and offering consumers a wealth of new services.
The Ministry of Industry and Information Technology gave 3G licenses to China Mobile, China Unicom and China Telecom in Beijing.
Chinese carriers are expected to spend 280 billion yuan (US$41 billion) on 3G networks and services in the next two years. The network spending could lead to 2 trillion yuan in private-sector investment in the next two or three years, said Chen Jinqiao, deputy chief engineer at the MIIT's telecommunications research institute.
The sale of 3G cell phones could top 300 billion yuan through 2011, according to Sinolink Securities analyst Chen Yunhong.
Consumers may now hook up to 3G services, including film downloads and video calls, based on both homegrown and Western standards. But time is still needed for all the carriers to launch their networks and start the new services.
The government approved 3G services, as expected, for three technologies: US-developed CDMA2000 (code division multiple access) for China Telecom, Europe-developed WCDMA (wideband CDMA) for China Unicom and the domestically developed TD-SCDMA (time division-synchronized CDMA) for China Mobile.
China Mobile yesterday was the first to put 3G into operation. It unveiled a new logo, G3, and new numbers starting with 188, which are considered lucky digits in China.
Most 3G service fees are similar to 2G charges, though the new video calls will cost 0.60 yuan a minute.
The timetable and fee structure for the other two carriers were not available yesterday.
Issuing the licenses will generate investment in network construction, handset development and new services.
The advent of 3G is expected to stimulate the Chinese economy and contribute 6 to 7 percentage points to the country's gross domestic product by 2010, analysts said.
"The 3G licenses will lift the performance of telecommunications firms, especially equipment makers, due to the huge size of the market," said Fang Lu, an analyst at Shenyin & Wanguo Securities. "The homegrown equipment makers will grab a bigger share of the market."
Firms such as Ericsson, ZTE, Huawei and Nokia-Siemens will also benefit, according to Sandy Shen, an analyst at Gartner Inc, a US-based IT consulting firm.
Nokia, the world's biggest phone vendor, will launch 3G phones based on all three standards and views the market as a huge opportunity.
Mobile Internet services, including video and program downloads, will become popular with 3G's faster data transfer speeds, according to service provider executives.
China now has more than 650 million mobile phone users ?? the most in the world ?? and adds over 5 million new users each month, according to the MIIT.
The start of 3G service had been promised for several years, but analysts said it was delayed while problems were worked out with the homegrown technology.
Also yesterday, the MIIT issued regulations covering the requirements of 3G network operation, covering such aspects as market competition, consumer rights, user information security, telecommunications fee management and facility building.
The licenses were issued a day after China Unicom announced it had won government approval to merge with China Network Communications Group Corp. The new China Unicom will hold all the assets and businesses of the two former companies.
The merger marks the final move in the restructuring of the country's telecommunications industry, which involved the merger of six telecom operators into three.
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