Shanghai Media Group, China's sole license-holder for Internet Protocol Television business, will itself manufacture terminal handsets for watching mobile TV with the IPTV service, thus stirring-up the phone-making industry, Monday's Sina.com.cn reported.

The report cited a Shanghai Oriental Pearl (Group) Co., Ltd.(OPG), an SMG subsidiary, as saying that the two will jointly invest 200 million yuan (US$24.7 million) to launch a phone-making unit, with OPG holding 51 percent of the equity and SMG the balance. The phones will be based on digital multimedia broadcasting technology.

OPG has full confidence in the potential of the phone market, with its general manager Niu Weiping expecting the investment to be recovered in no longer than four years.

He predicted 30 percent of phone-users will replace their gadgets annually with phones carrying mobile TV service, noting that currently there are 10.56 million subscribers to Shanghai Mobile Corp alone, making it the largest mobile telecom operator in Shanghai.

Revealing that the manufacturing cost of a TV mobile phone ranges between 3,000 yuan and 5,000 yuan and the monthly charge on the IPTV service will be about 10-50 yuan a month, he forecast phone sales will likely hit 1 billion yuan each year after three years' operation and when the business stabilises.

Contrary to Niu's optimism, the phone-making industry reacted cautiously towards the new phone plant.

Because SMG is currently the only IPTV operator in China, its adoption of the DMB phones means it has closed the door of IPTV phones to makers of handsets based on other IPTV technologies, insiders said.

In China, there are over 5,000 subscribers to mobile TV services, according to Shanghai Dragon, the country's only authorized mobile TV service provider.

(Shanghai Daily November 29, 2005)