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Moment of truth for China’s 3G mobile

China, with an estimated 633m mobile subscribers and more than 250m internet users – the largest telecoms market in the world – has finally fired the starting gun for third-generation services.

Five to eight years behind more advanced markets, Beijing announced on Friday that it was preparing to hand out licences to the country’s three mobile operators allowing them to offer services that include wide-area mobile video calls and broadband wireless data transmission.

The move is the moment of truth for China’s home­grown 3G standard, TD-SCDMA – TD for short – and for the country’s ambition to take part in the development of technologies that form the future and standards that will be used worldwide.

China Mobile, the market leader, must use TD for its 3G network, whereas China Unicom and China Telecom, its much smaller rivals, have been given licences for W-CDMA and CDMA 2000, the mature standards used elsewhere in the world.

TD is the main reason 3G has not been introduced earlier in China. Beijing submitted proposals to the International Telecommunication Union to make TD an international 3G standard in 1998, but even after the ITU gave approval in 2000, the state-led consortium of developers struggled to make the technology work.

“Five years ago, we were already ‘almost there’ with 3G,” says James Person, chief operating officer of the CDMA Development Group, the industry alliance behind the US-dominant standard. “But the government was determined to wait until TD was ready to compete.”

That is still not the case. Trial users signed up by China Mobile have been reluctant to extend their contracts, complaining of frequent technical glitches.

Wang Donghui, a marketing executive at Huawei, China’s leading network equipment maker, says the mutual interference of conversations on the same frequency and rapid drops in reception further away from base stations are still major problems.

Hardware suppliers have also been slow to jump on the bandwagon. “Our supply chain is complete, but weak,” explains Wang Jing, secretary-general of the TD-SCDMA alliance.

The number of TD-compatible handsets offers a fraction of the choice available to consumers for the other 3G standards. Nokia said last month that it would be offering TD handsets, but analysts say this is unlikely to have much impact on the market until the company produces a large number of different models. “Only then will we see consumers go for them – you need the lure of a beautiful gadget that your friends can envy you for,” says Mr Wang.

Therefore, it remains unclear how many TD subscribers China Mobile will sign up. While some analysts expect the number to jump to over 12m next year, most are much more conservative.

Michael Meng, an analyst at Citigroup, expects 2m-3m data-only users to sign up in 2009, with the total number of TD subscribers rising to 4m or 5m. “Is that enough? No, but it’s a good start,” he says. “TD will never reach the size of W-CDMA, but 3G is already over anyway, so TD is more likely to be carried into 4G” – the proposed next generation of mobile telephones planned for western markets, which will offer extremely fast data transfer.

China’s policymakers, while insisting on calling TD a “success” in public, agree with this. “We think that China Mobile will muddle through in 3G and concentrate all resources on directly leaping into LTE,” says a scholar who is part of a government-affiliated industry think tank.

LTE, or long-term evolution, is the formula for an evolving family of standards that would bridge the divide between different standards seen in 3G.

Источник: Financial Times

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