China to Get 3G – At Last!

After more than six years of speculation and expectation, China is ready, willing, and able to issue 3G licenses and so kick-start the country's mobile broadband revolution.

In formally announcing its plans to restructure the country's telecom sector and create three giant service providers, China's Ministry of Industry and Information, National Development and Reform Commission, and Ministry of Finance announced that three 3G licenses will be granted once the restructuring process is complete.

While it's not known exactly how long the restructuring process will take, the announcement ends much of the speculation surrounding the country's 3G strategy, as each of the three newly-formed operators will get a license.

The formation of the new carriers, each of which will own fixed line and mobile assets, involves: The merger of China Mobile Ltd. (NYSE: CHL) with China TieTong Telecommunications Corp. (formerly China Railcom); the acquisition of China Unicom Ltd. (NYSE: CHU)'s CDMA business by China Telecom Corp. Ltd. (NYSE: CHA), a deal that could be valued at anything from $5 billion to $10 billion, according to local estimates; and the merger of Unicom's GSM assets with China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906). (See China Begins Carrier Revamp.)

While the restructuring process had been expected for some months –- see our previous story for a more detailed breakdown of assets and subscribers -- the weekend's official confirmation put a big dent in China Mobile's share price as analysts considered the impact of the Chinese government's plans on the giant wireless operator's market share, according to this report from Bloomberg. (See Major Carrier Shakeup Expected in China.)

China Mobile had 392 million subscribers at the end of March this year, making it the dominant wireless market leader in a country that boasted the largest mobile sector growth in 2007. (See China Mobile by Numbers and Top 10 Emerging Mobile Markets 2007.)

While confirmation of the sector's revamp might not be so positive for China Mobile, it's a boost for the vendor community: Some industry estimates put the cost of China's 3G rollout at $75 billion.

And it's likely to be particularly good news for China's leading domestic equipment firms Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), as the Chinese government is urging the new operators to favor local technology from domestic firms.

That suggests China's 3G landscape will include at least one, if not more, major deployments of TD-SCDMA, the country's home-grown 3G standard that has already been extensively tested in the country. The country's carriers have spent a significant amount of money on TD-SCDMA trials, and may even be able to use their initial rollouts to provide 3G services during the Olympic Games this summer. (See Investments Line Up for Chinese 3G, China Mobile 3G Contracts Awarded, Chinese 3G, and TD-SCDMA Approaches $1B.)

But the spoils won't be confined to domestic companies. As has happened with the country's 2G rollouts, a number of international vendors will certainly be awarded some significant infrastructure and integration deals: The likes of Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), Nokia Networks , Motorola Inc. (NYSE: MOT), and Nortel Networks Ltd. have all been maintaining their business activities, including partnerships, in China ahead of the long-awaited 3G push. (See China's Looming Infrastructure Bonanza, Alcatel, Datang Get Closer, Alcatel Shanghai, Datang Team, Chinese Roulette, Ericsson Invests $1B in China, Nokia Invests in China 3G, Nokia Preps for China 3G, and Moto Makes New Friends.)

Nortel, though, will have less chance than some of its rivals, having sold its 3G UMTS business to AlcaLu and seen a Chinese partnership dissolve, the Canadian vendor is pinning its wireless hopes on some CDMA evolution deployments and a slice of the 4G action, once it arrives. (See Alcatel Snags Nortel 3G Unit, Nortel CEO: 3G Can't Cut It, Nortel's Big WiMax Bet, Nortel Demos LTE, and Nortel Suffers China 3G Setback.)

The mobile sector has been anticipating the award of 3G licenses in China since early this decade: As far back as early 2003 some industry executives were convinced that the award of licenses was only months away. (See Qualcomm Courts Chinese 3G, Siemens Prepares for China Deal, and What's Up With Chinese 3G?.)

Now that sense of constant anticipation has been transferred to India, where the 3G timetable shifts on an alarmingly regular basis. (See A Guide to India's Telecom Operators, India on Edge Over 3G, and India Plans 3G Auction.)

— Ray Le Maistre, International News Editor, Light Reading

lrmobile_kumaramitabh 12/5/2012 | 3:40:08 PM
re: China to Get 3G – At Last! China being the largest mobile market in the world has always attracted interest in when the 3G services will be enabled through regulations and spectru. Despite the delays due to home grown technology , china has maintained a very well directed and clear approach.

In India the developments which take sharp turns tend to leave one aghast. In the case of 3G there have been too many such sharp turns. First the spectrum was known to be squatted upon by many, including defence. After its vacation,now there is a raging controversy ( fueled by the existing mobile operators ) who along with TRAI would like to restrain Spectrum auction to existing players only. No reasons have been given why this can possibly be so. Thirdly a new controversy has been now started for spectrum with the mobile operators laying claim to even the 2.3-2.4 and 2.5-2.69 Ghz spectrum, which is reserved for Mobile WiMAX ( Now part of IMT after WRC 2007).Hence complete confusion still abounds, in a market which is fastest growing in the world and second only to that of China in absolute numbers.

It is the same confusion which has delayed the allocation of WiMAX spectrum in the 2.5 GHz band, leaving India with one of the lowest broadband penetrations in the World.

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