China issued long-awaited third-generation mobile phone licences Wednesday, a move that will pour billions of dollars into new networks as consumers buy video- and Internet-enabled handsets.
The Ministry of Industry and Information Technology issued licences covering the three major standards in China, Europe and North America, in a move that could fundamentally alter the way telecom operators do business.
“Telecom operators used to provide only access to network and did not care much about content. But now they’ll rush to develop content,” said Tang Mingjun, a Shanghai-based analyst with Shenyin and Wanguo Securities.
Market leader China Mobile received a licence for the Chinese-developed TD-SCDMA standard, according to Wang Lijian, a spokesperson for the Ministry of Industry and Information Technology.
China Unicom got a licence for Europe’s WCDMA standard while China Telecom will handle North America’s CDMA 2000, said Wang.
The international standards require that operators pay royalties to foreign developers.
Third-generation, or 3G, networks enable faster data transmission and services such as wide-area wireless calls, web surfing and video.
The licences are important because China is the world’s biggest cellphone market, with more than 634-million subscribers counted by the end of November.
The new standards will allow operators to generate revenue from multimedia content, which will probably lead to the three companies developing their own media units, said Tang of Shenyin and Wanguo Securities.
Analysts said that although it may be years before 3G services become popular in China, the licences will immediately benefit equipment makers such as Siemens, Ericsson and Nokia, as well as local rivals.
“Leading global suppliers such as Ericsson and Siemens are well-positioned in the WCDMA market,” said Fang Meiqin, an associate director of Beijing-based BDA China.
Industry and Information Technology Minister Li Yizhong said last month the carriers were expected to invest about $41-billion in 3G networks over the next two years, with at least $29-billion to be spent in 2009.
The government has said the spending on the launch of 3G services is an important part of efforts to battle the effects of the global economic slowdown.
China Mobile began a non-commercial trial of its 3G service in April 2008 involving 800 000 people, but it has been plagued by complaints that the service is unreliable, BDA’s Fang said.
China Telecom is expected to launch its 3G service in the first quarter in major cities and China Unicom is aiming to roll out its service in May in Beijing and expand its coverage to about 200 cities by September, Fang said.
“We expect there will be around three million 3G users in China as of the end of the year,” Fang said, adding 3G was expected to cost about the same as regular mobile service.
However share prices for all three companies fell in Hong Kong on Wednesday as investors sought to collect profits, while others were concerned about the new investments the companies would have to make.
And traders said that after years of delays, dealers had already factored in the licences’ potential benefits.
China Mobile shares closed 5,5% lower at 78,45 Hong Kong dollars ($10,11) and China Telecom fell five percent to 3,03 Hong Kong dollars. China Unicom shares were 10,6% lower at 9,19 Hong Kong dollars.
Beijing has been preparing for the roll-out of 3G since the beginning of the decade.
The global 3G industry association, 3rd Generation Partnership Project, first approved China’s TD-SCDMA in 2001 as one of the world’s 3G standards, but there have been countless delays since.
Analysts have said the delays were partly because China needed more time to perfect its home-grown standard. – AFP