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Chinese regulators could award operators licences to build 3G (third generation) networks as soon as this year, a leading telecoms consultancy firm forecasted yesterday, also saying the move would occur prior to an industry-wide reshuffle.

 

Zhang Dongming, research director of BDA China Limited, said the government is likely to license the 3G technologies by June.

 

Contrary to industry rumor, which suggested regulators would consolidate domestic telecoms operators when licensing the 3G technologies, Zhang says 3G will come first.

 

"The licensing will come before a consolidation of domestic telecoms operators. The licensing and reshuffle will not happen simultaneously," Zhang said.

 

3G telephony offers higher mobile data speed, supporting bandwidth-hungry applications such as full Internet access and video calls.

 

Given the complexity of the reshuffle of the top four operators, which are all listed overseas, the government will regard the licensing as the top priority, indicated Zhang.

 

After the licensing, "It is very likely that the number of major operators will be reduced from four to three," she said.

 

The analyst forecasted fixed-line incumbent China Telecom would purchase or rent cellular operator China Unicom's GSM network.

 

Smaller fixed-line carrier China Netcom might be merged with China Unicom to co-run the latter's CDMA network.

 

China Mobile, the world's largest mobile operator in terms of subscribers, will remain unchanged in the consolidation, the firm said.

 

BDA expects regulators to award China Telecom the country's first licence to build a 3G network based on the home-grown standard TD-SCDMA.

 

Yet, the European-initiated 3G WCDMA standard will dominate the market in the coming five years.

 

China Mobile is expected to build a 3G network based on WCDMA.

 

BDA forecasted the number of WCDMA subscribers would account for 55 percent of the total 3G market by 2010.

 

TD-SCDMA and the US-backed CDMA 2000 are likely to hold a 25 percent and 20 percent share respectively in terms of subscription base.

 

BDA forecasted the number of 3G subscribers in China to grow at a CAGR (compound annual growth rate) of 268 percent from 2006 to 2010.

 

By 2010, the number of 3G users will hit 210 million, accounting for 34 percent of the total number of the mobile phone subscribers in the country.

 

The number of the total mobile users is expected to grow at a CAGR of 9 percent from 2005 to 2010 to hit 617 million.

 

Fang Meiqin, senior consultant of BDA, says a real-name subscription scheme for mobile phones will thwart the growth of new mobile phone users,

 

Wang Xudong, minister of the information industry, said last month that the much-debated scheme would be launched this year.

 

Under the scheme, which is aimed at cracking down on market irregularities such as the increasingly rampant SMS (short messaging service) spam, prepaid mobile phone users will be required to register with their real names.

 

China now has more than 240 million prepaid mobile phone users.

 

Fang predicts about 15 million prepaid mobile phone users will abandon their telephone numbers within three years due to the real-name scheme.

 

About 18 million new subscribers are expected this year, bringing the total number of users to 106 million.

 

Yet, starting from 2008, the growth rate will see a dramatic drop due to the 3G rollout and operators' spending cutbacks.

 

(China Daily January 11, 2006)