The cellular duopoly of China Mobile and China Unicom will benefit greatly from the country's third generation (3G) wireless communication strategies, officials and industry experts say.

As the pair defend their turf against an upstart low-end service, 3G will provide a new stage to enhance their business performance, analysts say.

"3G will help them to sign up more subscribers and churn out more profits for them," said Song Junde, professor with Beijing University of Post and Telecommunications.

The success of 3G would be based on a stable telecom system, the wide applications of new 3G wireless services, reasonable prices, sound business model, a comprehensive 3G industrial chain, as well as the support of the government, he said.

"The synergy between telecom operators, telecom equipment providers, government and subscribers will help the deployment of 3G in China," he said.

China has recently seen a new round of debate on 3G issues at the TD-SCDMA forum in August and the fourth China 3G/IMT-2000 Mobile Networks 2003 last month in Beijing.

Many top leaders of world telecom giants have visited China to lobby the government to issue the 3G licences as soon as possible as they believe the market is very promising.

There were 244 million mobile-phone subscribers by the end of August; and Song believes that the subscribers to 2.5G and 3G will show a large increase.

But despite their ambition to cash in on the 3G market, China Mobile and China Unicom said that they would carefully study the development of three 3G technologies to work out sound market strategies.

Zhang Zhijiang, general manager of the technical department of China Unicom, said the company would gradually migrate 2G/2.5G services to 3G services.

"Our CDMA network will tend to provide wireless data service, targeting medium and high-end subscribers, while GSM will concentrate on low-end subscribers who favour voice transmission service," he said.

Meanwhile, the company is working to accelerate the debut of dual-mode handsets which can automatically transfer between GSM and CDMA networks.

Figures from China Unicom indicate that it has 15 million CDMA subscribers and 70 million GSM users.

Yang Zhiqiang, deputy general manager of the technical department of China Mobile, believes WCDMA will be the best 3G technology standard as it enables smooth network migration and support 3G services at the lowest cost through scale efficiency.

TD-SCDMA will be a great complement to WCDMA along with abundant mobile data services rolling out, she added.

However, analysts said both the companies should work out sound business models and new wireless applications before the kick-off of 3G services.

Industry experts seemed to have reached a consensus that the Chinese market is not ready for 3G.

"It is not exciting enough for China to roll it out now," said Weng Ku, director-general of the Technology Department of the Ministry of Information Industry, the country's telecom watchdog.

"The commercialization of the home-grown standards still needs some time as far as technology and terminal products are concerned," he stressed.

After the lacklustre development of 3G in the global market, China has adopted a cautious attitude towards licence issuing though it is widely speculated that the government plans to issue 3G licenses early next year.

Lin Jinquan, chairman of China Institute of Communications, believes the commercialization of 3G still need one to two years.

Nevertheless, Song of Beijing University of Post and Telecommunications is optimistic about 3G in China. He believes the increase on wireless data will greatly improve the ARPU of telecom operators and help the increase of high-end subscribers.

China Mobile and China Unicom are locked in a war for market share, using free minutes and subsidized handsets to attract new customers and skirt State-set charges for incoming or outgoing airtime.

And the competition will intensify, with China Telecom and China Netcom, the country's two largest fixed-line operators, joining the fray for 3G licences.

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