Timetable for 3G licensing, please!
By Li Weitao (China Business Weekly)
Updated: 2004-11-04 09:20

China's government is being urged to give a time frame for when it will decide to allow domestic telecoms carriers to build the 3G (third-generation) mobile communications networks across the country.

A clear timetable will ensure government supervision and the investment environment are transparent, said Francis Xi, vice-president in charge of Nokia Networks' marketing in China.

"We hope the Chinese Government will announce a clear timetable for the 3G licensing before the end of this year," Xi said.

China's government has yet to indicate when it will allow operators to build the super-fast networks, and how many licences it will hand out.

The obscurity of 3G licensing is denting the development of China's telecoms industry, Xi indicated.

"A clear timetable can ensure China will not lag behind other 3G markets in the world," Xi said.

"It will also help China absorb more foreign investment and boost the overseas listings of Chinese telecoms firms."

Xi said the government should award the 3G licences no later than the middle of next year.

George Huang, senior vice-president of Nortel Networks, for Greater China, echoed Xi's comments.

"The 3G technology is already mature. I think it is time for China's regulators to hand out the 3G licences," Huang said.

"The Chinese Government made very wise decisions in the 2G and 2.5G eras, and other industry chains. I believe it will make a decision for the 3G licensing at a right time."

China's officials have long adopted a "wait-and-see" attitude towards the 3G policy, due partly to hiccups in the earlier development of the global 3G market.

The Chinese Government also hopes delays in 3G licensing will give the home-grown 3G standard, TD-SCDMA, time to catch up with the Europe-initiated WCDMA and US-backed CDMA 2000.

WCDMA and CDMA 2000 have already been put into commercial use.

Chinese Government officials have said the TD-SCDMA equipment and handsets will not be ready for commercial use until June, 2005.

The Ministry of Information Industry (MII) is expected to provide some clues about the time frame for issuing 3G licences during a 3G forum to be held on November 8-10.

MII will announce, during that forum, the results of the field tests of the three 3G standards.

Some clues might help businesses better allocate their resources and research and development (R&D).

Top domestic telecoms gear makers Huawei Technologies and ZTE Corp have invested a lot in 3G R&D.

However, they are now forced to look towards overseas markets to sell their equipment due to the continuous delays in the 3G licensing process at home.

China might have missed the best time to develop 3G technology, said Wang Yuquan, president of consultancy Frost&Sullivan (China).

It usually takes about one year for operators to complete the 3G network buildouts once they receive approval from the government.

That means the roll-out of 3G services might occur in 2007 if the government hands out the licences in the middle of this year.

Chinese firms, given their relative inexperience, may find it hard to compete with foreign rivals in the future 3G value-added market, Wang explained.

Despite some hiccups in the earlier development, global 3G telephony has gained significant traction since the beginning of this year.

The number of 3G subscribers has grown rapidly, and an increasing number of 3G phones have become available in the market.

The uptake has resulted in increasing calls for the Chinese Government to make a decision on 3G licensing as soon as possible.

Xi said China should avoid excessive investments and overlapping build-outs of 3G networks.

"The government should help create effective, but not vicious, competition in the future 3G market," he said.

The government, he suggested, should allow China Telecom and China Netcom to use China Unicom's 2G GSM networks for roaming service after the two fixed-line carriers receive 3G licences.

"If China Telecom and Netcom build two national 3G networks, they will incur huge expenses," Xi said.

"As far as we know, operators are quite prudent about their 3G planning."

With the 2G roaming services, China Telecom and Netcom can build 3G networks in stages, Xi said.

China Unicom could also generate revenues from the roaming service offered to China Telecom and Netcom, he added.

Wang suggested China Telecom and Netcom collaborate to build a single, national 3G network.

Some analysts said up to three 3G national networks should be built to foster effective, but not vicious, competition.

Lou Qinjian, deputy MII chief,said in June the government must ensure 3G licensing will help deepen reform, spur competition, upgrade networks, meet customers' demands and benefit the development of China's industry.

The 3G licensing will dramatically change the competitive landscape of China's telecoms market, analysts said.



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