China 3G market growing fast: Q&A with Digitimes Research analyst Roger Huang

Rodney Chan, DIGITIMES, Taipei [Wednesday 8 December 2010]

The China telecom market officially entered the 3G era just two years ago, much later than some of its neighbors, such as Japan and Taiwan. But its 3G market will be growing fast in the next few years, and Digitimes Research senior analyst Roger Huang thinks the price of handsets will be a key factor determining the pace of growth.
Q: What were the key moments in the restructuring of China’s telecom industry?
A: China’s telecom sector has seen major restructuring over the past two decades or so. China’s telecom market has now evolved from the monopoly of a single state-run telecom into a three-horse race between China Telecom, China Mobile and China Unicom. In 2008, the China government allowed all three telecom carriers to offer full-range services, meaning they can all operate in the mobile, fixed-line and broadband sectors and offer bundled services. At the same time, all three carriers received 3G licenses.
Q: What is the current status of China’s 3G market, as well as the telecom industry in general?
A: China’s 3G market has seen much faster growth in 2010 than in 2009 when the carriers just started to offer 3G services. The staggering growth in 2010 is the result of a low comparison base in 2009. And improvements to infrastructure, expanded handset offerings and decreases in prices have all provided growth momentum and incentives for users to change to 3G services.
As for the overall telecom industry in the country, China Mobile has an advantage from the large base of mobile phone users it has accumulated over the past several years. China Telecom remains the biggest broadband player, but it has been much affected by the fixed-mobile substitution (FMS). Its finances are stable, but it is lagging far behind the two competitors in terms of user number. As for China Unicom, it has the worst profitability, but it has a more balanced development among its various services. Its prospects look good as it embraces the globally-accepted WCDMA 3G standard.
Q: What changes have been seen in the supply chain resulting from the development of 3G.
A: More and more international players are realizing the importance of the China market. There are now many foreign and domestic suppliers for all three 3G standards in China – TD-SCDMA, WCDMA and CDMA. Chipmakers now also see China as an important market.
Q: How fast will China’s 3G market grow? Who will be the winner of the three telecom players?
A: The 3G market in China is expected to grow steadily in 2011. The key factor will be handset prices: the lower the prices, the faster the 3G market will grow. In the long run, China Unicom will have more advantages, but China Mobile may accelerate its migration to TD-LTE, leveraging on the global standard to regain ground lost while supporting the home-grown TD-SCDMA standard.
Article via DigiTimes