Ahhh, China. It’s sort of like the black sheep of the global wireless family. It plays by its own rules, it doesn’t conform and it certainly doesn’t make things easy for any government or wireless company hoping to rein it in.
But what potential. China is the largest wireless market in the world with more than 335 million wireless subscribers. The next-largest market, the United States, has nearly 193 million wireless customers, for comparison purposes. Pyramid Research last week said the Chinese market would generate $9 billion for vendors from 2006 to 2009, with 2007 alone expected to generate about $4 billion.
The big question marks in the Chinese market revolve around third-generation services. When will the government award third-generation licenses, how many 3G licenses will be handed down and what technologies will be mandated? Nobody knows the answers to these questions, but speculation abounds.
First the timing: RCR Wireless News has been reporting since 2001 comments from various executives and governmental officials who predict China will issue 3G licenses “next year.” Well, it’s 2005 and we’re still reporting that same timeline.
The speculation surrounding the number of 3G licenses has varied from two to four over the years. There currently are two main mobile players, China Mobile Communications Group and China Unicom Ltd., both of which are mostly owned and controlled by the Chinese government. Conventional wisdom has both the wireless operators gaining 3G licenses. China also has two fixed-line carriers, China Telecommunications Group and China Netcom Group Co. Ltd., which interestingly both offer fixed-wireless services. Each of the fixed-line carriers also has been mentioned as potentially receiving a mobile license.
In its report, Pyramid offers a new twist on the license number question. Pyramid expects three nationwide 3G licenses to be awarded with one going to a fixed operator. The firm offers one scenario with China Telecom and China Netcom consolidating and offering a nationwide 3G service. Another scenario examines the possibility of dissolving China Unicom and dispersing its GSM subscriber base to China Telecom and its CDMA network to China Netcom-making way for both a TD-SCDMA and a CDMA2000 operator.
It’s no secret China wants to reduce its dependence on foreign suppliers and to increase market share for Chinese vendors. So the nation’s homegrown 3G technology, TD-SCDMA, will have a place in the market. Numerous groups have spent too much money on research and development for it to go by the wayside, regardless of reports that TD-SCDMA didn’t fare well in recent tests.
Basically, the same question marks surrounding 3G licenses that were thrown around in 2001 are still circulating in 2005. And China maintains the same truths as well: It’s a wild market with massive untapped potential that will be closely watched, and to some degree envied, by the rest of its wireless family.
