NEW YORK-Despite problems the written Chinese language poses for Internet communications, China may nevertheless become the largest wireless data market in the world.
China Telecom Hong Kong, which had 38 million subscribers at the end of 1999, “is closely following and preparing for wireless data,” Li Ping, vice chairman and chief operating officer, said in a recent presentation here.
In a populous country with a proportionately low number of wireline phones and personal computers, “wireless data is one of the most promising sectors,” he added.
Hurdles remain because of “the difficulties in using Chinese characters in Internet-enabled handsets … but China could become the biggest wireless data market in the world,” Li said.
“The future of our company is based on the convergence of wireless voice and data.”
China Telecom, the incumbent cellular carrier, already provides short message service in some cities, offering sports scores, stock quotes and weather reports. It is conducting trials of General Packet Radio Service and Wireless Application Protocol and expects test results by mid-year.
“With WAP, we are waiting for the vendors, Ericsson and Nokia, because many of the software and applications are not available yet,” Li said.
To get a sense of the value of value-added services, the Global System for Mobile communications provider conducted a survey earlier this month in the largest city in the province of Guangdong.
“In the best city in the best province, value-added services account for about 5 percent of total revenues,” Li said, adding that it would be difficult to extrapolate that assumption to all of its coverage areas.
“We have not yet decided on a wireless data strategy, so we are charging based on minutes of use,” he said.
Although it is exploring WAP and GPRS, China Telecom has taken a pass on the current generation of Code Division Multiple Access network technology. “For us in the near term, I don’t think it would be appropriate and wise to introduce second generation CDMA,” Li said.
“We are closely monitoring 3G CDMA, but we are still waiting for standards.”
While looking to expand its service offerings, China Telecom also is engaged in enlarging its coverage territory, which has been focused on three of China’s most economically developed provinces-Guangdong, Zhejiang and Jiangsu. In October, it raised $2 billion in a secondary offering of its stock, which trades on the New York Stock Exchange, and an additional $600 million in a concurrent global bond offering.
Some of the proceeds were used in recent months to purchase three provincial Chinese cellular carriers, which have “an average penetration of six percent, or 10 percent of the addressable market, that is, of people who can afford wireless,” Li said.
China Telecom Hong Kong has been able to focus completely on its wireless voice and data businesses since the federal government undertook a restructuring of the domestic telecommunications market last year, he said.
China Telecom, which does business as China Mobile Communications Corp., divested itself of its fixed line services. Likewise, its paging operations went to China United Telecommunications Corp., better known as China Unicom. And its television venture went to China Telecommunications Broadcasting Satellite Corp., or ChinaSat.
“The restructuring better defined our environment and separated government functions from telecommunications services,” Li said.
China Unicom, which has about 12 percent of the country’s 45 million mobile phone customers, and China Telecom, which has the rest, could face a third competitor, according to recent reports.
The People’s Liberation Army, ordered by the federal government to divest its private sector enterprises, may be assembling a public-private partnership in order to regain control of its mobile wireless networks. However, any such venture would require government approval.
Asked earlier this month to comment on these reports, Li said his company had not been able to confirm them.
However, he added, “generally speaking, I encourage and support competition in telecommunications.”
