“The introduction of 3G services (in China) will not give the telecom carriers a big boost, as global experiences show that 3G has not been very helpful in driving business growth,” said Wang Jinjin, a telecom industry analyst with UBS.

“The industrial restructuring, in which all of the country’s three telecom companies become full service operators, will only worsen the competition,” said Wang.

Early this year, the three carriers have been awarded their 3G licenses and all announced huge investment plans to build their networks.

China Mobile, the world’s biggest mobile phone operator in terms of subscription number, was assigned the license to deploy 3G networks based on TD-SCDMA, a homegrown 3G standard while China Telecom got one for the CDMA2000 standard, two widely adopted standards.

China Unicom, the country’s second biggest mobile carrier, on Sunday (May 17) launched its trial third-generation services in 55 cities based on the Wideband Code Division Multiple Access, or WCDMA technology and aims to expand the trial to a total 284 cities by the end of September, according to media reports.

China Unicom is the last of the country’s three major operators to launch the trial service, the report said.

China Mobile, one of the nation’s three leading mobile operators, is to allot 600 million yuan (88.24 million U.S. dollars) to support the research and development of terminal devices for TD-SCDMA, the domestically-developed 3G standard.

The newly-launched R&D project will focus on the development of a less expensive design of a flagship mobile phone model that supports broadband internet, and whose market price will be under 1,000 yuan, said the company.

3G services are relatively higher than the preceding technologies, which may also keep customers away. According to a survey by www.3g.cn, an industry website, 60 percent of its 15,155 respondents said the current pricing “was too high”.

One bright spot will be the equipment gear makers, including base station and cellphone manufacturers, analysts said.

The Ministry of Industry and Information Technology (MIIT), the telecom regulator, had said earlier that China would spend 280 billion yuan on 3G networks in 2008 and 2009.

Foreign telecom equipment makers’ total share in China’s 3G market may fall below 50 percent, BDA China, a Beijing-based telecom research firm, predicted earlier.

“One thing is for sure: China Mobile’s dominant position is going to be weakened in the next two to three years,” said Chen Jinqiao, deputy chief engineer from China Academy of Telecommunication Research, which is under the MIIT.

“The rollout of 3G services will make China the only major economy where investment in the telecom sector is still growing. It will help Huawei and ZTE a lot,” Chen said.

Source : Konaxis