China’s 3G market update
+8* China ThoughtsPublished October 6, 2008 at 8:21 am No CommentsThis month China Mobile announced the bidding for the second round of construction of its TD-SCDMA network. It will cover 28 cities and a maximum of 30 billion RMB (4.4 billion USD). According China Mobile’s calendar, the trial service will be launched in these 28 cities next June, but is 3G really a priority?
China Mobile has built a TD-SCDMA network in 8 cities during the first round of construction, and launched its service during the Olympic Games. The second round will provide coverage to all the provincial capital cities. TD-SCDMA is the starting point of 3G in China. It seems it would bring new blood to the whole industry, especially to data service. The future of the other standards W-CDMA and CDMA2000 in China is still unclear, as the Chinese government gave a headstart to TD-SCDMA even though it will slow down the 3G market expansion in China compared to what could be achieved with proven technologies already benefitting from economies of scale.
China Mobile has been politically selected and pushed by the government to deploy Chinese 3G technology. To balance this, China Mobile has been rumored since July to invest 100 billion RMB (14.6 billion USD) in its GSM network. China Mobile has still not denied it. The goal would be to achieve an almost ‘perfect’ GSM coverage including all the city corners and most areas in the countryside, and further strengthen its leading position in terms of the network. If it is true, it will exactly matches its rural market strategy.
Users from rural areas represented half of the additional subscribers of China Mobile for the past two years and for them 3G does not make much sense yet – and this is the case for most Chinese users as well. What they do care about is to ‘have’ or ‘not have’ a mobile and the Chinese mobile market is still far from saturation. 3G network deployment which involves huge investments is unlikely to be regarded by China Mobile as the best way to catch new subscribers and compete with other operators.
Yiqun Bo @ +8*
