China edges closer to licensing 3G

China's long-awaited 3G licences could be close.

The process has been delayed while the Chinese government restructured the Chinese telecommunications industry, and waited for the Chinese variant of 3G technology, known as TD-SCDMA, to mature.

"The time is ripe in principle for issuing 3G licences," Xi Guohua, vice minister for industry and information technology, the paper reports from a gathering of industry executives in Beijing.

Market watchers expect that the Ministry for Industry and Information Technology will issue licences in January but Xi would not commit to a timetable.

China is the world's largest market for mobile phones, so the decision to licence 3G services could have a profound effect on the fortunes of handset and infrastructure providers, as well as creating vast opportunities for operators. 

China Mobile had 414.6 million customers at the end of June. China Unicom, the second largest operator, had 127.6 million customers on its GSM network at the end of June, and 43.2 million customers on its CDMA network. Under the government's restructuring of the industry, China Unicom is selling its CDMA network to China Telecom, the nation's biggest fixed-line carrier. It is expected that each of the three resultant mobile operators will eventually be granted a 3G licence.

This will enable the standards battle to begin in earnest. China has developed its own variant of the 3G CDMA standard in order to avoid being dependent on Western technology, but its development has been more difficult than expected. This has opened an opportunity for Western manufacturers to gain a foothold with the more widely accepted WCDMA standard.

China Mobile has already said that it will start offering 3G services using the locally developed TD-SCDMA standard by next June. It plans to launch the service in 38 cities. China Unicom is also planning a 3G roll-out, but appears to be favouring the more mature WCDMA standard that is already in use around the world.

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