Analyst perspectives on key wireless industry topics including mobile devices, network infrastructure, mobile operators, mobile content, and short range wireless connectivity.

OK... Telecom Restructuring Complete, Beijing Olympics Proving to be Success... 3G Licenses?

3G licensing is suspiciously looking like it could become reality. Two major hurdles, the Telecom Restructuring and the Beijing Olympics are on their way to being "Done Deals. Another positive sign is the ramped up commitments by the three mobile operators in the Chinese market: 

- China Mobile (GSM) - Has committed to RMB 127.2B (US$ 18.5B) in 2008, RMB 119B (US$ 17.3B) in 2009 and RMB 109B (US$ 15.9B) in 2010;
- China Unicom (GSM) - Will spend RMB 100B (US$ 14.5B) between 2009 and 2010;
- China Telecom (CDMA) - will spend RMB 80B (US$ 11.6B) upgrading its CDMA network between 2009 and 2011. 

By comparison in 2007, China Mobile spent RMB 105B (US$ 15.3B) on its GSM network while China Unicom spent RMB 12B (US$ 1.74B) and RMB 11B (US$ 1.6B) on its GSM and CDMA networks respectively (note the CDMA network now belongs to China Telecom). 

The capex commitments are also coinciding with product, technology and infrastructure announcements from ZTE and Huawei. 

So what is notable?

- ABI Research's current expectation is 3G licensing takes place in 4Q 2008;
- As is done in China, the carriers will award contracts for network upgrades and product (ie. handsets) procurement in 4Q-2008 so that carriers will have done some preassembly of their 3G networks by the time 3G licenses allow them to commercially launch services; 
- China Mobile may be burdened with the TD-SCDMA license but they intend to upgrade their TD-SCDMA infrastructure to TD-LTE as soon as is practical. So TD-SCDMA (in its original form) may only be around for a short while. 

The 3G licensing could provide revenue opportunities for equipment and handset vendors targetting the Chinese market against a backdrop of flagging growth in the general, wider global and Chinese economy. The 3G capex commitments by the 3 Chinese carriers are quite remarkable especially by China Unicom and China Telecom. They all see a potential market to secure the lucrative 3G subscribers. The 3G subs base will obviously be smaller than 2G but they will be the more affluent and bigger spenders. In the early days of 3G in the West, 3G subs had a delta of around 30% over their 2G cousins. Despite its 70% market share, China Mobile cannot afford to let its competitors get a head start on 3G.

Hwai Lin Khor, AP Wireless Analyst, contributed data to this blog.

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