As the commercial use of China's 3G (3rd generation) mobile phone technology draws near, the country's mobile industry is showing stronger enthusiasm than ever.

International telecom manufacturer Nokia has threatened to withdraw its investment from China. OKWAP, a newly ratified handset maker announced that it got China's first 3G license, which has proved to be false.

The recent tumult comes in the wake of Chinese Minister of Information Industry Wang Xudong's remarks at the Fortune Forum late last month that "China promises to provide 3G service by 2008."

Concluding from Wang's remarks that the government would delay the time for 3G licensing, companies have pressed the government to push forward China's 3G process.

Who Is Playing up 3G?

Chinese mobile telecom operators are not necessarily in a hurry to launch 3G services. In China's booming mobile communication market, they would rather continue safely making profits in the present environment.

But fixed line operators have a different story. With little room for expansion, they are eager to enter the profitable mobile market by taking advantage of 3G.

Prompted by the poor performance in the domestic market last year, China's home brand handset makers also pin their hopes on 3G, in expectation of quick new growth with the technology.

Government statistics show that this year China's capacity for mobile phone making has surpassed 500 million sets, which indicates a much greater supply than demand. Under such a backdrop, new comers in the industry, like OKWAP, are eager for the opening of the 3G market.

Three Factors Determine China’s 3G Schedule

The reshuffling of China's telecom companies is one of the important factors in the government's issuing of 3G licenses, Vice Minister of Information Industry Xi Guohua said at the Boao Forum for Asia in April.

The ministry set the reshuffling as one of its major tasks for the year 2005, but no plan of reform has yet been made, said Xi.

It is the hope of both the Chinese government and the mobile communication industry to get rid of the high patent fees in the 3G market. Yet, even TD-SCDMA, China's homegrown 3G standard, has still to settle the patent issue through negotiation.

A report from the Telecom Academy under the Ministry of Information Industry shows that China's Datang Group, a major proponent of the TD-SCDMA standard, only holds 7 percent of TD-SCDMA's patent, Nokia 32 percent, Ericsson 23 percent and Siemens 11 percent.

According to ministry sources, negotiations with American company Qualcomm, owner of the property rights of CDMA, have been stagnant for more than a year due to the high patent fee charged by Qualcomm.

At the Boao Forum for Asia, Xi Guohua said the high patent fees would lead to a monopoly harmful to industrial development. He called for multinational companies to charge lower, more reasonable fees.

The maturity of TD-SCDMA is another key factor determining China's 3G process. According to the government schedule, TD-SCDMA will be ready for commercial use in June this year. The result of the test for commercial use to be published this September is also expected to have a major influence over the 3G process.

Expert: Rational on 3G

Despite companies' enthusiasm about 3G, some experts are calling for a more rational attitude toward the new technology, arguing that 3G is only the evolution 2G, rather than a revolution.

Most people are still unclear about what 3G could bring. The European experience has shown that subscribers can be much less enthusiastic than the industry expects.

However, some insiders gave bold predictions that China would have 6.2 million 3G subscribers by 2006, 7.35 million by 2008, and even nearly 200 million by 2010.

The government has tended to cool the 3G clamor. Yet "the government cares more about 3G than any one else," said Xi.

China has more than 50 million new mobile users every year. "The government will issue 3G licenses when the technology is mature," Xi said.

(Xinhua News Agency June 6, 2005)