After proceeding cautiously, the Ministry of Information Industry (MII) yesterday told domestic operators to be ready for the rollout of 3G (third generation) mobile telecoms services.

China's operators and equipment makers have been anxiously awaiting the go-ahead for 3G services, which are said to provide quicker transmission and combine calling services, with extras like information downloading, e-mail and instant messaging.

"After years of efforts, it's time for China to develop 3G," MII chief Wang Xudong told the ministry's annual working conference in Beijing yesterday.

Policies related with 3G technologies, services, fees, regulations and spectrum allocation should be worked out in 2006, he said, although the ministry has not set up a clear timetable for 3G licensing.

"Operators should make full preparations for building networks, developing service offerings and nurturing the market," Wang said.

In January, Wang said the MII would join other government bodies to make suggestions to the State Council regarding 3G development "at an appropriate time" in 2005.

And in May he promised to enable operators to offer 3G services during the Beijing Olympics 2008.

Yet the government still wants to give the homegrown 3G technology standard, TD-SCDMA, more time to mature.

TD-SCDMA is competing against Europe-initiated WCDMA and US-backed CDMA 2000.

Not yet put into commercial use, TD-SCDMA has made major progress in recent months, sparking speculation that the 3G licensing process will soon be underway.

A report by Beijing-based Norson Telecom Consulting predicted 3G licences would be handed out "almost definitely" in 2006.

And many industry executives have predicated the licensing would take place in the first half of next year, possibly as early as March.

However, some say an industry-wide reshuffle may slow down the 3G licensing process.

Wang said regulators should "link the 3G (licensing) with deepening telecoms reform, optimizing the competitive landscape, improving regulations and supervisions as well as promoting (Chinese) independent intellectual property rights (IPRs)."

Regulators have been concerned that too many 3G licences will lead to "excessive investment" or so-called huge fixed-asset losses.

Insiders said the State-owned Asset Supervision and Administration Commission (SASAC), has been considering merging major telecoms operators.

Chen Jinqiao, a senior researcher with the China Academy of Telecommunications Research, a think-tank affiliated with the MII, said 3G licences are less likely to be handed out early next year, given a looming industry reshuffle.

Chen said competitive landscape of China's telecoms industry is "not rational," and regulators might inevitably resort to consolidating operators, the researcher said.

"A reshuffle of the domestic industry by mergers is still likely," he said.

Yet, mergers or swaps of State-owned assets will not be a "cure-all" as a large-scale reshuffle will be costly, Chen noted.

"The government may also designate some operators to run TD-SCDMA networks with a set of preferential policies to reshape the industry," he said.

Rumours have been swirling that fixed-line incumbent China Telecom might get the first 3G licence to build a TD-SCDMA network.

The government may also allow more foreign companies' involvement in small Chinese telecoms operators, as part of its efforts to reshape the industry, the researcher said.

Chen also urged all related government bodies to join each other to reach a common view to reshape the country's telecoms industry.

Many ministries, including the MII, SASAC, the National Development and Reform Commission and the Ministry of Science and Technology, are currently involved in the 3G licensing scheme.

(China Daily December 28, 2005)