China's National Development & Reform Commission (NDRC) believes that a fundamental restructuring of the nation's telecom industry is essential to promote the long-term growth of the country's fixed and wireless core communications networks. Because of this, the Chinese government is offering 3G licenses to the four state-owned telcos-China Mobile, China Unicom, China Telecom and China Netcom-as incentives if they are willing to accept reforms, according to iSuppli.
Much of the responsibility for reforms can be attributed to China Mobile. The company has a near monopoly in China's mobile communications market with $37.8 billion in revenue, accounting for 76 percent of the nation's total mobile communications revenue. China Mobile also had a net profit of $8.5 billion last year, which-to put it into perspective-is 10 times the profit of China Unicom, three times that of China Telecom and six times that of China Netcom.
"The NDRC and the Ministry of Information Industry (MII) want China Telecom and China Netcom to offer both fixed-line and wireless services so consumers will have more of a choice," said Kevin Wang, analyst with iSuppli's China Research service.
"Government regulators recognize that Fixed-Mobile Convergence (FMC) based on Internet Protocol Multimedia Subsystems (IMSs) is the new trend in the telecom industry. Thus, they are wiling to use 3G licenses in exchange for a fundamental change in China's telecom industry."
iSuppli believes that China's core fixed and wireless networks all are transitioning to Internet Protocol (IP)-based Next-Generation Networks (NGNs). Furthermore, increasing numbers of media gateways and servers will allow China's telecom networks to deploy advanced support services, video content distribution and online gaming. By offering this improved multimedia capacity, operators can more easily introduce new value-added services that in turn will generate more revenue for the state-operated companies. Mobile handsets in China also will have to incorporate more advanced multimedia capabilities and open operating systems.
Politics and 3G
In China, releasing 3G licenses has moved from being a technical matter for the telecom companies to a political issue. The biggest barrier to introducing 3G services is the high level of licensing fees that must be paid by Chinese operators, mobile infrastructure suppliers and handset manufacturers. Much of the postponement is coming from the Chinese government, which is still negotiating with companies such as Qualcomm and Siemens, which own many of the 3G technology patents.
"Those who obtain 3G licenses will decide the future of China's telecom industry," Wang said. "The longer the delays in 3G licenses, the greater the bargaining power of the Chinese government."
iSuppli believes that China will issue three licenses during the first half of 2008 and it is a certainty that China Mobile will be given a license to deploy TD-SCDMA networks. China is not expected to deploy more than three national 3G networks as regulators aim to reduce capital expenditures through base-station site-sharing arrangements as well as Radio Access Network (RAN) and core-network sharing.
Millions of subscribers, valued added revenues
iSuppli forecasts that China's TD-SCDMA 3G subscribers will jump to 28 million by 2011, up from 1.1 million subscribers in 2007. By 2008, 3G subscribers in China will reach 6.4 million. For each of these subscribers, a new mobile handset will be required, offering a new selling opportunity for many companies inside the wireless telecom industry in China.
However, iSuppli believes that a key revenue driver in China will come from the applications that will be enabled by 3G. Chinese consumers will be able to access the Internet, download music, stream Internet video, use mobile mailboxes, pay bills online and engage in mobile blogging and interactive 3D gaming-all through their mobile phones.
This expansion of the value-added services to the telecom industry in China will infuse the country with new revenues coming from domestic consumers. ISuppli believes most consumers will be naturally curious to explore the additional functions of their mobile handsets. ISuppli forecasts China's 3G value-added services market will grow to $19.5 billion in revenue by 2011, maintaining a Compound Annual Growth Rate (CAGR) of 17.4 percent from $8.8 billion in 2006."
Posted to the site on 26th July 2007
Posted to: www.cellular-news.com/story/25116.php