Global Economics

China's Never-Ending 3G Saga


A senior Ministry of Information Industry official acknowledges the need to issue 3G licenses soon, but it's still a long way from reality

Like sniping between Nokia and Qualcomm, China's 3G licensing has become a telecom staple.

Every year the logic for an imminent issue of licenses seems inescapable. Every year the licenses remain on the shelf.

The problem is twofold. First is China's secretive and dysfunctional industry structure. The Ministry for Information Industry (MII) is the regulator, policy-maker, standards-setter and official industry front-man. But it shares its role with the economic planning agency, National Development and Reform Commission (NDRC), the State-owned Assets Supervision and Administration Commission (SASAC), which owns and supervises SOEs, and, presiding over all of it, the government executive body, State Council.

That's not to mention the many stakeholders, the carriers, the state-owned vendors (which is all except Huawei), and in particular investors and the international finance community.

The second problem is the need to find a path to profit for the preferred 3G standard, TD-SCDMA. If China 3G policy-making is about anything, it is about gifting TD to the telecom world.

So it is positive news that MII's senior vice-minister Xi Guohua has acknowledged there's a need to issue 3G licenses soon. However, this is a long way from the reality of new licenses.

China's carrier sector is close to crisis. Before any of them has a 3G mobile license it will need to go through a long-overdue restructure. For the first time ever, the two fixed-line operators this year reported net customer losses. Only broadband is keeping them afloat, while China Mobile takes three-quarters of the industry's growth and profits.

A consensus has built up in the Chinese media in recent months that no restructure will take place until after next year's Olympics. In the absence of any government leadership on the issue, that has become a substitute for official policy.

Xi's remarks should be seen as an attempt to challenge the policy stasis. It will be some time before licenses are issued and commercial networks are rolled out.

Provided by Telecom Asia—Copyright: © 2006 Questex Media Group, Inc. > All right reserved.

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