China to let operators offer both land and mobile services

December 31, 2007

There are an estimated 500 million mobile users in China

China may this year issue full-service licenses to telecoms companies, permitting them to operate both mobile and land-line services, Xinhua News Agency reported, citing Wang Xudong, the head of the Ministry of Information Industry.

Mr. Wang said the current industry structure, which limits China Telecom Corporation Ltd. and China Netcom Group Corporation (Hong Kong) Ltd. to land-line operations and China Mobile Ltd. and China Unicom Ltd. to mobile services, curbs available technologies and hinders the industry's development.

China is the world’s largest mobile market in sheer numbers: an estimated 500 million users out of a total population of 1.3 billion people. Next-door neighbor India is the world’s fastest growing mobile market, with an estimated 225 million users, or 20 percent of its overall population.

The introduction of full-service licensing in China may allow the weaker land-line companies to offer mobile services to better compete with China Mobile. This could have the effect of increased penetration for mobile marketers in China.

Reports say that mobile businesses will likely be transferred to China Telecom and China Netcom amid proposals to break up China Unicom.

Earlier last year, Mr. Wang said that the Chinese telecoms industry would expend 1 trillion yuan ($1 = 8 yuan) from 2006 to 2011. He also said that the government would issue 3G mobile licenses very soon.

Meanwhile, the Chinese government said Dec. 26 that it had approved a plan for upgrading its mobile phone network for wireless broadband services, which some analysts claim is a move to improve the country's competitiveness with home-grown technology.

The Web site of the State Council of the People's Republic of China – also known as the central government of the People's Republic of China – said that the government was poised to award licenses for phone networks to offer 3G phone services during the Summer Olympic Games in Beijing in August.

However, an analyst from China International Capital was quoted in a recent report by the International Herald Tribune saying that the proposal, posted on a government site, “looks like a plan for Wi-Fi, or wireless local area networks, not the 3G licenses that everyone is waiting for."