3G licences coming to China and
WiMAX Network Portland
January 10, 2009
In January 2009, all eyes are on the long-awaited 3G licences in China
and India. Today, the Chinese regulator officially announced the issuing
of 3G licences to its three operators. In contrast, India has (again)
postponed the kick-off date for the auction of 3G licences, to the end
of January 2009.
3G licences will boost
Both China and India's mobile markets are booming. On average, over 7
million new subscribers were added every month in 2008 in each market.
Each has a population of over 1 billion and a mobile penetration rate of
less than 50%, so there is still huge potential for growth in both
mobile markets. Therefore mobile operators in both markets have strong
incentives to obtain a licence and invest in 3G.
3G services have already been tested in both these markets in 2008.
Therefore issuing licences does not initiate 3G investment but will
accelerate it, so we expect to see a new wave of telecoms infrastructure
investment following the granting of the licences. The Chinese
government estimates that the issuing of its 3G licences will result in
Rmb300 billion ($41 billion) in 3G investment.
Each market also has different foreign direct investment (FDI) rules, so
the 3G opportunity is different for India and China. India limits FDI in
its telecoms industry to 74% and permits foreign operators to bid for
its 3G licences. We expect that this will attract many international
carriers to bid. In contrast, China s FDI level is only 49% and it has
not made any 3G licences available to foreign players.
Nonetheless, vendors will welcome the news in both markets. It is a
golden opportunity for global equipment and handset vendors at a time
when there are few signs of growth.
China s 3G licences were predictable
As expected, today s announcement confirms that China Mobile, China
Telecom and China Unicom will receive the TD-SCDMA, CDMA2000 1XEV-DO and
WCDMA licences respectively.
There has been much talk about EV-DO and WCDMA being more established
and widespread 3G technologies than TD-SCDMA, but we don t believe this
is much of an advantage for China Telecom and China Unicom. Firstly,
China is a huge market and is certainly a big enough market for TD-SCDMA
to thrive. Secondly, let s remember that China Mobile controls around
70% of China s mobile market and this will not drastically change in the
short term. Thirdly, TD-SCDMA is China s home-grown 3G technology, so it
has immense government backing. Therefore we believe that it is not a
matter of if TD-SCDMA will succeed, but a matter of when.
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