3G touted to drive China's mobile uptake

China's mobile users have been slow to respond to the country's initial rollout of 3G services, but the local government expects 3G to take a front seat in driving new mobile subscriptions.

The country's largest mobile operator, China Mobile, last week reported slow adoption of its homegrown TD-SCDMA 3G services. Initially targeting to secure 10 million new 3G sign-ups for this year, China Mobile later revised that figure down to 3 million after initial pilot trials.

Lu Xiangdong, China Mobile's vice president, was quoted in reports to say new services require time to prove their quality. Lu expects more sign-ups to follow, after an initial "proving" period, noting that China Mobile currently has 1.2 million 3G subscribers.

China's Ministry of Industry and Information reported over the weekend that the rollout of 3G networks is driving a continued shift from fixed to mobile phone users in the country.

The number of fixed-line users declined by some 10 million, while the number of mobile users increased by 54 million in the first half of this year, it said. According to ministry statistics, China boasts a population of over 1 billion phone users, including fixed and mobile.

A recent report from Pyramid Research predicted that the rollout of 3G networks in the country will be a driving force for the expansion of the local mobile market into 2014. The report expects China's telecoms market to surpass that of Japan's by the year, as well.

Pyramid added that in addition to 3G investments, China Mobile is also expected to focus on expanding its 2G infrastructure to the rural market.

China Mobile's TD-SCDMA standard, however, has been dogged by technological barriers from the onset. From connectivity issues reported in 2003, and its Olympic Games rollout--initially slated for wide deployment--was eventually limited to selected states.

According to a recent Shanghai Securities News report, the standard also faces a lack of compatible equipment, compared to other international standards such as WCDMA and CDMA2000, which will be rolled out in the country by China Unicom and China Telecom, respectively.

China Telecom has a 3G subscriber base of 100,000, falling short of the 20 million initially expected for this year. China Unicom performed better with the WCDMA standard, signing up 470,000 subscribers in the second quarter, said the report.