Home & Office

Ovum: China to get 'new wave' of 3G investments

China's awarding of 3G licenses to local carriers is expected to trigger new investments from players which have been cautious and waiting for confirmation.
Written by Victoria Ho, Contributor

China has awarded its long-awaited 3G licenses, and Ovum expects this to incite "new waves" of 3G investment in the country.

Following China's awarding of the licenses Wednesday, the analyst firm released a statement saying the booming mobile market in the country spells a "golden opportunity" for global equipment and handset manufacturers.

With a growth of over 7 million new subscribers added each month and a mobile penetration rate that is still under 50 percent of its 1 billion people, there is "huge potential for growth", said Ovum.

In 2007, the analyst firm said China's delay to award the licenses was "hurting investment", because carriers were remaining cautious over preparing for the capital expenditure.

The announcement is therefore expected to trigger a "new wave" of investment, on top of the base infrastructure that had to be put in place during trial runs last year, said Ovum. The Chinese government estimates this to amount to a 300 billion yuan (US$41 billion) investment.

TD-SCDMA to rule the roost
China's Ministry of Industry and Information Technology (MIIT) issued three 3G licenses: TD-SCDMA to China Mobile, WCDMA to China Unicom and CDMA2000 to China Telecom.

Home-grown standard, TD-SCDMA was deemed an immature technology just last year by industry watchers. It was still facing technical issues such as connectivity being dropped in moving vehicles, affecting both calls and Web browsing, and was a problem already seen back in 2003.

And although WCDMA and CDMA2000 are more established standards than TD-SCDMA, Ovum thinks it is "not a matter of 'if' TD-SCDMA will succeed but 'when'".

It explained: "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 percent 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," said Ovum.

Editorial standards