Eastern promise - Special Report China And Japan

CommunicationsWeek International, Feb 4, 2002 by Michelle Donegan

In 2003, new telecoms and e-commerce laws are expected, and changes to the organization of MII have also been mooted, bringing further uncertainties to the competitive landscape in China.

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Percentage cap on foreign investment in China's telecoms sector post-WTO

Sector         2002         2003          2004         2005        2006

Mobile          25%          35%                        49%
               (3 cities)  (17 cities)                (17 cities)

Fixed-line                                              25%
                                                      (3 cities)

Value-added /   30%          49%          50%
Paging         (3 cities)  (17 cities)  (nationwide)

Sector           2007          2008

Mobile           49%
               (nationwide)

Fixed-line     35%           49%
               (17 cities)   (nationwide)

Value-added /
Paging

Investment will initially be allowed in Beijing, Shanghai and Guangzhou
and will be followed in 2003 by Chengdu, Chongqing, Dalian, Fuzhou,
Hangzhou, Nanjing, Ningbo, Qingdao, Shenyang, Shenzhen, Xiamen, XI'an,
Taiyuan and Wuhan.

Source: Lovells

RELATED ARTICLE: China by numbers

Population: around 1.3 billion (approximately one fifth of the world's population)

Fixed-line telecoms subscribers: 177 million as of Nov. 2001, (source: Ministry of Information Industry (MII)

Mobile subscribers: 145 million (as of January 2002), (MII)

Registered Internet users: 15.881 million (source: Beijing University of Posts and Telecoms)

Size of telecoms services market in 2001: $42 billion (MII)

Annual average growth rate of communications industry (2001-2005): 23% (Beijing University of Posts and Telecoms)

Fixed-line services will grow from $52 billion in 2001 to $143 billion in 2006 (Pyramid)

Infrastructure spending will average $13 billion annually for the next three years (Pyramid)

Third-generation mobile service delays in China: mirroring the setbacks facing western Operators and Vendors

Among the uncertainties that still surround the telecoms industry in china is how and when the government will issue licenses and allocate spectrum for third-generation mobile services. Many experts predict that allocation will occur through some form of "beauty contest," perhaps at the end of this year or early next year.

"It's more important how they decide [to allocate 3G licenses] than what they decide," says Charles Cosson, senior counsel, public policy, for Vodafone, Americas and Asia region, based in Walnut creek, California.

china, keen to back its own economy, is developing its own 3G technology called TD-SCDMA, which was one of the key research and development projects in china's ninth 5-year plan. "They promote [TD-SCDMA] because it was developed by Chinese firms," says Fei Li, analyst at Pyramid Research, The technology is being co-developed by Datang of Beijing, Siemens, and the china Academy of Telecommunications Technology.

In March last year, the ITU-T accepted TO-SCDMA as one of the technologies for 3G. But the big commercial trials with three operators in china, which were scheduled to start this month, have been put back to the third quarter of this year. The developers of the technology maintain that equipment will be commercially available in 2003, including dual-mode handsets for roaming with GSM networks.