Chinese Govt to Distribute 3G Cell Phone Licenses

Chinese Govt to Distribute 3G Cell Phone Licenses

BEIJING -- The Chinese government plans to distribute licenses for 3G (third-generation) cellular phone services to major communications firms as early as this year, it was learned on February 6.

It plans to approve licenses for TD-SCDMA, an original communications standard developed in China, as well as the WCDMA (wide-band code division multiple access) and cdma2000 standards now used in other countries.

The approval is expected to trigger a total of more than 1 trillion yen in capital spending to develop the infrastructure necessary for 3G services, which enable the high-speed transmission of video. Competition is expected to intensify among the world's communications equipment manufacturers to supply the world's largest mobile phone market.

The Chinese government is expected to provide 3G licenses to four firms. Besides existing cell phone service providers China Mobile Communications Corp and China United Telecommunications Corp (China Unicom), two fixed-line carriers -- China Telecommunications Corp and China Netcom Corp -- are also expected to be included in order to stimulate competition and promote lower prices.

Those obtaining licenses will choose from one of three communications standards: the TD-SCDMA standard, the WCDMA standard used by NTT DoCoMo Inc, UK giant Vodafone Group Plc and others, and the cdma2000 standard used in Japan, Korea and other nations.

China's Ministry of Information Industry has already secured the spectrum necessary to implement the three standards. Investments in building base stations, fiber-optic networks and other infrastructure are estimated to peak at an annual 9 billion dollars in 2005.

The Chinese government believes that even with three different standards, service providers will be able to make profits because the Chinese market caters to more than 200 million cell phone users -- the largest number in the world.

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