China

China: The telecom market is expected to evolve in coming months, mainly driven by 3G licenses introduction, market restructuration and value-added services. Most of analysts now expect 3G licenses will be introduced early next year. Uncertainties still exist on the number (3 or 4), who would be granted and the chosen technologies (W-CDMA, CDMA 2000 and TD-SCDMA). If mobile operations are opened to current fixed line operators (highly expected), some are seeing 3G as the way to migrate PAS users (wireless fixed line) to 3G services. Why not! But this requires that operators heavily subsidize 3G handsets. Is it sustainable? It should be the first phase of introduction with an affordable phone, then in a second phase operators would introduce a range of 3G value-added services.

China is a country with low ARPU (not the lowest, but around $10), and many analysts make the forecast that

Chinese mobile operators have to generate new business revenue models and need value-added services in order to increase ARPU. Foreign mobile operators are also interested to enter the Chinese market, but also have to overcome barriers put in place by government policy. They will only get in as niche operators, while Chinese mobile operators are expected to get the bulk of the market.

The situation is further complicated by the fact that the Chinese government plans to restructure the telecom market. The move could impact the number of players (how many fixed, how many mobile, how many with both businesses), their focus and perimeter, introduce perhaps MVNOs to reduce redundant network resources.

A lot of answers are expected. A first milestone should be the next 3G China Global Summit 2005 from 14-16 September, where new test results of its homegrown TD-SCDMA 3G standard could be announced. To be continued....