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Specter of 3G

(China Daily)
Updated: 2009-05-15 07:43

The battle lines are being drawn as we near the World Telecommunication Day on May 17. The three Chinese telecom giants have spared no advertising ammunition or expense to attract subscribers for their third generation (3G) services.

It was reported that China Unicom would start 3G services on that day while China Mobile and China Telecom vowed to boost promotion of their businesses.

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Ever since the Chinese government finally issued licenses to the three domestic telecom giants in January, Chinese consumers have been waiting for the day the 3G services will roll out. A full-scale market war between the telecom giants seems inevitable now.

The industry regulator may want to stop these telecom giants from undercutting each other, as a fierce price war would leave little profit for these State companies.

However, if the telecom industry is to serve as a powerful growth engine for the national economy, policymakers should refrain from stepping into consumer-friendly competition between these telecom giants.

Already, at least five years behind more advanced markets, China needs to speed its 3G race based on different technologies including homegrown technology as well as proven standards from overseas.

The vast telecom market in China will surely provide ample demand for all three domestic competitors. Domestic mobile phone users numbered more than 600 million, and the business volume of telecom services reached about 2 trillion yuan ($292 billion) in 2008.

The faster and fancier conveniences that the 3G services promise will open opportunities for the Chinese telecom giants to attract more subscribers. But the high price for such services remain a concern for many prospective customers.

True, the different technological advantage of the three 3G standards adopted by the Chinese telecom companies may affect their competition for subscribers.

But price will still be the deciding factor. Speed may be good to attract some users, but is not good enough to offset the disadvantage of higher prices that keep more users away.

For China's 3G market to survive and thrive, our telecom giants must first build a sufficiently large user base to make business in the new spectrum commercially viable.

Lower prices will not only enable many more Chinese consumers to enjoy 3G services but also keep down the cost of business activities in China.

Hence, the industry regulator should welcome competition that forces domestic telecom giants to be more cost-efficient. And these telecom operators should try their best to integrate the 3G technology in a way as to maximize business prospects, provide better choices to clients and add value to consumer services.