The launching of the third-generation services by China's leading cell phone operators this fall signals the start of a battle for top position in the world's largest mobile phone market.
3G networks enable mobile phone users to surf the Internet at faster speeds and use new services such as video calls and mobile television. For smaller rivals China Unicom and China Telecom, the emergence of China's 3G market is also an opportunity to challenge market leader China Mobile. [China Daily]
For smaller rivals China Unicom and China Telecom, the goal is to topple long-time leader China Mobile.
China's second-largest cell phone operator, China Unicom, officially launched its 3G services last month.
However, experts said that the China Mobile's lead is unlikely to change, at least in short term.
Although China Mobile was forced to develop China's homegrown 3G standard, TD-SCDMA, almost on its own, neither competitor seems ready to pose a serious threat, analysts said
China Unicom's 3G strategy apparently is taking a back seat to its widely publicized deal with Apple Inc to bring the US technology company's popular iPhone handset to China. Experts said the company has been slow to launch 3G services.
China Telecom, which launched its e-Surfing 3G brand late last year, is technically incompatible with most mobile phones used in China.
China Telecom launched a huge marketing campaign during the past few months to promote a series of its 3G services such as mobile email, Internet surfing and video calls.
"From the publicized strategies of the major Chinese telecom operators, I don't think China Mobile's dominant position will be challenged in the near future," said Wang Yuquan, a senior consultant at the research firm Frost & Sullivan.
Wang said neither China Unicom nor China Telecom has focused on the core value of 3G services.
As a technology that supports faster data transmission speeds, 3G networks enable mobile phone users to search the Internet at faster speeds and use 3G services such as video calls and mobile TV.
The Chinese telecom operators hope the new service becomes a fast-growing source of revenue, since traditional cell phone income has declined in recent years due to market saturation and increased competition.
A head start
In January, the Chinese government issued 3G licenses to its major telecom operators.
To even the playing field between China Mobile and its smaller competitors, the government ordered China Mobile to adopt the country's home grown 3G standard, TD-SCDMA.
TD-SDMA is believed to be less developed than the WCDMA standard adopted by China Unicom and the CDMA2000 standard adopted by China Telecom.
Many believe the government's decision will give China Unicom and China Telecom a head start, since China Mobile needs more time to develop TD-SCDMA and win support from handset manufacturers.
However, that did not prevent China Mobile from announcing its 3G brand "G3" on the same day in January that the Chinese government granted the 3G licenses - three months earlier than when China Unicom unveiled its "Wo" 3G brand in April.
China Mobile is also the first to launch its own online application store, which allows its users to download a variety of mobile applications.
Bill Huang, general manager of China Mobile's research institute, said the firm sees smartphone sales growing in "double digits" in coming years - at least two to three times faster than other phone sales.
Huang said only about 10 percent of the company's clients are using smartphones, which support advanced data services, but he expects the number to reach 50 percent in the next three to five years.
During the past year, China Telecom and China Unicom have been busy renovating their businesses as part of the government-led restructuring of the industry.
Part of China Unicom's mobile business was split and sold to China Telecom. China Mobile, on the other hand, was left nearly intact by the restructuring.
China Mobile, the country's largest cell phone operator, began trials of its TD-SCDMA service in many Chinese cities during the Olympic Games last year and also invested in upgrading and expanding its current network.
Zhang Yanan, an analyst at the domestic research firm Analysys International, said China Telecom and China Unicom still face many challenges in competing with China Mobile.
Zhang said China Unicom seems to be "low-profile" in releasing applications and 3G services to the market.
China Telecom, he said, has struggled with a relatively small base of mobile phone users, which limits the number of its potential 3G users.
According to company figures, China Mobile had about 450 million mobile phone users by the end of July -- a huge lead over China Unicom's 141 million users and China Telecom's 41.73 million mobile users.
But China Telecom also has 50 million broadband users and nearly 200 million fixed-line users.
"China Telecom is strong in the corporate market, but only accounted for about 5 percent of the consumer market. That greatly limits its user base for 3G service," Zhang said.
China Telecom acquired its mobile business from China Unicom last year. During the past few years, the business - based on CDMA technology backed by Qualcomm, LG and Samsung - had been under development by China Unicom.
At that time, China Unicom also operated a mobile business based on GSM technology and failed to achieve a balance between the two businesses.
Since China Telecom acquired the CDMA business, it has been striving to partner with foreign and domestic cell phone vendors to introduce more handsets.
Because of technology incompatibility, China Mobile and China Unicom users have to change handsets to use China Telecom's service.
In August, just one month before China Unicom announced plans to introduce iPhones in China, the company placed an order with dozens of domestic mobile phone makers for 4 million 3G handsets -- the largest such order in China.
"Because of regulatory restrictions, China Telecom could not enter the mobile business during the past few years, which meant the company lacked the experience of running a mobile business," said Wang of Frost & Sullivan.
"It seems like it now wants to do everything in the 3G area, but there may also be a risk of losing focus," Wang said about China Telecom.
Wang said China Unicom's introduction of iPhone might fail to help attract high-end users, but likely would have a strong appeal to young customers.