China's telecommunications supervisor on Wednesday issued long-awaited third-generation (3G) mobile phone licenses to three mobile operators, a move that is expected to lead to billions of dollars being invested in building new networks.
The Ministry of Industry and Information Technology (MIIT) said China's biggest mobile operator, China Mobile, was awarded a license for TD-SCDMA, the domestically-developed 3G standard.
The other two main carriers, China Telecom and China Unicom, received licenses for the US-developed CDMA2000 and Europe's WCDMA, respectively.
The 3G high-speed networks can handle faster data downloads, allowing handset users to make video calls and watch TV programs.
The MIIT also issued 23 regulations on the requirements of 3G network operation, covering such aspects as market competition, consumer rights, user information security, telecommunication charges management and facility building.
The news would also benefit the 3G network equipment and cell phone manufacturers, including ZTE Corp, Wuhan Fingu Electronic Technology Co and Ningbo Bird Co Ltd.
The 3G cell phone sales would top 300 billion yuan ($44 billion) during the 2009-2011 period, Sinolink Securities analyst Chen Yunhong forecast.
Shares of these companies declined, however, because of profit taking. ZTE Corp shares fell 4.03 percent to 27.83 yuan. Wuhan Fingu Electronic Technology Co was down 2.73 percent to 17.45 yuan. Ningbo Bird Co Ltd shed 1.92 percent to 2.55 yuan.
The licenses were issued a day after China Unicom announced it had won government approval to merge with China Network Communications Group Corp The new China Unicom will hold all the assets and business of the two former companies.
The merger marks the final move in the restructuring of the country's telecommunication industry, which saw six telecom operators rationalize into three: China Mobile, China Telecom and China Unicom.
The State Council, the country's Cabinet, approved the issue of the 3G licenses on December 31. MIIT pledged to issue licenses when the industry restructuring was accomplished.
There could be about 280 billion yuan of direct investment in new networks over the next two years, MIIT minister Li Yizhong said on December 19.
The network investment would lead to 2 trillion yuan in private-sector investment in the next two or three years, said Chen Jinqiao, deputy chief engineer of the MIIT's telecommunications research institute.
An unidentified official with China Mobile said the market leader would make the development of TD-SCDMA its top priority. China Mobile had already started construction of new networks to cover all cities by 2011.
The government sees the development of 3G networks as an important step in boosting domestic demand and optimizing telecom market competition.
Industry analysts predicted fierce competition for 3G market share among the three carriers.
While WCDMA and CDMA2000 are viewed as having more mature 3G technology that's available around the world, the domestically developed TD-SCDMA has a government pledge of "strong support."
An on-line survey at Sina.com on Wednesday found that 65 percent of the 130,000 respondents said they would choose 3G network service.
China Mobile leads the domestic telecom market with more than 400 million mobile users, two-thirds of the total.