Report: Government policy and user demand furthering development of wireless in China

November 30, 2004

China continues to be the world's fastest-growing telecommunications market. With a population of 1.3 billion and forward-thinking economic and regulatory policies, annual capital investment in China exceeds 200 billion RMB (about 24 billion US $), making its telecom market the center of the Asia Pacific region. According to In-Stat/MDR, stimulated by government policy and end-user demand, the development of wireless communications is an area of significant focus. While government scrutiny of foreign investment in China's wireless market remains tight, joint investment in infrastructure, services, and devices are very active.

In-Stat/MDR has also found that:

- Fixed and wireless telephone subscribers surpassed 600 million in the first half of 2004, with fixed line telephone subscribers reaching 290 million, and mobile subscribers reaching 310 million.

- As 3G deployment faces technical and market challenges, Chinese officials remain conservative toward the development of 3G. Thus, factors, such as market demand, schedule and scope of 3G licensing, and 3G experimental results promise sufficient turnover, and maturity of TD-SCDMA, have become important criteria.

- CDMA has been a strong growth area in China, with China Unicom having quickly become the world's second-largest CDMA operator. Interoperability between GSM, CDMA, and 3G is a key area of focus for policy-makers.

- The Little Smart Personal Handyphone Service (PHS) continues to be a force in China's telecommunications market, with a significant influence on pricing for wireless services.

- The future of TD-SCDMA in China is uncertain, with platform reliability issues and licensing delays continuing to call the technology's long-term potential into question.

This Market Alert is drawn from the In-Stat/MDR report, "China Wireless: The Evolving Regulatory Environment"