China Slow To Adopt 3G - InformationWeek

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China Slow To Adopt 3G

Multiple technologies, high costs, and lack of compelling 3G services cited as reasons for the reluctance of mobile users to upgrade.

China was around a decade behind much of the world in updating its mobile phone networks to 3G and now, a year into the rollout, the country is finding that consumers are fairly slow to sign up for the new services.

According to the Ministry of Industry and Information Technology (MIIT), China's 3G networks now cover most of the nation's cities and investment levels have already been reduced as future work will be about extending and improving coverage, and therefore not as costly as initially setting up the networks.

There are three nationwide operators offering 3G networks using three different technologies. China Unicom is using the international and mature wideband-CDMA/UMTS standard with High Speed Download Packet Access, making it not only the fastest network but also the most supported in terms of handset technology. China Telecom uses CDMA2000/EVDO technology popular in the United States, while China Mobile is using China's home-grown standard Time Division-Synchronous CDMA.

With such a variety of options, the industry is surprised that there are only 25.2 million 3G users in total so far, 10.49 million of whom are using China Mobile's TD-SCDMA network. Trailing not far behind is China Unicom, which added 1.032 million customers to bring its total to 7.56 million. China Telecom does not announce its total number of 3G customers, but data suggest it had around 7.18 million customers at the end of last month. China has nearly 750 million mobile users.

One reason for the low numbers, more than a year after the launch of 3G, could actually be the variety of different technologies used. Consumers are confused by all the marketing from each network and don't really know what to choose.

Deciding on a handset and an operator is a big decision and requires greater commitment than the GSM days when SIM cards and handsets could be switched between networks easily. Nowadays there is almost no compatibility; if a consumer buys a phone that has a TD-SCDMA radio it must be used with China Mobile, a CDMA phone must be used with China Telecom, and a WCDMA phone must be used with China Unicom.

Moreover customers are put off by high prices. There has been such hype surrounding 3G that consumers and networks alike treat it as something different, a new kind of service that has different charging structures. If you wish to switch to 3G you must specifically sign up for a new contract and, in some cases, a new phone number.

In much of the world a consumer has a mobile tariff which may include a data package. If they have a 3G-capable phone they will use 3G, if they have an older phone it will use GPRS or EDGE for data, but there is no distinction made in charges. In China, the customer as well as the network pay for the upgrade.

Finally there appears to be a dearth of 3G-specific services that convince customers to make the leap. The operators appear to be slowly addressing this and rolling out services such as mobile TV and application marketplaces similar to Apple's App Store.

Some of the lessons learned from the 3G rollout may be helpful as China moves towards 4G in the future, although China Mobile seems set on using technologies incompatible with international standards, as it pushes forward its plans for TD-LTE.

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