China's 3G Policy Still Remains Unclear

EL SEGUNDO, CA—According to a report from Byron Wu of iSuppli Corp., the Chinese government’s slow progress on the issuing of third-generation (3G) wireless licenses mean that 3G services are unlikely to be deployed in the nation until 2007.

As the end of the year nears, there is still no sign that the Chinese government will issue 3G wireless licenses this year. After Chinese operators are awarded licenses, it will take at least one month for telecom OEMs to prepare contract bids for evaluation. Once carriers make their purchasing decisions, it will then take a further three months for OEMs to produce and deliver equipment.

Even China’s two largest telecom equipment OEMs, Huawei Technologies Co. Ltd. and ZTE Corp., still do not have a clear indication of what kind of gear major Chinese carriers need for 3G technology. Nor do they know when such network equipment will actually be deployed.

Despite these uncertainties, China’s mobile-communications infrastructure capital spending is expected to rise to $4.2 billion in 2006, up 12.3 percent from $3.7 billion in 2005. China’s wireless infrastructure CAPEX is projected to reach $5.4 billion in 2010, rising at a compound annual growth rate (CAGR) of 7.6 percent from 2005.

The figure represents iSuppli’s forecast for China’s mobile infrastructure CAPEX during the period from 2005 to 2010.

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