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China could "very soon" award domestic telecom operators licences to build 3G (third generation) mobile phone networks, the country's top telecom official said yesterday.

 

"I cannot provide a specific timetable, but it could happen very soon," Wang Xudong, minister of information industry, told reporters at the ITU Telecom World 2006 being held in Hong Kong.

 

Wang reiterated a commitment to enable operators to offer 3G services during the 2008 Olympic Games in Beijing, saying it is "well-founded and feasible."

 

3G services enable video calls, faster data downloading speed and mobile Internet access.

 

Wang said operators would be given enough time to deploy 3G networks. "The build-out of networks and the following trial operations could take some time."

 

Industry observers estimate that setting up networks and trial operations could take at least one year before operators can formally roll out services to consumers.

 

As a result, some believe licences could be handed out in the first quarter next year; and China Netcom (Hong Kong) CEO Zuo Xunsheng said at the expo that it could be as early as February.

 

The acceleration of the 3G licensing process could be a shot in the arm for major telecoms companies, especially equipment and handset makers, which have invested heavily in 3G-related research and development.

 

The building of the 3G networks could unleash purchase orders worth tens of billions of dollars but Wang suggested the windfall might be smaller than many expect.

 

"It might not be feasible (for operators) to build national 3G networks immediately," he said. Some analysts expect regulators to allow operators to first build networks in select cities such as Beijing and Shanghai.

 

Wang would not specify how many 3G licences would be handed out. There are four major telecoms operators in the country and analysts believe four licences could result in excessive competition while fewer than three could curb competition.

 

"Government bodies are studying how many licences, three or four, are needed (to be awarded)," said Wang.

 

An industry restructuring has been looming in China's telecom sector, which might see the government consolidate the top four operators into three while awarding 3G licences.

 

It has been speculated that China Unicom, which runs cellular networks based on two different standards, may sell one network to China Telecom and merge the other with China Netcom.

 

But Wang said he "never heard such a plan and we never studied such a plan."

 

The minister added that the restructuring is "up to the board of directors of the four operators, which are all public companies."

 

The State-owned Assets Supervision and Administration Commission (SASAC) has said it is working on reforming the domestic industry but denied reports that it would split China Unicom.

 

"There has been much discussion on how to better realign the telecom industry," a senior executive with China Unicom told China Daily last week.

 

"We believe the government would make a judgment at the right time to protect the interests of the country, the industry and consumers."

 

(China Daily December 5, 2006)