Report: China will not issue 3G licenses before 2008

The Chinese government will not issue licenses for 3G (third-generation) mobile services until the first quarter of 2008, according to a Chinese report.

China's Ministry of Information Industry (MII) will not issue the licenses until a new round of tests involving the homegrown TD-SCDMA (time division synchronous code division multiple access) 3G technology ends next year, reported Caijing magazine in its latest issue.

Delaying the release of the 3G licenses will give TD-SCDMA and its backers additional time to close the gap with more mature 3G technologies, WCDMA (wideband
CDMA) and CDMA2000 EV-DO (evolution data optimized).

In December, China's Minister of Information Industry, Wang Xudong, reiterated a promise that commercial 3G services would be available when Beijing hosts the
Olympic Games in 2008. Issuing licenses during the first quarter of 2008 would still allow operators to meet this goal, even if they have little time to expand their 3G coverage areas throughout the country.

The eventual release of 3G licenses will coincide with a restructuring of China's major telecommunications operators, which are currently split into fixed-line and mobile carriers, Caijing reported.

The four major Chinese telecommunication operators, which are all state-owned, are currently divided into fixed-line and mobile carriers.

China Telecommunications (China Telecom) and China Network Telecommunications Group (China Netcom) are the country's primary fixed-line carriers, offering voice and Internet services. To avoid overlap and direct competition between the two carriers, the country was divided up between the two companies. China Telecom serves western and southern China, including Shanghai, while China Netcom's market covers the north, including Beijing.

The two mobile carriers, China Mobile Communications (China Mobile) and China United Telecommunications Co. (China Unicom), are not restricted geographically but they use different technologies. China Mobile operates a GSM (Global System for Mobile Communications) network and has the most subscribers, while China Unicom has both a GSM network and a CDMA service that is its primary network and offers faster data downloads.

Determining how these companies will be structured, and what mobile networks they will have, is not something that will be determined by MII alone. The decision also involves the State-owned Assets Supervision and Administration Commission (SASAC), which oversees China's state-owned companies and is a central player in the 3G licensing process.

Further complicating the bureaucratic wrangling over 3G and telecommunication industry reform, there are other government organizations, including the National Development and Reform Commission and Ministry of Science and Technology, involved in the decision process.