As posted by: Wall Street JournalBEIJING -- China's wireless carriers will invest $40 billion in advanced third-generation networks over the next two years, a top official said, in what could be a boost for China's domestic telecommunication-equipment industry.
China, the world's largest mobile phone market by number of subscribers, is one of the last major telecom markets to adopt third-generation technology, which has higher data-transmission speeds that enable wireless video and other fancy services. Earlier this month, the government said it would award 3G licenses to its carriers by the beginning of 2009, ending a years-long wait by equipment makers. Speaking Friday, Li Yizhong, minister of industry and information technology, predicted at an industry conference that China will spend 280 billion yuan, or about $40 billion, on 3G networks over the next two years.
However, Mr. Li also said that the government would provide "strong support" to China's homegrown 3G technology, known as TD-SCDMA, which is being adopted by China's largest carrier, China Mobile Ltd. The other two global 3G standards, WCDMA and CDMA2000, were developed overseas. That statement reinforces expectations that a greater share of sales for the new 3G networks will go to domestic companies than in the past. Analysts say spending is likely to benefit Chinese telecom equipment makers ZTE Corp. and Huawei Technologies Co., who are the leading suppliers of network equipment to the carriers.
BDA China Ltd., a Beijing-based technology consulting firm, says non-Chinese vendors may struggle to benefit from China's 3G spending. Telefon AB L.M. Ericsson, Alcatel-Lucent SA and Nokia Siemens Networks' total shares together are expected to amount to less than 50% of total spending, BDA says.
Mr. Li's announcement comes as mobile-phone sales are also expected to drop world-wide in 2009, as the global economic decline crimps consumer spending. Research firm Gartner Inc. said last month that global handset sales in the third quarter rose just 6% from a year earlier, compared with 16% in the third quarter of 2007, as fewer consumers purchased replacement models.
Mr. Li said total revenue in China's telecom industry in the first 11 months of 2008 rose 7.6%, but that targets for 2009 have been pared down.
