Mobile phone subscribers in Tianjin and Hainan were allowed to switch operators on Monday, a step that may break market dominance of the world's largest wireless operator - China Mobile - and open the door of opportunities wider to Europe-led third-generation technology, analysts said. 

The pilot program in northern Tianjin municipality and southern Hainan province was launched under the guidance of the Ministry of Industry and Information Technology, and involves the country's three operators - China Mobile, China Unicom and China Telecom.

The program allows mobile users to shift from one operator to another without changing numbers.

The service switch is free of charge and operators are required to support the client's request and complete the procedure within two working days.

The move follows a government circular in 2008 to promote telecom reform, and allow subscribers to freely switch networks to boost competition in favor of minor players.

Among the 830 million mobile phone subscribers in China, China Mobile boasts the biggest market share with 575 million, compared to China Unicom's 172 million and China Telecom's 83 million.

China Unicom considers the move an opportunity, according to a company statement on Monday.

"With the third-generation (3G) network, star devices such as iPhone and the convenient and fast services we provide, China Unicom may attract a large number of users from other operators," the statement read.

All three operators run both second- and third-generation technology, with 3G services providing faster transmission speed and a broader multimedia experience. China Unicom runs Europe-led WCDMA (Wideband Code Division Multiple Access) technology, which is seen as more popular than the home-made TD-SCDMA on China Mobile.

At the same time, China Unicom, the official partner of Apple Inc for iPhones and iPads, is confident iPhone 4 can lure customers.

The country's No 2 telecom operator will make it a priority to supply iPhone 4 and other popular handsets to Tianjin and Hainan, a marketing director from the company's Hainan branch, who declined to be named, told China Daily.

Since its September launch in China, iPhone has been facing a supply shortage after 200,000 orders were placed in just 10 days.

"I want to transfer from China Mobile to China Unicom, because the 3G function on iPhones is only supported by China Unicom," said Huang Mingxuan, a 28-year-old IT engineer in Tianjin. He will probably buy an iPhone 4 if he can transfer his number to China Unicom, he said.

According to an online survey on China's biggest portal website sina.com, 70 percent of 23,397 respondents said they were willing to change carriers. Of those, 37.9 percent wanted to transfer to China Unicom, 35.2 percent chose China Mobile and 26.9 percent opted for China Telecom.

Qiu Lin, analyst with the research and consulting firm Strategy Analytics, said China Mobile might suffer a customer drain with China Unicom being the biggest beneficiary.

"In the short term, some China Mobile subscribers may switch over to China Unicom, given that it has a better product portfolio supported by companies such as Apple, Google, Nokia, and Samsung," said Qiu.

Ji Chendong, an analyst with research firm Frost &Sullivan, said the ministry's decision not only creates a competitive environment, but provides an opportunity for worldwide WCDMA equipment players.

"In the short term, this provides the possibility of increasing customers for both WCDMA and CDMA 2000", but the likelihood is that WCDMA customers will increase more, said Ji.

Consequently, Nokia, Ericsson and Qualcomm will probably benefit, Ji added.

The trial phase will last six months, said the ministry. After that, users will not be able to switch between operators until new rules based on the trial are released.

(China Daily November 23, 2010)