3G services not used

However, Pang, from GFK, said that although sales of 3G handsets would rise substantially this year - and are expected to account for 30 to 40 percent of the total cell phone market in the country - many Chinese may still use the 2G network even though they bought a 3G handset.

"Some people may just buy the fancy 3G handset but not necessarily use 3G services," he said.

That worry was echoed by David Tang, vice-chairman of Nokia's China business. "According to our estimation, there are many Chinese 3G handset users who don't actually use 3G services, partly because of the telecom operator's limited network coverage," he said. "If China's 3G is to be a success, there should be more users actually using the service, rather than buying a fancy handset and closing the 3G function."

Nokia last year launched a beta version of its online application market "Ovi Store" in China, in an effort to boost 3G services in the country. It is providing a free navigation service for its cell phone users in China. Tang said Nokia launched 18 different types of 3G handsets in China last year, compared with more than 30 2G devices. He said it planned to sell more 3G handset and less 2G phones in China this year.

Network convergence

Although many believe the 3G boom in China would intensify competition between Chinese telecom operators, experts said the real challenge for operators in the long run may be from Internet firms or even traditional media groups such as TV stations.

Earlier this month, China's premier Wen Jiabao said convergence of telecom, broadcasting and Internet networks should be stepped up. Wen said the country was ready for such a convergence given its existing technology, network infrastructure and market potential. According to the government plan, cross-industry operations will be encouraged between the telecommunications, broadcast and Internet fields through limited trials over the next two years, with the aim of promoting full network convergence by 2015.

"If the telecom network can connect with the broadcasting network, it would mean many State-owned media groups, such as CCTV, could become a telecom service provider," said Pang from GFK. Because the broadcasting firms have a huge advantage on user penetration and making content, "that will change everything currently in the market".

Tang from Nokia said industry convergence was a natural trend. "We believe that it is good for cell phone users whether the telecom operators provide television programs or Internet news," he said. Tang said his company would provide more services in coming years.

Frank Meng, president of Qualcomm China, said he was optimistic about the Chinese telecoms industry. "No matter what the future holds, China's 3G boom will unquestionably accelerate the technology's development across the world," he said.

(China Daily January 25, 2010)