China's telecom carriers plan to spend 36.6 billion yuan (US$4.54 billion) on third-generation phone networks, Beijing-based analysts said yesterday, citing figures from company sources.

 

China is expected to issue 3G licenses this year, touching off a potentially explosive new service that will allow phone users to receive data at much higher speeds and spur the growth of handsets that can play movies and high-graphics video games and accommodate teleconferences.

 

China Mobile's investment is expected to account for 45 percent of the total, compared with 40 percent for China Telecom and 15 percent for China Unicom, according to Beijing-based Norson Telecom Consulting. Norson said its report was based on information from telecom officials.

 

"The 3G investment will force the operators to cut spending on their current businesses, such as the Little Smart service, because their total investment won't grow rapidly," Norson telecom analyst Yang Dapeng said in a phone interview yesterday.

 

China Telecom's investment in Little Smart - a cordless phone service based on a fixed-line network - will be 3 billion yuan this year, down from 8.5 billion yuan last year, according to Yang. Chinese telecommunications investment will reach 224 billion yuan this year, 12 percent growth year on year, according to Wang Guoping, an analyst at China Galaxy Securities Co Ltd.

 

China will issue at least one 3G license by the middle of this year, probably based on homegrown TD-SCDMA (Time Division-Synchronous Code Division Multiple Access) technology, according to Yang.

 

Two other technologies are also expected to be used: US-developed CDMA2000 and Europe's WCDMA (Wideband Code Division Multiple Access).

 

Separately, Beijing-based CCID Consulting, a research firm under the Ministry of Information Industry, said China Unicom will focus on CDMA2000.

 

"It is still uncertain whether China Unicom will be spun off, but it will invest much more than 15 percent of the total," said CCID analyst Li Yanfeng.

 

China Unicom may merge its CDMA business with China Telecom, according to earlier new media reports.

 

The investment in CDMA2000 technology will reach 10 billion yuan this year, authorities said. The carriers' total 3G investment this year is estimated at 26.2 billion yuan.

 

(Shanghai Daily February 17, 2006)