The growth rate of China's telecommunications market will continue to grow at a fast pace due to the introduction of new technologies and services, CCID Consulting, a domestic research company, predicted.

"In the future, the launch of 3G (third generation mobile communications) will give a major boost to the development of the telecommunications industry and increasing capital expenditure on 3G systems and equipment will be a trend from 2004 to 2007," said Lu Guoying, a senior analyst with the firm.

Total investment in 3G telecommunications will amount to 252 billion yuan (US$30 billion) in 2006 and 55 percent of that will go to purchasing systems and equipment, he explained.

In addition, the sales of related mobile phones will also create a market as huge as 100 billion yuan (US$12 billion). The number of mobile telephone service subscribers will exceed 400 million by then, compared to last year's 269 million, and mobile communications will account for about 60 percent of total telecom revenues, according to the government think-tank affiliated with the Ministry of Information Industry.

The Chinese Government said last year it might issue 3G licences as early as the second half of this year.

Besides the boost from the 3G launch, data services will become another driving force for the development of the mobile telecommunications industry, Lu pointed out.

According to CCID Consulting, data service revenues reached 38.4 billion yuan (US$4.64 billion) last year, about 5 percent of total telecom revenues or 2 percent higher than in the previous year.

Mobile subscribers in China sent 137 billion short text messages in 2003 - a typical example of data service - 40 percent higher than in 2002.

Lu believes both business and personal users will have strong demand for more data services like mobile shopping, supply management and location services.

This is why mobile operators should work closely with content providers to form a healthy industrial chain to promote the popularity of these services, he said.

CCID Consulting forecasts mobile business will grow at an average annual speed of 75 percent from 2003 to 2007 and will generate more than 100 billion yuan (US$12 billion) in revenues next year.

(China Daily March 11, 2004)